Blackberry 2006 Annual Report Download - page 8

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6Research In Motion Limited
Gross margin for the year of 55.2% was higher
than the 52.9% in scal 2005. This improvement
was primarily due to increased scale efciencies
in manufacturing and service as well as a
favorable overall product mix, which included
higher software revenues, and our continuing
cost reduction efforts.
Operating expenses were up slightly as a percent
of sales in scal 2006. This increase was due to
continued hiring across all parts of the business as
well as investment in sales and marketing activities
relating to new product launches and the expansion
of RIM’s global carrier relationships.
Net income in scal 2006 increased by 79% to
$382.1 million or $1.96 per share diluted compared
to $213.4 million, or $1.09 per share diluted, in the
prior year. We continue to believe that there is
leverage in RIM’s long term operating model and we
expect earnings to continue to grow going forward.
RIM’s balance sheet remains strong with $1.25 billion
in cash and equivalents at the end of scal 2006,
which reects the impact of the litigation settlement
of $612.5 million in the fourth quarter. During the
past year RIM also repurchased 6.3 million of its
outstanding shares at an average price of $61.90
per share.
RIM had approximately 4,700 employees at the
end of scal 2006 which is up from approximately
3,500 at the end of scal 2005. We continue to hire
across all areas of the company including R&D,
carrier support, business development, marketing,
customer care and manufacturing.
BlackBerry
At the end of scal 2006, the BlackBerry solution
was available on over 160 networks in 60 countries
around the world. There are approximately another
150 carriers around the world that are scheduled
for launch in scal 2007.
North America remains the largest market for
BlackBerry and this year we launched several
new BlackBerry devices in this region and added
a number of new carrier partners. We continue
to drive growth in North America by increasing
penetration in our existing customer accounts
through enabling enterprise applications and
by targeting new customers in large enterprise,
small and medium business and the emerging
prosumer markets.
At the end of scal 2006 approximately 25% of the
BlackBerry subscriber account base was outside
of North America. BlackBerry is now available from
multiple carriers in all major European markets
and we are seeing strong subscriber growth in the
region. The new BlackBerry 8700 Series of devices
was launched in Europe in late 2006 and the sleek
design and industry-leading capabilities of this
device are proving to be attractive to European
customers. BlackBerry brand awareness continues
to grow in Europe and we are particularly pleased
that BlackBerry was named a SuperBrand in the UK
for the rst time last year.
Our efforts in Asia are continuing and we are seeing
strong progress in a number of markets including
Australia, India, Singapore and Hong Kong. During
the past year, BlackBerry support for non-Latin
characters was added which further improves RIM’s
ability to address customer needs in Asia. We look
forward to launching the BlackBerry solution in China
and other new Asian markets during scal 2007.
Enterprise
RIM’s leadership in the enterprise market continued
throughout scal 2006. This year we launched
new versions of BlackBerry Enterprise Server and
BlackBerry MDS. BlackBerry Enterprise Server v4.1
provides increased manageability and IT policy
management for our customers as well as access
to enterprise Instant Messaging applications, while
BlackBerry MDS v4.1 offers support for Web
Services and makes the development and wireless
deployment of new or existing enterprise
applications even easier than before. We continue
to see limited traction from potential competitors
and expect continued strong growth in this market,
particularly as we specically target small and
medium sized businesses and customers recognize
the value of application extension.
6
Over 25%
of scal 2006
revenues
were from outside
North America.