Yesterday, after the close, BlackBerry manufacturer Research in Motion (NSDQ: RIMM) reported its first fiscal quarter of 2011. Earnings per share were better than expected at $1.38 versus $1.34 consensus. Sales missed expectations and came in at $4.24 billion for the quarter versus $4.35 billion consensus estimates. In their press release, RIMM also announced a 31 million share buyback program which may be what took the stock up briefly. But, it was disappointing unit shipments during the quarter which seems to be what the market is focusing on. RIMM shipped 11.2 million devices during the first quarter, just hitting the low end of the range of consensus expectations which were for 11.2-11.8 million units. All indicators point to sales of smartphones escalating, which leaves only one explanation for the disappointing level of shipments – someone is taking market share from RIMM. Prime suspect: Apple (NSDQ: AAPL).
BlackBerrys just don’t garner the excitement that a new iPhone does. The lines at Apple’s stores yesterday were as insane as ever (check out this guy’s slideshow of his travails outside the 14th street store in Manhattan), Japanese iPhone fans, dressed up as phones, waited 3 days to get their hands on the 4th iteration of the smart phone. Jason Bateman, of Silver Spoons and Arrested Development fame, was caught cutting the line outside a Los Angeles Apple store and was incessantly booed by the crowd despite the movie role hot streak he has been on. Sell-side analysts across Wall Street have been handicapping the iPhone 4’s first day sales numbers. Piper Jaffray’s Gene Munster is casting a wide net with 1-1.5 million units sold , while Oppenheimer analyst, Yair Reiner, is comfortable with the 1.5 million number (600,000 units were pre-ordered). Of particular interest is the survey the Piper Jaffray team conducted among iPhone customers in San Francisco, Minneapolis, and New York, as they waited in line. 608 customers were interviewed and 77% of them said they upgrading to the iPhone 4 from a previous version of the iPhone. That number is staggering. But it got me thinking – how many people do you know who have owned every single iteration of the iPod? Personally, I have owned 5 versions (and I’ve only lost one); and I’m not even particularly Apple-philic. Apple has done what only high end pocket book manufacturers have been able to do in this languishing global economy – convince their customers they need a new one every year. In more bad news for RIMM, 6% of the iPhone 4 buyers surveyed by the Piper team were switching from a BlackBerry (3% were switching from Android phones and 2% were switching from Nokia).
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