Research In Motion Limited (RIMM)

F3Q2011 Earnings Call Transcript

December 16, 2010 5:00 pm ET

Executives

Edel Ebbs – VP, IR

Jim Balsillie – Co-CEO

Brian Bidulka – CFO

Analysts

Jim Suva – Citi

Maynard Um – UBS

Tim Long – BMO Capital Markets

Jeff Kvaal – Barclays Capital

Tavis McCourt – Morgan Keegan

Steven Fox – CLSA

Gus Papageorgiou – Scotia Capital

Mike Abramsky – RBC Capital Markets

Kulbinder Garcha – Credit Suisse

Rod Hall – JPMorgan

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the Research In Motion third quarter fiscal 2011 results conference call. At this time all, participants are in a listen-only-mode. Following the presentation, we will conduct a question-and-answer session with instructions provided. (Operator instructions) I would like to remind everyone that this conference is being recorded today, Thursday, December 16, 2010.

I will now turn the conference over to Edel Ebbs, Vice President, Investor Relations. Please go ahead.

Edel Ebbs

Thank you. Welcome to RIM’s fiscal 2011 third quarter results conference call. With me today on the call are Jim Balsillie, Co-CEO; and Brian Bidulka, CFO. After I read the required cautionary note regarding forward-looking statements, Jim is going to provide a business and strategic update, Brian will then review the third quarter results and I’ll discuss our outlook for the fourth quarter of fiscal ’11, we’ll then open the call up for questions.

I would like to note that this call is available to the general public via call-in number and webcast. A replay of the webcast will also be available on the rim.com Web site. We plan to wrap up the call before 6.00 P.M. eastern this evening.

Some of the statements we will be making today constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities Laws.

These include statements about our expectations and estimates with respect to product shipments, revenue, gross margin, operating expenses, CapEx, depreciation and amortization, earnings, channel inventory and seasonality for Q4 fiscal 2012 and beyond, our expectations regarding RIM’s near and long-term tax rates, our expectations regarding the impact of foreign exchange on our revenue and net income in Q4, our product development and marketing initiatives and timing, including our expectations relating to the BlackBerry PlayBook, developments relating to our carrier partners and other statements regarding our plans and objectives.

We will indicate forward-looking statements by using words such as expect, plan, anticipate, estimate, may, will, should, forecast, intend, believe, continue and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made.

Many factors could cause our actual results, performance or achievements to be materially different than those expressed or implied by our forward-looking statements, including risks relating to our intellectual property rights, our ability to enhance our current products and develop new products and services, risks relating to competition, our reliance on carrier partners, third-party manufacturers, third-party network developers and suppliers, risks relating to network disruptions and other business interruptions, our ability to manage our production facilities, security risks and risks relating to encryption technology, risks associated with our international operations, our ability to manage growth and other factors set forth in the risk factors and MD&A sections in RIM’s filings with the SEC and Canadian securities regulators. We base our forward-looking statements on information currently available to us and we do not assume any obligation to update them except as required by law.

I will now turn the call over to Jim.

Jim Balsillie

Thank you, Edel. RIM is pleased to report a record third quarter with strong unit shipments, net adds and financial performance, and a strong outlook for the fourth quarter. This is the sixth consecutive quarter that RIM has reported record shipment.

International markets continued to adopt BlackBerry in record numbers and BlackBerry is the number one smartphone in several markets in Western Europe, including the U.K., and BlackBerry was the number one smartphone for the third consecutive quarter in Latin America.

In North America, BlackBerry was included in a number of exciting Black Friday and holiday promotions that are continuing throughout December. The smartphone market is rapidly evolving, highly segmented and growing quickly. For example, the prepaid smartphone market in the U.K. alone grew 245% year-over-year versus postpaid at only 65% growth, and RIM is taking advantage of these dynamics to leverage our unique position and grow the business to record levels.

The BlackBerry Torch was launched in over 75 new markets during Q3 and we saw our weekly sell-through run rates increasing substantially quarter-over-quarter. Torch and BlackBerry 6 are receiving strong support from our partners, including substantial marketing campaigns and Hero status with many of our European carrier partners. The campaigns are driving excellent results, which we expect to continue throughout the holiday season.

The Torch has also been a resounding success in Middle East, where it was launched at GITEX, with both Du and Etisalat launching aggressive pricing bundles and media campaigns to promote the product.

Torch is currently rolling out in Latin America and we expect to see the initial excitement around the product extend as we add additional partners in Asia and other international markets in Q4.

In the United States, Torch was launched in two new colors, red and white, to coincide with the $99 pricing from AT&T and sell-through run rates have increased as a result of these programs. Torch is currently featured in AT&T’s holiday marketing campaign, which is scheduled to have high visibility through to the end of the year.

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