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RIM: A Rosy Storm Carries It Through Holidays

A Storm for every stocking?

BlackBerry maker Research In Motion Ltd. is having a happy holiday, this week reporting record sales for the last quarter, ahead of the holiday season.

The news is for certain correlated to the launch of the BlackBerry Bold and BlackBerry Storm handsets, the latter of which RIM has touted as Verizon Wireless’ “best-selling device,” and noting that it can’t keep it stocked.

On Thursday, RIM said its net subscriber adds increased quarter over quarter by 14 percent, while net income rose 7 percent to $396.3 million. Revenue was up 66 percent from $1.67 billion this time last year.

There was also some bad news: The Storm is RIM’s big entrée into the consumer market, 75 percent of buyers being new to BlackBerry. But that could be a liability considering the device has been lambasted for being buggy and unintuitive in its interface, leading to returns. And the consumer market is nothing but in possession of a long memory for quality issues.

The consumer play isn’t helping margins either, eating up all kinds of marketing and R&D. RIM duly noted a drop in gross margin, from 50.7 percent in 2007 to 45.6 percent for the current quarter. It said those margins will get even more squeezed, forecasting them to be in the 40 percent to 41 percent.


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