RIM's Stock Shoots Higher as Pearl Gleams

With help from its newest BlackBerry handset, Research in Motion posts better-than-expected second-quarter earnings

Research In Motion (RIM) (RIMM) shares surged more than 21% to a new 52-week high on Sept. 29, after the Blackberry maker reported strong preliminary second quarter results.

Citing the launch of its new products such as the BlackBerry Pearl handset, the Waterloo, Ontario company said late Sept. 28 that during the three months ended September 2, 2006 its net income amounted to $140.8 million, or $0.74 per share. During the same quarter of 2005, the company's net income was $129.8 million, or $ 0.68 per share.

Research in Motion plans to file its final financial statements for the quarter after it finishes an internal review into its accounting of stock option grants. In a separate announcement the same day, the company said it expects non-cash charges associated with past option grants will reduce previously reported earnings by about $25 to $45 million over the period since its initial public offering in 1997.

Investors focused on Research in Motion's stellar earnings results and pushed its stock price 21.1% to $104.20 per share in early Nasdaq trading Friday. The stock is soaring at a new 52-week high from its low of $51 per share on Oct. 26, 2005.

"RIM and its carrier partners are focusing on execution, and results are following," said ThinkEquity Partners LLC analyst Jonathan Hoopes in a research note. "RIM's device road map should 'carry the day,'" Hoopes added. He hiked his opinion on the stock to accumulate from sell.

Research in Motion added 705,000 BlackBerry subscriber accounts during the quarter, bringing the total to 6.2 million subscriber accounts. Moreover, it expects subscriber account additions in the third quarter to grow to 800,000. The company in recent months introduced the BlackBerry Pearl, a handset aimed to rival Palm (PALM)'s best-selling Treo.

Now Research in Motion is expecting even better times ahead for earnings. It says that during the quarter ending December 2, 2006, it will have $0.88 to $0.95 cents per share diluted.

"Our technology and business strategies continue to open new markets for RIM and expand our opportunities for growth," Jim Balsillie, Chairman and Co-CEO at Research in Motion, crowed in a press release.

With competition sharpening, Balsillie's optimism may be tested in the coming months. But for now, the Street is sending a positive message on the Blackberry maker.

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