BlackBerry Ltd (BB) 2003 Q1 法說會逐字稿

Good afternoon, ladies and

gentlemen. Thank you for standing by. Welcome to

the Research In Motion first quarter fiscal 2003

earnings conference call. At this time all

participants are in a listen-only mode. Following

the presentation we will conduct a

question-and-answer session. Instructions will be

provided at that time should you have questions.

If anyone has any difficulties during the

conference, please press star zero for operator

assistance at any time. I would like to advise

everyone that this conference call is being

recorded and will now turn the conference over to

Mr. Dennis Kavelman, Chief Financial Officer.

Please go ahead, sir.

Thank you. Welcome to

RIM's fiscal 2003 first quarter conference call.

With me is Jim Balsillie, RIM chairman and co-CEO.

After reading the required forward-looking

statements disclaimer I will begin by providing an

overview of first quarter results as well as

guidance for upcoming quarters. I will then turn

the call over to Jim who will provide business and

strategic updates. We will then open up the call

for questions.

I would like to note that this call is available

to the general public via call in number and web

cast. A replay of the webcast will also be

available on the RIM.net website. We will be

wrapping up the call by 6:15 Eastern this evening.

Information presented today includes

forward-looking statements within the meaning of

the United States private securities litigation

reform act of 1995. These includes statements

about our expectations, beliefs, intention or

strategies for the future which we indicate by

words such as anticipate, intend, believe,

forecast, expect, estimate, and similar words.

Our forward-looking statements reflect our current

views with respect to future events and are

subject certain risks and certain assumptions we

have made. The important factors that could cause

our actual results a, performance, or achievements

to be materially different than those express or

implied by these forward-looking statements

include continued acceptance of RIM's products,

RIM's competition, rapid technological change,

timing of rollouts and new network technologies,

changes in the macroeconomic environment,

dependence on intellectual property rights,

dependence on the success of carriers and

distribution partners, risks relating to product

defects and product liability, risks relating to

foreign exchange fluctuations, change in Canadian

laws and foreign relations, risks relating to

international operations, and other risks detailed

from time to time in RIM's periodic reports filed

with the securities and exchange commission and

other regulatory authorities. If one or more of

these risks or uncertainties materialize or

assumptions underlying the forward-looking

statements prove incorrect, actual results could

vary materially from those that are express or

implied by these forward-looking statements. We

base our forward-looking statements and material

currently available to us. We do not assume any

obligation to update them.

I would now like to provide an overview of the

first quarter results. Revenue for the first

quarter ending June 1st was $71.6 million. This

represented an increase of 8 percent over the

$66.1 million in the prior quarter and 7 percent

decrease from $77 million in the first quarter of

last year. Now, the BlackBerry represents the

vast majority of RIM's revenue, we will report

revenue segmented into handheld hardware, service

and software, OEM and other.

Total handheld represented $28.1 million or

39 percent of RIM's revenue during the quarter.

This was up from $27 million in the prior quarter.

We shipped approximately 63,000 handhelds,

combined BlackBerry and nonBlackBerry,

nonBlackBerry handhelds representing just

3 percent of total revenue. ASPs were 445

dollars, up from 380 in the prior quarter. ASPs

in Q4 were low due to a greater percent of

shipments in the 950 form factored into that

quarter. In Q1 the mix was a majority of 857,

957, and GPRS handhelds which have higher ASPs

Nonhydrorevenue (phonetic) which includes service

and software was $38.2 million or 54 percent of

revenue for the quarter. The service component

was $29.4 million with a remaining $8.8 million

being split between enterprise software revenue

and software NREs paid from carriers and other

partners from BlackBerry development.

RIM added 60,000 gross subscribers during the

quarter steady with Q4 gross additions.

Deactivations were lower than the previous quarter

at 26,000 for total net subscriber additions of

34,000 and total BlackBerry subscribers of 355,000

as of June 1st.

6,100 companies have installed the BlackBerry

enterprise server in their organization up from

5,000 at the end of February. From this point we

will just disclose the number of enterprises with

BlackBerry service enterprise server software as

it is a more meaningful metric than total

companies using BlackBerry.

Sales of OEM radios and other revenues such as

accessories was $5.3 million for 7 percent of

revenue for the quarter. Gross margin for the

first quarter was up to 43.5 percent versus

42.1 percent in the prior quarter and 38.1 percent

for the same quarter a year ago. This increase

was expected, gross margin continues to increase

with a greater percentage of service and software

revenue and with ongoing cost reduction to

hardware products..

Gross R and D spending increased $16.2 million for the

quarter as expected versus a $14.8 million in the

prior quarter. The majority of this expense was

direct personnel express so prototyping materials

and other costs for initiatives such as GPRS,

CDMA, and new odd end products.

RIM continues to hire selectively and is committed

to investing in necessary projects with the best

opportunities for long-term returns. R and D

expenditures and other government funding for the

quarter were $12.6 million or 17.6 percent of

revenue.

