During the one-hour long earnings call this afternoon, Research In Motion spent a good portion of it justifying its spending spree to analysts who questioned gross margins and expenses during the second-half of the year. Analysts weren’t the only ones who worried. In after-hours trading, the stock was trading 20 percent lower, representing a drop of about $20 to just below $80 a share. Earnings Call.
To be sure, RIM (NSDQ: RIMM) has a lot of things to be encouraged about. During the quarter, it said it owned about 50 percent of the smartphone marketshare in the U.S., that about 60 percent of its new subscribers were consumers, not its bread-and-butter enterprise users; and about half of the people buying its latest 3G phone, the Blackberry Bold, are consumers. And in the current quarter, it expects to launch the Pearl Flip, launch the Blackberry Bold in the U.S. via AT&T (NYSE: T), also an unnamed phone on “a new platform.”
Still, it was the expenses analysts were concerned with. In Q2, expenses, including research and development, selling, marketing and administration and amortization increased to $605 million, up from $491 million in Q1, and up from $311 million in the year ago period.
Here’s some of Balsillie’s justifications for the spending, hinting at new product launches and revenue streams:
— Growth period: “We believe we are entering the time of tremendous opportunities for the remainder for the fiscal year. It puts RIM in a tremendous opportunity to gain share in the smartphone market…”We are in a surge type situation. You are going to see a rapid set of product introductions. To us, that