However, the company scaled back its optimism for new subscriber growth in the current quarter due to its bitter and highly publicized legal battle with patent house NTP, which threatens to shutter RIM’s US BlackBerry service.
An overwhelming amount of media coverage of the NTP court case, in which NTP has alleged the BlackBerry infringes on several of its patents, has created some uncertainty among customers, said RIM CFO Dennis Kavelman, on a conference call.
In November, the company said it expected 750,000 to 800,000 new subscribers in the current quarter, but has lowered that to 700,000 to 750,000, Kavelman said.
Even though RIM acknowledged it some subscribers are likely to be left on the table during the current quarter, it maintained its previous revenue and profit outlook.
RIM expects between $590m and $620m in revenues with a profit of 76 cents to 81 cents per share for the current quarter.
Chief executive Jim Balsillie said, on the call, that despite slightly less growth projections for new subscribers in the current quarter, business remained strong. Actual shipments and replacements and sales and software is absolutely staying perfect, really, he said.
Profit rose to $120.1m, or 61 cents a share, in the quarter ended November 26, from $90.4m, or 46 cents, a year ago. Revenue surged 53% to $560.5m from $365.9m last year. This blew past analysts’ forecasts of $549m.
Handhelds drove 70% of business during the quarter, with 1.12m device shipments, up from 960,000 in the previous quarter. RIM also added 645,000 new subscribers in the quarter, bringing total BlackBerry accounts to about 4.3m, said Kavelman.
It may be as soon as February when a US District Court may issue an injunction against RIM’s BlackBerry service in the US, or NTP and RIM may reach a settlement before then. Many analysts have said Canada-based RIM would pay as much as $1bn to settle with Arlington, Virginia-based NTP.
Balsillie said that the two companies were negotiating a potential settlement, through a mediator. But he also reiterated that RIM has a software workaround that does not involve technology being disputed by NTP, which could be used in the event of an injunction.
Industry watchers have advised enterprises to be wary of the promise of such a workaround, because RIM has yet to provide any details. But Balsillie said yesterday, We are very close to making detailed information, which will provide the specifics of the workaround solution.
Some carriers already have been briefed on the workaround, while others are in the process of being briefed, he said.
During the call, Balsillie said several times that the company and some customers have been encouraged by a recent victory with the US Patent and Trademark Office, which has preliminarily rejected some NTP patents. But NTP can appeal if the department issues final rejections before the courts issue an injunction.
We believe we have been vindicated by the actions of the US Patent Office, he said. These unusual actions of the Patent Office constitute significant new information that has not previously been considered, but should be considered, by the courts, he said.
While he later said, in response to a question, that he can’t guarantee the District Court judge will take into consideration the Patent Office’s initial rejections of NTP’s patents, he also pointed out the Department of Justice also is involved in the case. Very rarely are they involved in these kinds of things, he said.
Even if RIM does release a workaround, in the case of an injunction, there’s no guarantee NTP won’t try to take action against the workaround. But Balsillie said the company has various gradations of workarounds that it could employ if this happened.
He implied that the initial workaround did not effect users’ experience, but that the alternatives may. You keep evoking [a new workaround] until you’re safe, he said. And it’s all done with a software switch.