RIM shares up after strong Q3 earnings report

BlackBerry maker ships record 14.2 million smartphones, despite falling market share

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Shares of BlackBerry maker Research in Motion Ltd. (NASDAQ: RIMM) jumped in early trading Friday after the Canadian smartphone manufacturer reported strong third-quarter earnings on Thursday.

The BlackBerry maker easily topped Wall Street estimates with a 58 percent increase in fiscal Q3 earnings on record shipments of its smartphones.

(Also see: Android eating RIM's lunch in smartphone OS market)

In Friday's early trading, RIM shares were up as high as 61.75, or 4.2 percent above Thursday's closing price of 59.24. In after-hours trading Thursday, RIMM climbed as high as 62.50, or 5.5 percent above the day's regular-session close.

Research in Motion's third-quarter report may not quell long-term concerns about its dwindling smartphone market share, but it certainly shows a company currently in a strong financial position.

Net income was $911.1 million, or $1.74 per share, compared to $628.4 million, or $1.10 per share, in the year-ago quarter. Consensus estimates called for earnings of $1.65 a share.

Revenue was $5.49 billion, up 40 percent from last year's Q3 revenue of $3.92 billion. RIM shipped a record 14.2 million BlackBerrys in the quarter, also up 40 percent from a year ago. The company cited strong international sales and sales of its new BlackBerry Torch as catalysts for its record quarter.

RIM also is getting ready to enter the tablet market with its PlayBook.

However, challenges lie ahead. While overall worldwide smartphone sales continue to increase -- benefiting all major manufacturers -- RIM's share of the market has been shrinking. It also faces the prospect of having to compete for the first time with Apple's iPhone in Verizon stores. Apple recently ended its exclusive distribution agreement with AT&T, and BlackBerry sales by Verizon already have been hurt by the flood of smartphones powered by Google's Android mobile operating system.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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