BlackBerry Sales Surge, but Palm Cools Off

Handset Makers on Divergent Paths With Research In Motion Posting 59% Jump in Profit and Rival Posting Another Loss By YUKARI IWATANI KANE And PHRED DVORAK Research In Motion Ltd. reported surging profits and sales of its BlackBerry devices while rival Palm Inc. posted another quarterly loss amid signs that consumer demand waned for its newest smart phones. The results showed the diverging paths of a market leader and an underdog in an increasingly competitive smart-phone market. Shares of the two companies moved in opposite directions in after-hours trading. RIM's shares jumped 12% to $71.21, while Palm's shares fell 8.7% to $10.70. In a positive sign for both companies, RIM and Palm shipped more phones than Wall Street had expected during the latest quarter, despite stiff competition from Apple Inc.'s iPhone and phones that run Google Inc.'s Android operating system. Overall, RIM said it shipped 10.1 million handsets for the quarter ended Nov. 28, more than the 9.6 million analysts expected. Palm shipped 783,000 smart phones in its quarter ended Nov. 27, higher than analysts' average expectation of about 700,000. RIM launched its Storm 2 device in October and Palm had started selling its Pixi phone last month. "The competition has clearly been overestimated," said Shaw Wu, an analyst with Kaufman Bros. "The big picture is that we're still at the early stages of smart-phone adoption... and it's premature to declare that there is only one winner." But Palm showed signs of weakness in sales of its Pixi as well as its flagship device, the Pre. The company said 573,000 phones actually sold through to consumers during the quarter, down 29% from the prior quarter ended in August and down 4% from a year earlier. RIM, based in Waterloo, Ontario, reported its profit climbed 59% to $628.4 million, or $1.10 a diluted share, for its fiscal third quarter from a year earlier. Its revenue rose 11% to $3.92 billion from a year ago. RIM Co-Chief Executive Jim Balsillie said some strength comes from sales overseas, where analysts say an increasingly mainstream set of consumers may be attracted to cheaper offerings like a newly released, low-cost version of the BlackBerry Curve. Some 80% of new subscribers were nonbusiness users. The results came the same day that some BlackBerry users in North America faced delays in receiving email on their devices. RIM later said technicians isolated and resolved the issue and it was investigating the cause. For Palm, the loss for its fiscal second quarter narrowed to $85.4 million from $506.2 million a year ago, when it took big tax charges. But its operating loss of 37 cents a share was wider than Wall Street's projection for a 32-cent-a-share loss. Palm's revenue also fell 59% to $78.1 million following a change in how the Sunnyvale, Calif., company accounts for smart-phone revenue over a two-year period instead of immediately. If revenue wasn't deferred, Palm would have posted revenue of $302 million. Palm's expenses rose 21% from a year ago as it spent more on marketing and sales. The company said it would continue to invest in marketing its products in coming months as it seeks to regain market share. ---- RIMM Devices--- Q3 During the quarter, RIM shipped approximately 10.1 million devices, including its 75 millionth BlackBerry smartphone. Approximately 4.4 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 36 million. Q2 During the quarter, RIM shipped approximately 8.3 million devices. Approximately 3.8 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 32 million. Q1 During the quarter, RIM shipped approximately 7.8 million devices. Approximately 3.8 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 28.5 million. Q4 2008 RIM shipped approximately 7.8 million devices in the fourth quarter and approximately 26 million devices during fiscal 2009. Approximately 3.9 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 25 million.