RIM's enjoys a profit surge; Palm sputters
RIM's enjoys a profit surge; Palm sputters
Strong sales of Research in Motion Ltd.'s new line-up of consumer devices bumped its fiscal first-quarter profit up 73%, as the BlackBerry-maker gears up to face formidable competition from a broad range of cellphone makers, including Apple whose iPhone goes on sale today.
RIM's competitor Palm Inc. didn't fare as well, posting a 43% decline in net income and a 1% drop in revenue in its fiscal fourth quarter. Palm reported record sales of its Treo smart phones, but it is facing rising competition from companies such as RIM, Apple, Motorola Inc. and Nokia Corp.
Handset manufacturers are trying to win market share by loading up devices with a wide range of features. RIM, of Waterloo, Ontario, continued to enjoy strong sales of its consumer-friendly BlackBerry handsets like the Pearl. The company said it is seeing promising initial results from its recently-introduced Curve, which has a revamped music and video player.
RIM's revenue rose 76% to $1.08 billion in the period ended June 2 from a year earlier. Net income increased to $223.2 million, or $1.17 a share, from $128.8 million, or 67 cents. RIM, whose stock is up 30% this year, also announced a 3-for-1 stock split.
RIM projected revenue of $1.3 billion to $1.36 billion for its second fiscal quarter ending Sept. 1. The company said it soon would begin shipping devices in China, opening up a massive market RIM has long talked about trying to penetrate. Following RIM's earnings release, after the market closed, its shares rose 16%, or $26.64, to $192.23 in after hours trading.
Palm yesterday acknowledged that competition has stiffened and warned that there may be some "stall" in Treo sales while consumers check out Apple's iPhone."We certainly take new competitive products into our guidance," said Ed Colligan, the Sunnyvale, Calif., company's chief executive, in a conference call.
Palm, whose market capitalization is less than $2 billion, has been dogged by criticism that it is too small to compete against larger rivals. Partly in response, Palm earlier this month, agreed to sell a 25% stake to a private-equity partner, Elevation Partners. As part of the deal Elevation brought three people onto the Palm board, including Apple's former head of hardware, Jon Rubinstein, who helped pioneer the iPod. He took on the role of executive chairman and will be involved in product development.
For the three months ended June 1, Palm reported that net income fell to $15.4 million, or 15 cents a diluted share, from $27.2 million, or 25 cents a diluted share a year earlier. Total revenue declined to $401 million. Still, sales of its Treo smartphones climbed 43% to 750,000 units.
Palm also released results after the market close. In after-hours trading, its shares fell 2.5%, or 41 cents, to $16.15 each.
RIM and Palm are bracing themselves for today's iPhone launch. Nearly 30% of RIM's subscribers are consumers or small business users who subscribe to its BlackBerry Internet Service -- the segment that analysts say is most vulnerable to competition from the iPhone, a stylish media device, cellphone and web browser that AT&T will sell for $499 and $599.
Blackberries. You can pick them up for nothing now
Post a Comment
You need to be logged in to post comments. Enter your login with your comment. Not registered?