Selling marketing and administrative expenses were

$28 million. This is higher than the $26.6

million spent in the prior quarter but lower than

the forecasted increase. While we continue to

invest heavily for new carrier products, brand

awareness and global expansion, we're managing

costs very tightly and believe the lower than

expected SG and A expenses this quarter is evidence of

the successful cost management efforts.

Depreciation and amortization was $7.2 million, up

from $5.8 million in the prior quarter. The

increase was related to the acquisition of R and D

production equipment as well as to a write down of

tooling and NRE costs for some legacy products.

Net income in the first quarter was $3.2 million.

The decrease from $4.3 million in the prior

quarter was due to lower interest rates as

discussed in a previous conference call so the

decrease in cash, cash equivalent to marketable

securities, $28.6 million. Net loss for the

quarter was $10.8 million or 14 cents per share.

This is favorable versus our guided range of 18 to

22 cents per share due to mainly stronger growth

margins and prudent cost management.

RIM's balance sheet continues to be very strong

with high cash reserves, negligible long-term debt

and appropriate working capital balances. Cash,

cash equivalents and marketable securities, at the

end of the first quarter RIM had $616 million in

cash, which is $7.88 cents per U.S. share, a

decrease of $38.6 million from the prior quarter.

Cash holds from operation was positive at $6.1

million due to strong efforts in accounts

receivable and inventory management. Acquisition

of capital and tangible assets equaled $24.7

million. This included assets for the plant, R and D

programs, new sales offices as well as licensing

fees to several technology partners.

RIM also purchased 685,000 shares under the terms

of the normal course issuer bid at a cost of $10.1

million. We are modeling a cash burn for the

second quarter of approximately $40 million

excluding any share repurchases. This is higher

than the first quarter due to license fees paid

under the announced agreement with Ericsson as

well as the slang soft (phonetic) acquisition. We

expect cash burn to the $20 to $30 million in the

third quarter and approximately $20 million in the

first quarter as we move to profitability.

RIM's cap-ex budget has remained at $80 million

for the year but incremental spending is being

directed to the IT licensing programs such as the

deal announced with Ericsson.

Trade accounts receivable increased slightly to

$43.3 million from $42.6 million in the prior

quarter. Trade DSOs for Q1 decreased to 55 days

compared to 59 days in the previous quarter.

Other receivables decreased to $2.44 million in

the first quarter down from $6 million in the

prior quarter. Other receivables primarily relate

to government R and D programs and Canadian and UK

sales taxes.

Inventory decreased to $29.3 million in the

current quarter down $8.2 million from $37.5

million in the prior quarter. The majority of

RIM's inventory continues to be raw materials

components. The inventory balance has been

steadily decreasing as legacy raw materials are

reduced.

Net capital in the tangible assets increased by

$17.4 million in the first quarter to 199.6

million. Increase was due to the acquisition of

capital assets and intangible assets with regard

to profitability, R and D, production related assets

and licenses. Accounts payable and accrued

liabilities increased slightly to $49.2 million

from $46.9 million at the end of the first

quarter. Deferred revenue increased to $11.6

million up $1.8 million from $9.8 million at the

end of last quarter as a direct result from

continuing growth in the company's BlackBerry

subscriber base. Deferred revenue continues to be

primarily comprised of prepaid customer air time

usage fees for BlackBerry internet addition,

deferred licensing revenues, and deferred warranty

payments.

Weighted average shares used in the EPS

calculation for the quarter were $78.7 million.

Actual basic and diluted securities outstanding on

June 1st were $78.2 million and $88.7 million,

respectively. During the quarter the company

repurchased of 685,000 of its common shares for a

total cost of $10.1 million pursuant to the common

share purchase plan.

At this time I would like to discuss our outlook

for the upcoming several quarters. I'll provide a

financial outline and Jim will expand upon the

individual products and channels. Again, a

reminder that these forward looking statement

reflect management's best current estimates and

should be taken in the context of the risk factors

outlined at the beginning of the call and outlined

in our regular filings.

On the April conference call we provide add

revenue estimate for the August quarter in the

range of $75 to $80 million. We continue to

expect revenue in this range. We are continuing

to model a steep increase in revenue in the second

half of the year as most of our European, North

American and Asian carrier partners and channels

will have successfully launched their BlackBerry

offerings, a new handheld with integrated speaker

microphone and world band capabilities will also

have launched. With respect to the third quarter

ending in November, we are targeting revenue in

the range of $90 to $100 million. This is

currently in line with consensus forecast. On the

last call we provided an estimated range of $375

to $425 million in revenue for the year. Current

street consensus is in the range of $340 to $360

million due to concerns over the timing of carrier

rollouts, telecom spending and enterprise

spending. We continue to believe that the lower

end of our guided change is reasonable and

attainable based on the outlook for Q2 and Q3. We

do not have clear visibility after the fourth

quarter so we are conservatively estimating a $350

to $375 million range for revenue for the year.

