Wall Street relished the chance to take its hair out of curlers, slather on its lip gloss and give RIM a big smooch. It's been a few quarters since it smacked its lips on something as pricey and handsome as
Research in Motion
, which makes the BlackBerry device and reddened cheeks on the Street by beating estimates by 3 cents with a 10-cent earnings finish.
RIM flexed its corporate-customer muscles with $90.1 million in revenue for the quarter ended Feb. 28, besting the Street's $74.3 million predictions by 21%. To top it off, RIM maintained its guidance for the first quarter and full year 2002. Despite a price-to-forward earnings multiple of 66 and a PEG ratio of 1.3, analysts' knees still wobbled.
RIM dropped more than 11.4% during the day, but soared more than 18% in after-hours trading.
Conveying humility, RIM management remained strong and silent when it came time for comparison with an ugly March 27
warning. Palm CEO Carl Yankowski sent handheld stocks skidding when he signaled that the consumer handheld-device- and operating-system maker would follow up a $471 million third quarter with puny fourth-quarter revenue of $300 million to $315 million.
"We're not going to be cavalier about the current market or the IT spending environment. It's prudent to be cautious," said Jim Balsillie, chairman and co-CEO. Despite expressing solidarity with the rest of tech stocks, RIM won't be lowering its sights, and managed to only partially camouflage its enthusiasm. "Our long-term plans remain spectacularly optimistic."
RIM reiterated $75 million to $80 million revenue guidance for the first quarter ending May 31 -- sequentially down from this quarter, which featured unexpectedly high sales from messaging partner
. To keep in step with its suffering brethren, management suggested the Street look more to the lower end of its ranges. After RIM works through a slow second quarter with $80 million to $90 million in revenue, RIM management expects the handheld business to bounce back with renewed vigor for a healthy $370 million to $390 million finish for 2001.
RIM's only flaw of the day was a $14.75 million write-down on investments, a small outbreak of forehead pimples the Street was more than willing to overlook in this era of warty frogs. Heck, RIM has $721.9 million in cash and marketable securities; it can pay for deep-extraction facials.
Trying to come up with weakness, analysts expressed concern that only their own ranks were buying BlackBerry handhelds, but RIM coyly admitted that only one-third of its customers are in the investment-banking business. The company sees increasing opportunities in the less-moneyed government-worker ranks.
Overall device shipments jumped from 115,000 in the third quarter to 184,000 in the fourth, with BlackBerry sales up from 55,000 devices in the third quarter to 79,000 in the fourth quarter. BlackBerry sales are less than half the company's revenues.
Now, let's see if Handspring's earnings report Thursday can live up to the dreams conjured up in Wall Street's minds tonight.