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BlackBerry patent settlement hits RIM earnings
But subscriptions rebounded after court case with NTP...

By Tom Krazit

Published: Friday 07 April 2006

Research In Motion (RIM) has been hit by the costs of settling its patent lawsuit with NTP, but BlackBerry deployments rebounded as the fourth fiscal quarter ended.

Revenue came in at $561.2m, a little higher than the expectations RIM provided when it settled the long-running BlackBerry lawsuit in March. The final total was up 39 per cent from $404.8m in revenue during last year's fourth quarter.

Net income for the period, which ended one day after the settlement on 4 March, was $18.4m. That includes the $162.5m that RIM paid NTP during the quarter to settle the case. The total settlement amount was $612.5m, but $450m had been stored in escrow during the appeals process of the original verdict that the BlackBerry infringed on patents held by NTP.

As expected, RIM did not add as many new subscribers during the fourth quarter as it had forecast last year, which was one of the reasons it finally decided to settle the case. But the settlement caused new BlackBerry accounts to increase from about 40,000 a week to around 50,000 a week, close to the levels that RIM saw in its third quarter, Dennis Kavelman, RIM's CFO, said on a conference call following the earnings release.

Jim Balsillie, co-CEO of RIM, said on the conference call: "With the litigation behind us, we're looking forward to building on the momentum we're seeing in early (fiscal) 2007."

Still, RIM disappointed financial analysts with its outlook for its first fiscal quarter. The company expects to record between $580m and $610m in revenue during its first quarter, which ends 3 June. Analysts polled by Thomson First Call were looking for more, with an average estimate of $625m for the quarter.

The company has been happy with the demand from its carrier partners and corporate customers, but is being cautious with its forecasts while waiting for the rebound to sustain itself for a few quarters, Kavelman said.

Tom Krazit writes for CNET News.com