SAN FRANCISCO -- Bullish investors sent shares of BlackBerry maker Research In Motion ( RIMM) soaring to an all-time high Friday, a day after the company offered more robust growth expectations. Shares of RIM were recently up $13.64, or 13.6%, to $114.18, reversing an
after-hours slide in the stock. RIM now sports a market capitalization of $62.2 billion. A slew of new product releases, subscriber growth that shows no signs of slowing down, a growing international footprint and little competitive pressure from rivals have combined to help fuel even more positive sentiment. RIM crossed the 10 million-subscriber mark and reported revenue of $1.37 billion in the second quarter, more than double the $658.5 million in the same quarter of last year. For the third quarter, RIM said it expects revenue of $1.6 billion to $1.67 billion and earnings in the range of 59 cents to 63 cents a share. Analysts' consensus had been $1.51 billion and EPS of 55 cents. RIM's bullish guidance reflects the company's plans for a strong holiday season. The company's product launches slated for fall include the BlackBerry 8130 Pearl for CDMA networks such as Verizon's ( VZ), the 8120 Pearl for Edge and Wi-Fi networks, and a new software platform, the BlackBerry Unite, for the home and small and medium business market.
All of the offerings should help feed what analysts see as pent-up demand for the company's devices as well as consolidate RIM's position as a smartphone maker with the best portfolio of products in the market. "We expect the BlackBerry Pearl 8310, which will be available from all carriers in North America later this fall, to open up a new market of CDMA users who want the small light form factor of the Pearl on a high speed EVDO network," Jim Balsillie, CEO of Research In Motion told analysts on the quarterly results conference call Thursday. The
launch of new phones should help RIM expand its consumer base significantly. RIM, with nearly 70% of its revenue from business users, is already seeing more consumers flock to its products. For the first time, non-business subscriber additions were greater than "enterprise" additions in North America, the company said. "While not all of them may be consumers, this gives a glimpse into the opportunity available to RIM in the consumer market," wrote Rob Sanderson, an analyst with American Technology Research, which does not own shares of RIM or have an investment banking relationship with the company. "Enterprise seasonality should pick up through year-end and we expect RIM's growing consumer business will amplify subscriber growth into the holiday season," Sanderson told clients in a research note.
For investors, RIM's international ambitions allow for additional upside. In the last two months, the company launched the BlackBerry Curve 8310 with built-in GPS capability in Hong Kong and India on the Vodafone Essar network. RIM expects to bring more carriers on board in the next few months. The company is also working with a strategic channel partner to bring BlackBerry devices to China. Meanwhile, RIM's rivals, Motorola ( MOT), Palm ( PALM) and even Apple ( AAPL) with the hyped-to-the-hilt iPhone, haven't been able to stem its march. "RIM's stable hardware gross margins is a reflection of very little competitive pressure from other vendors," wrote Jeffrey Fan, an analyst with UBS Securities in a note. UBS owns shares of RIM and makes a market in the company's stock. Fan, who raised his price target on the stock to $125 from $120 believes "with a scarcity of companies growing organically at RIM's rate and size," RIM deserves its premium valuation.