April 6, 2006 2:15 PM PDT
RIM earnings sag on settlement costs
The company said Thursday that revenue came in at $561.2 million, a little higher than the expectations RIM provided when it settled the long-running BlackBerry lawsuit in March. The final total was up 39 percent from $404.8 million in revenue during last year's fourth quarter.
Net income for the period, which ended one day after the settlement on March 4, was $18.4 million. That includes the $162.5 million that RIM paid NTP during the quarter to settle the case. The total settlement amount was $612.5 million, but $450 million had been stored in escrow during the appeals process of the original verdict that the BlackBerry infringed on patents held by NTP.
As expected, RIM did not add as many new subscribers during the fourth quarter as it had forecast last year, which was one of the reasons it finally decided to settle the case. But the settlement caused new BlackBerry accounts to increase from about 40,000 a week to around 50,000 a week, close to the levels that RIM saw in its third quarter, Dennis Kavelman, RIM's chief financial officer, said on a conference call following the earnings release.
"With the litigation behind us, we're looking forward to building on the momentum we're seeing in early (fiscal) 2007," Jim Balsillie, co-chief executive officer of RIM, said on the conference call.
Still, RIM disappointed financial analysts with its outlook for its first fiscal quarter. The company expects to record between $580 million and $610 million in revenue during its first quarter, which ends June 3. Analysts polled by Thomson First Call were looking for more, with an average estimate of $625 million for the quarter.
The company has been happy with the demand from its carrier partners and corporate customers, but is being cautious with its forecasts while waiting for the rebound to sustain itself for a few quarters, Kavelman said.