BlackBerry maker Research In Motion Ltd. (RIMM) reported strong third-quarter earnings fueled by rapid consumer growth during the lead-up to the holiday season. This was strongly supported by growth in sales to non-business customers. Net income surged to $370.5 million or 65 cents a share, from $175.2 million, or 31 cents a share, in the year-earlier quarter. Revenue has doubled to $1.67 billion. The results allayed fears of slowing demand from its financial services customers in wake of the credit-market meltdown.
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The company’s stock climbed 11.8% in after-hours trading on the Nasdaq Stock Market, to $119.63.
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In its most-recent quarter ended Dec. 1, the company added 1.65 million subscriber accounts, up from 1.45 million in its second quarter. As of Dec. 1, RIM had roughly 12 million subscriber accounts, of which 34% are consumers and small-business users, up from about 30% in the prior quarter. The volume of wireless carriers’ holiday promotions featuring the BlackBerry had exceeded the company’s expectations and helped to lift sales.RIM’s consumer push is steaming ahead thanks to the uptake of new devices with more multimedia capabilities. The quarter included the introduction of an updated version of RIM’s BlackBerry Pearl by Sprint Nextel Corp. and Verizon Wireless, a device for which there was pent-up demand. Internationally, RIM saw strong growth in Latin America.
Another spurt in growth could come in a few months as a result of a dramatic new design — a touch-screen BlackBerry. A touch-screen BlackBerry could help RIM compete with Apple Inc.’s popular iPhone, which sells more to consumers than businesses.
Despite heavy competition from handset makers, RIM continues to widen its share of its market. In the third quarter of 2007, RIM held 39% of the market for U.S. smartphone and cellular PDA shipments, up from 35.6% during the third quarter of 2006, according to Gartner Inc. World-wide, the company’s share of smart phone and PDA shipments increased from 7% to 10% during the period.
Competition:
Wireless instruments are a heavily competed industry. The strong competitors are Palm ( PALM), Motorola (MOT), Nokia (NOK) and Apple (AAPL). The competition has been showing mixed growth signals with Palm showing a dip in share price while Apple doing well with its new iPhone. Motorola and Nokia also have been showing a strong growth in its sales.
Stock Analysis In recent weeks, RIM stock — which trebled since the start of the year to a closing high of $133 last month — had fallen amid macroeconomic jitters and worries that a slowdown in technology spending at large corporations could hurt RIM’s business. But RIM’s results and positive outlook have brushed aside those concerns for now.
Covered Calls:
For covered call investing, it is important to find good companies with strong business fundamentals. Covered calls provide investors the potential to generate monthly option income. The following covered call investing positions were found for RIM and its competitors using PowerOptions search tool.
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| Stock Sym |
Stock Price |
Option | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
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| RIMM | 117.36 (-1.58) | RULAD | 08 JAN 120.0 (23) | 4.7 | 4 | 4.2 | 6.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RIMM | 117.36 (-1.58) | RULAF | 08 JAN 116.6 (23) | 6.25 | 5.3 | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RIMM | 117.36 (-1.58) | RULBD | 08 FEB 120.0 (51) | 8.35 | 7.1 | 7.7 | 10.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RIMM | 117.36 (-1.58) | RULBU | 08 FEB 115.0 (51) | 10.75 | 9.2 | 7.9 | 7.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AAPL | 198.57 (-0.38) | APVAS | 08 JAN 195.0 (23) | 11.8 | 5.9 | 4.4 | 4.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AAPL | 198.57 (-0.38) | APVAT | 08 JAN 200.0 (23) | 9.3 | 4.7 | 4.9 | 5.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AAPL | 198.57 (-0.38) | APVBS | 08 FEB 195.0 (51) | 17.7 | 8.9 | 7.8 | 7.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AAPL | 198.57 (-0.38) | APVBT | 08 FEB 200.0 (51) | 15.2 | 7.7 | 8.3 | 9.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MOT | 16.34 (-0.22) | MOTBR | 08 FEB 17.0 (51) | 0.48 | 2.9 | 3 | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MOT | 16.34 (-0.22) | MOTBQ | 08 FEB 16.0 (51) | 0.96 | 5.9 | 4 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOK | 38.70 (-0.12) | NAYBG | 08 FEB 35.0 (51) | 4.6 | 11.9 | 2.6 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOK | 38.70 (-0.12) | NAYBH | 08 FEB 40.0 (51) | 1.65 | 4.3 | 4.5 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PALM | 6.56 (-0.05) | UPYAU | 08 JAN 7.5 (23) | 0.15 | 2.3 | 2.3 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PALM | 6.56 (-0.05) | UPYBA | 08 FEB 5.0 (51) | 1.7 | 25.9 | 2.9 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PALM | 6.56 (-0.05) | UPYBU | 08 FEB 7.5 (51) | 0.35 | 5.3 | 5.6 | 20.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[tags] BlackBerry, Nasdaq, BlackBerry Pearl, iPhone, Gartner, AAPL, Apple Computer Inc., MOT, Motorola Inc., NOK, Nokia Corp. ADR, RIMM, Research In Motion Ltd., covered call investing, covered call investment strategy, investment strategy, iron condor, option income, poweroptions, stock option trading, stock options [/tags]