Instant View: RIM shares fall as phone sales disappoint

A BlackBerry smartphone user is pictured checking its Calendar in Washington, March 30, 2010.

NEW YORK (Reuters) - Research in Motion Ltd's quarterly revenue missed Wall Street expectations as the BlackBerry maker sold fewer phones than forecast, amid fierce competition from Apple's iPhone and Motorola's Droid.

The U.S. shares of RIM fell more than 5 percent in extended trading.

COMMENTARY:

ED SNYDER, ANALYST, CHARTER EQUITY RESEARCH

"They did inline or a little better than their own guidance but Street expectations were for quite a bit more," he said, referring to EPS of $1.27 compared with Wall Street expectations for $1.28.

He said investors will be disappointed with phone sales which appeared to be hurt by competition from rivals such as Apple Inc's iPhone and Motorola Inc's Droid, which was promoted heavily by Verizon Wireless.

"They had this business almost to themselves for years. Now everybody's joined the party. The U.S. was probably tough for them."

"The full brunt of Verizon and Droid is probably showing up now."

He said phone sales of 10.5 million units were weaker than RIM's forecast for 10.6 million to 11.2 million units, and that investors had hoped it would beat that guidance.

"It's especially bad because the whisper had been for better units (than the guidance)."

NICK AGOSTINO, ANALYST, RESEARCH CAPITAL

"Basically, when you look at the fact that the top line was lighter then expected and the gross margins were better than expected, and I also calculated the ASP somewhere around $312 ...it looks like they did well in the international markets, selling primarily the Curve and then that would tie in to the lower ASP and the higher gross margin." Agostino was expecting gross margin to be around $320.

"If you look at the metrics, it's kind of a mixed bag. Primarily shipments -- volume is lower than expected ... that's probably got some investors nervous and it probably feeds nicely into some of the bears' comments."

"My read here is that they are likely gaining share on an international level, and possibly losing share on a North American basis, or, the North American market, as far as they are concerned, has probably stalled a bit."

MARK MCKECHNIE, ANALYST, BROADPOINT AMTECH

"It's a pretty strong guide. They didn't deliver on February but they're taking up expectations for May. We'll have to get some explanations on the call," he said, referring to RIM's forecast for Q1 EPS of $1.31 to $1.38 compared with average Wall Street expectations for $1.22.

"I'm sure they'll have some sort of an explanation."

McKechnie said he was disappointed that handset sales missed his expectation for 11.1 million units but noted that RIM's addition of 4.9 million subscribers in the quarter was better than his forecast for 4.6 million.

But he said RIM's estimated $311 average selling price was a disappointment compared to his $317 expectation.

"It may be related to the currency shift of the dollar versus the euro because about 30 percent of RIM's business is in Europe."

PETER MISEK, ANALYST, CANACCORD ADAMS

"It was a slight miss on the quarter and a great guide and that always creates controversy."

"It kind of reminds me of what happened last year when they crushed net subscriber adds, but they drew down net inventory, and I think the issue here is that they drew down inventory significantly."

"I know it's trading huge volumes, but I wouldn't read too much into the initial reaction. I would be a buyer on the weakness."

"I think people just looked at the miss and they didn't really look at the guide or margins. The margins on the guide, the unit guide, the revenue guide, the EPS guide, are all really good."

If you take the mid-point of their guidance and you annualize that, you get over $5.20 of earnings, and over $5.20 of earnings for a $70 stock, that seems pretty cheap to me."

(Reporting by John McCrank and Sinead Carew, compiled by Tiffany Wu)