RIM ups subscriber forecast but drops financial outlook

Smartphone maker Research In Motion today offered an update to its forecast for its fiscal fourth quarter (ending Feb. 28), predicting 20% higher growth than the 2.9 million net subscriber additions it predicted in mid-December but expecting earnings on the lower end of its previous guidance. After introducing a slew of new devices, including its first flip phone and touch-screen device, the BlackBerry manufacturer saw record levels of net sub additions throughout the holiday buying season, although it did not specify which products were responsible for the growth.

Despite the positive subscriber growth, RIM is expecting its gross margins and earnings per share for the quarter to come in at the low end of its previously guided ranges. The fourth-quarter results, which will be presented on April 2, will reflect RIM’s product mix, lowered channel inventory levels and an increased ratio of new subscriber sales to upgrade and replacement sales, the company said.

“Consumers are increasingly upgrading from feature phones to smartphones, and RIM's entry level devices - the BlackBerry Pearl and BlackBerry Curve - are extremely attractive,” said Avi Greengart, research director of mobile devices for Current Analysis, in an email interview.

Although RIM hasn’t released what handsets have seen the most traction, the revised guidance suggests it may be its lower-end handsets like the original Curve and Pearl that are attracting subscribers. Beginning today, RIM’s latest smartphone, the BlackBerry Curve 8900, will also be available from T-Mobile for $199.

Meanwhile, RIM’s touch-screen device, the BlackBerry Storm, has received mixed reviews since its launch in November. RIM reportedly sold 500,000 Storms in the month following its introduction with exclusive partner Verizon Wireless. According to Ross Rubin, wireless and consumer technology analyst for the NDP Group, this growth has made the Storm a successful device for both Verizon and RIM. In general, he sees RIM’s revised guidance more as a reflection of the economy and the resultant trends in consumer wireless purchases than its mix of smartphone sales.

“In the consumer markets, at least in the US, while we are continuing to see strong smartphone growth in terms of unit share, the overall market for handsets has been declining,” Rubin said. “In the enterprise market, of course, we are seeing many companies lay off workers and cut back on budget expenses. Even though mobile email is an idea that’s becoming a lot more popular and accepted, it’s still in that stage where it’s not necessarily considered a critical task for many employees.”