An Uninspiring End to the YearThe absolute details of RIM's quarter were not bad, but near-term stock market performance is almost always a game of performance relative to expectations. RIM did post 36% revenue growth, with device sales making up about 81% of the total. This top-line result did miss estimates, though. Below the top line, results were okay, but not exciting. Gross margin weakened from the year-ago level, dropping about 150 basis points. Likewise, operating income rose more than 22%, but margin contracted two and a half full points.
A Very Tough Year on the Way
Although RIM made the claim that the BlackBerry was the best smartphone in the U.S. in 2010, that is the sort of press release filler that makes absolutely no difference in the assessment of the stock. What matters far more is the fact that there will apparently be no new models in the first quarter, and that there were will likely be a lot of inventory-clearing in the front half of the year. That means that margins are going to take a hit, expectations will be back-end-loaded into the second half, and analysts and investors will have plenty of doubts about management's view of the company's earnings power.
Although management did confirm that the new Playbook will support apps that run on Google's (Nasdaq:GOOG) Android, that was about it for the good news.
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