Blackberry 2010 Annual Report Download - page 34

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focus into broader market segments. The Company currently expects ASP in the first quarter of fiscal 2011 to
be slightly lower than the fourth quarter of fiscal 2010. ASP is dependent on a number of factors including
projected future sales volumes, device mix, new device introductions for the Company’s enterprise, prosumer
and consumer offerings as well as pricing by competitors in the industry.
The Company estimates that a $10, or 3.2%, change in blended ASP would result in a quarterly revenue change
of approximately $104.7 million, based upon the Company’s volume of devices shipped in the fourth quarter of
fiscal 2010.
Service revenue increased by $225.3 million, or 54.3%, to $640.5 million, or 15.7% of consolidated revenue in the
fourth quarter of fiscal 2010, compared to $415.2 million, or 12.0% of consolidated revenue in the fourth quarter
of fiscal 2009, reflecting the Company’s increase in BlackBerry subscriber accounts since the fourth quarter of
fiscal 2009. Net BlackBerry subscriber account additions were approximately 4.9 million for the fourth quarter
of fiscal 2010 compared to approximately 3.9 million for the fourth quarter of fiscal 2009. The total BlackBerry
subscriber account base at the end of the fourth quarter of fiscal 2010 was over 41 million subscribers
compared to approximately 25 million subscribers at the end of the fourth quarter of fiscal 2009.
Software revenue increased $9.8 million, or 16.7%, to $68.6 million in the fourth quarter of fiscal 2010 from
$58.8 million in the fourth quarter of fiscal 2009. The majority of the increase was attributable to technical
support and other software revenues, partially offset by a decrease in CALs.
Other revenue increased by $10.4 million to $116.2 million in the fourth quarter of fiscal 2010 compared to
$105.8 million in the fourth quarter of fiscal 2009. The majority of the increase was attributable to increases in
non-warranty repair and sales of accessories, partially offset by lower gains realized from revenue hedging
instruments. See “Market Risk of Financial Instruments — Foreign Exchange” for additional information on the
Company’s hedging instruments.
Gross Margin
Consolidated gross margin increased by $479.5 million, or 34.7%, to $1.86 billion, or 45.7% of revenue, in the
fourth quarter of fiscal 2010, compared to $1.38 billion, or 40.0% of revenue, in the fourth quarter of fiscal 2009.
The increase of 5.7% in consolidated gross margin percentage was primarily due to an increase in the blended
device margins driven by shifts in product mix and a lower percentage of revenue from device shipments
which comprised 79.8% of total revenue mix in the fourth quarter of fiscal 2010 compared to 83.3% in the same
period of fiscal 2009. As noted above, gross margin percentage for devices is generally lower than the
Company’s consolidated gross margin percentage.
The Company expects consolidated gross margin to be approximately 44.5% in the first quarter of fiscal 2011,
based on the Company’s current expectation for product mix, device ASP, current product costs and foreign
exchange.
Operating Expenses
The table below presents a comparison of research and development, selling, marketing and administration,
and amortization expenses for the quarter ended February 27, 2010, compared to the quarter ended
November 28, 2009 and the quarter ended February 28, 2009. The Company believes that it is meaningful to
also provide a comparison between the fourth quarter of fiscal 2010 and the third quarter of fiscal 2010 given
that RIM’s quarterly operating results vary substantially.
(in thousands)
%of
Revenue
%of
Revenue
%of
Revenue
February 27, 2010 November 28, 2009 February 28, 2009
For the Three Months Ended
Revenue ....................................... $ 4,079,712 $ 3,924,310 $ 3,463,193
Operating expenses
Research and development .......... $ 267,164 6.6% $ 242,329 6.2% $ 182,535 5.3%
Selling, marketing and
administration.......................... 497,642 12.2% 465,717 11.9% 406,493 11.7%
Amortization ................................. 86,540 2.1% 83,129 2.1% 61,595 1.8%
Total ............................................ $ 851,346 20.9% $ 791,175 20.2% $ 650,623 18.8%
MD&A
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