Research in Motion said quarterly profit and sales rose, but the results lagged expectations and the stock tumbled on rekindled fears that the dominance of its BlackBerry smartphone is waning.
RIM, the object of increasingly higher expectations for its fiscal fourth quarter in recent days, said it shipped 10.5 million phones in quarter, well shy of a consensus estimate of about 11 million devices.
Profit and phone shipment forecasts had ratcheted up with RIM moving aggressively into the mainstream consumer market to counter growing competition in its bread-and-butter sales to corporate executives.
The disappointing shipments may point to stronger demand for rival Apple's iPhone and Motorola's Droid, a newcomer that may have started to gain traction with consumers, Charter Equity Research analyst Ed Snyder said.
They had this business to themselves for years. Now everybody's joined the party. The U.S. is probably tough for them now, said Snyder, referring to increased competition in the United States.
RIM's profit rose to $710.1 million, or $1.27 a share, in the three months ended February 27, from $628.4 million, or $1.10, in the same period last year.
Revenue increased 18 percent to $4.08 billion.
The results lagged analyst expectations for a profit of $1.28 a share and revenue of $4.3 billion, according to Thomson Reuters I/B/E/S.
RIM's 45.7 percent gross margin exceeded expectations of 43.5 percent, easing concern that increasing sales of lower priced handsets would pull down profitability.
If you look at the metrics, it's kind of a mixed bag. Primarily shipments -- volume is lower than expected - that's probably got some investors nervous and it probably feeds nicely into some of the bears' comments, said Research Capital analyst Nick Agostino.
My read here is that they are likely gaining share on an international level, and possibly losing share on a North American basis.
For the upcoming fiscal first quarter, RIM said it expects earnings per share of $1.31 to $1.38 and revenue of $4.25 billion to $4.45 billion. It expects to add between 4.9 million and 5.2 million subscribers and have a gross margin of 44.5 percent.
Broadpoint Amtech analyst Mark McKechnie said the guidance is pretty strong, which may suggest that sales may have been deferred from the fourth quarter to the first quarter of the new fiscal year.
McKechnie said he was disappointed that fourth-quarter handset sales missed his expectation for 11.1 million units, but said RIM's addition of 4.9 million subscribers in the quarter was higher than his 4.6 million forecast.
U.S.-listed shares of Research in Motion fell 6.7 percent in extended trade on Wednesday after the BlackBerry maker posted its results.
(Reporting by Susan Taylor, with additional reporting by Sinead Carew in New York and John McCrank in Toronto; Editing by Frank McGurty)