Research In Motion Ltd.’s sales of the BlackBerry smartphone trounced estimates last quarter as it gained ground in emerging markets, signaling that the company may still have a future in the age of the iPhone.
RIM shares jumped as much as 20 percent in early trading in New York after the company sold 7.4 million smartphones, about 500,000 more than analysts had projected. RIM also posted a narrower loss for the period than estimated and increased its cash holdings. That impressed some of RIM’s biggest critics -- including shareholder Vic Alboini, who has previously demanded a shakeup in management and strategy.
“Those numbers are very, very positive,” Alboini, chairman of Toronto-based investment firm Jaguar Financial Corp., said in an interview yesterday. “RIM has taken a step up the ladder, and they can see where they’re going.”
The results show that RIM can gain customers in lower-income markets such as Asia and Africa, even as it struggles to compete in the U.S. with Apple Inc.’s iPhone and devices running Google Inc.’s Android software. The challenge now is a successful release of the BlackBerry 10 phone, the linchpin of the Waterloo, Ontario-based company’s comeback strategy.
“If they can have another quarter of not burning cash and can get the device out in a few months, then investors are thinking, ‘Perhaps they have a chance to come back,’” said Neeraj Monga, an analyst at Veritas Investment Research in Toronto who rates RIM a sell.
The stock jumped 15 percent to $8.24 at 8:43 a.m. after earlier reaching $8.60. The shares, which have lost 68 percent of their value in the past year, closed at $7.14 in New York yesterday.
RIM’s free BlackBerry Messenger program, known as BBM, has emerged as a selling point in developing countries, where data plans often cost more.
“It’s amazing when you go into those countries and you see how BBM is just kicking it,” Chief Executive Officer Thorsten Heins said on a conference call, fresh from a tour through Asia, the Middle East and Africa. “I mean, it’s everywhere.”
RIM also did a better job conserving cash than some analysts predicted, curtailing operating expenses 7.9 percent. Cash and investments grew to $2.3 billion by the end of last quarter, up from $2.2 billion three months earlier.
“The fact cash is not going to burn out in a quarter or two gives us an opportunity to see what BB10 is going to do,” Alboini said.