RIM Lifts BlackBerry Subscriber Targets As Wireless Operators Promote Devices

A flurry of BlackBerry promotions by wireless carriers has paid dividends for the device maker, Research In Motion, which is adding far more subscribers than it had forecast just two months ago.

The smart phone maker on Thursday said its BlackBerry subscriber adds will be 15% to 20% higher than expected for its fiscal fourth quarter ending March 1. That would put net subscriber additions at 2.09-2.18 million, up from its earlier forecast of 1.82 million and giving it some 14 million total subscribers.

"BlackBerry smart phones proved to be a big hit throughout the holiday selling season and we're pleased to see RIM's business momentum continuing in the new year," Jim Balsillie, company co-CEO, said in a statement.

RIM shares Thursday rose 9% to 106.69, after rising as much as 11.5% earlier in the day.

Consumer Side Growing

The BlackBerry has its roots in the corporate world, where road warriors use the device as a productivity tool great for e-mail and more. In the past year, RIM has pushed into the consumer market with its Pearl and Curve models that cellular firms have solidly backed. About one-third of BlackBerry subscribers are consumers.

Among carriers promoting BlackBerrys this holiday were AT&T T, T-Mobile USA, Verizon Wireless, Sprint Nextel S and Bell Canada. RIM said the momentum carried into January and that its traditional post-holiday lull didn't occur, but it didn't say why.

Cellular carriers strongly back smart phones because the average revenue per user typically is double that of basic cell phone users, according to research firm In-Stat. BlackBerry users often get more expensive data services.

RIM, however, didn't raise its sales or profit guidance. It projects sales this quarter of $1.83 billion, up 96% from the year-earlier quarter. It expects earnings of 68 cents a share, vs. 33 cents a year ago. In its statement, RIM said the number of net subscriber accounts and additions "is a nonfinancial metric and should not be relied upon as an indicator of RIM's financial performance."

Analysts focused on the big increase in subscribers.

"RIM is not seeing a slowdown despite continued macroeconomic concerns, fear over financial services exposure and potential consumer slowdown," wrote Citi Investment Research in a report following the announcement. "RIM is increasingly viewed as a necessary productivity tool in the enterprise rather than a discretionary item.

"RIM is our top North American handset pick and should benefit from strong secular smart phone growth."

Smart phones let users multitask, perhaps checking e-mail while using a spreadsheet and receiving a phone call.

Smart phones represented just a tiny segment -- many estimates are less than 5% -- of the 1.14 billion cell phones shipped last year. But while the cell phone shipments overall rose 12% last year, smart phone shipments rose 30%. Over the next four years, smart phone shipments will jump an average 31% a year vs. 7% for all mobile phones, says Chris Hazelton, an analyst at research firm IDC.

No. 2 Behind Nokia

"RIM is a huge player in a tiny segment," Hazelton said. "But that segment will see the most rapid growth, with a lot of it coming from the consumer side."

RIM is the No. 2 seller of smart phones behind Nokia NOK, says Hazelton, though IDC couldn't immediately provide a market share breakdown. Other smart phone makers include Motorola and, as of June, Apple AAPL and its iPhone.

Handheld computers, also known as personal digital assistants, basically are smart phones without voice services and are rapidly being replaced by smart phones. But now some analysts say some users have even started choosing smart phones over laptop PCs.

"Instead of a $1,000 laptop, people can get a smart phone for a few hundred dollars and still have the same ability to communicate," said In-Stat analyst Bill Hughes.