Research In Motion
continued breaking higher ground on Friday, riding bullish sentiment from Thursday's
strong first-quarter earnings release.
The stock was recently trading up $32.91, or 19.9%, to $198.50; it earlier reached an all-time intraday high of $200.58.
The Waterloo, Ontario, company delighted investors with a 76% rise in sales, helped by a strong showing for its latest products. Subscriber accounts grew by roughly 15%, with a growing proportion coming from abroad.
International revenue will become increasingly important if sales growth slows in RIM's most mature market, North America.
RIM also demonstrated how profitable it is by handily beating analysts' forecasts for earnings per share, despite sales that were only slightly better than expected.
Perhaps most importantly, the company's earnings and revenue targets for the current quarter far exceeded analysts' forecasts. This reassured investors that the BlackBerry will continue to be a force to reckon with as the high-end of the cell market welcomes
iPhone, which goes on sale Friday evening.
"It's becoming pretty apparent that the BlackBerry is going to be the weapon of choice for carriers to compete against
and the iPhone," said Scott Thompson, vice president of equity analysis for Montag and Caldwell, an institutional money manager. Montag holds almost 5 million RIM shares and is one of its largest investors.
RIM has traditionally drawn its base of subscribers from on-the-go professionals who need quick and reliable access to their work email accounts. But RIM has begun targeting general consumers with the competitively priced and sleekly designed Pearl, which went on sale in September. In the last quarter, the company released its Curve, another consumer-oriented model. Both phones have helped RIM expand its customer base beyond so-called "enterprise" users.
During RIM's conference call on Thursday, co-Chief Executive Jim Balsillie said that five additional carriers, including several in Europe and Latin America, had begun offering the BlackBerry to subscribers on their networks. Also,
, AT&T and
, a joint venture of Vodafone and
, have expanded the number of BlackBerry models that they carry.
Balsillie also said Research In Motion is readying up to three new models with enhanced multimedia features aimed at consumers. He expects to release these in the autumn.
"I think you're going to see some very positive and compelling and very unexpected extensions to what we're doing," he said during the call.
The drive to add more consumers has brought down the average selling price of BlackBerries. As a result, gross margins have tightened. But Thompson says the company can offset this with greater sales volume and lower operating costs as a proportion of sales.
"We expect the absolute dollar amount spent on research and development and sales and general administrative expenses is going to grow, at a slower rate than revenue," he said.
Operating expenses as a proportion of sales fell to 25% in the last quarter, from 29% in the same quarter a year earlier and 28% in the prior quarter.
Mike Abramsky, an analyst with RBC Capital Markets, said this operating leverage is not yet priced into the stock. Given RIM's prospects for expanding business outside of North America, he raised his target price to $250 from $180.
RBC Capital makes a market in RIM shares and provides nonsecurities services to RIM. It is a unit of RBC Asset Management, which holds almost 3 million RIM shares.