Based on booked orders, supply agreements, new

product launches and ongoing service and software

revenue, we feel this range is reasonable and

attainable.

Gross margin increased in Q1 to 43.5 percent.

This is in line with our expectations for this

quarter of between 42 and 45 percent. This

increase in gross margin is due to the increase in

amount of software and recurring license and

service fees in our revenue mix as well as ongoing

cost reduction efforts for our handheld products.

We expect this trend to continue and are raising

our gross margin target to the 45 to 48 percent

range.

With respect to operating expenses, as evidenced

by a lower than expected expense levels in the

first quarter, we are tightly controlling costs

even as we aggressively roll up new carrier

partners and new products. We are targeting net

R and D expenses to increase by approximately 20 to

25 percent in Q2 due to some development expenses

scheduled to specifically land in this quarter and

then to remain steady growing less than 10 percent

per quarter going forward.

We continue to see longer term leverage and R and D,

and look for it to drop substantially as

a percentage of revenue by the fourth quarter of

next fiscal year. We expect SG and A to increase by

15 to 20 percent in the second quarter from the

$28 million in Q1 and then at a rate of

approximately 5 to 10 percent per quarter going

forward.

Marketing expenses will vary depending on the

number of new markets and new channel partners

being launched and supported. With respect to

depreciation and amortization, there's a few one

time write downs increase depreciation expense

this quarter we forecast depreciation expense to

be flat in the second quarter and then to increase

10 to 15 percent per quarter thereafter.

Given the low short term interest rates in the

U.S. we are currently modeling annualized yields

on our portfolio for approximately 2 percent for

Q2, total investment income the second quarter

would therefore be in the range of $3 to $3.5

million. People should continue to adjust their

models with movements and rates. We are currently

forecasting a tax rate of 20 percent for fiscal

2003 and a long term rate of 25 to 30 percent.

With respect to earnings, we now expect the net

loss for the second quarter to be in the range of

15 to 20 cents which is improved from the

previously expected loss of 18 to 22 cents. The

main reason for this decrease is improved gross

margins as well as tight management of expenses of

our current estimate for the third quarter is a

smaller loss in the range of 7 to 12 cents per

share. Based on the current forecast of for the

year of $350 to $375 million in revenue, we are

continuing to forecast a return to profitability

in the fourth quarter with an overall loss for the

area of 30 to 45 cents per share. I will now turn

the call over to Jim.

Thank you very much, Dennis.

I'm clearly pleased that we achieved our

forecasted revenue target, improved upon our net

loss forecast for the first quarter by controlling

costs. Our traffic continues to be to leverage

all the exciting deals we've announced into strong

subscriber and revenue growth. There continues to

be strong demand for BlackBerry as evidenced by

the 60,000 growth subscriber ad during the

quarter, and an exciting number of new channel

partners globally upon which we base our growth

plans.

Last quarter we conservatively reduced our revenue

estimates for the first - for the fiscal year due

to timing concerns regarding carrier rollouts.

Our expectations for the remainder of this year

have not substantially changed, as Dennis

discussed a few moments ago. From a partnership

and deal perspective, we have had an extremely

successful few months since our April conference

call. New carrier deals were announced with

Vodafone UK, SFR in France and with Telstra in

Australia. AT and T Wireless, Rogers, Hutchison in

Hong Kong T-Mobile in Germany and TIM in Italy all

announced commercial availability of BlackBerry.

Last week we announced a BlackBerry product roll

back that many include a world band handheld with

integrated speaker mic and removable rechargeable

battery, multinetwork support for customers to

support mixed environments, advanced IT management

features, mobile data service, BlackBerry web

clients as well as additional features such as

tri-ban support, color screen, corporate voice

mail integration and additional wireless

synchronization features.

Following the announcement of the new GPRS OEM

product line, we announced supply agreements with

Melard Technologies and Panasonic. In the next

few minutes I would like to talk about these new

relationships and announcements and will provide

updates on our assisting channel partners as well

as our internal operations.

I will now provide an update on BlackBerry. At

the end of the quarter we had 355,000 subscribers.

Over 6,100 companies have installed the BlackBerry

enterprise server. Net subscriber ads of 34,000

were up slightly from the February quarter and in

line with expectations between 30,000 and 40,000.

Growth subscriber ads continue to be strong at

60,000. Obviously the downsizing that we saw in

the fourth quarter continues in the first quarter

as well. For the second quarter we are again

conservatively targeting 35,000 to 45,000 net

additions. We look for gross additions to

increase from Q1 and are working to control

deactivations. We expect significantly higher

gross and net subscriber additions in the third

and fourth quarter of this year.

I will now provide an update on our care

relationships. In Europe, our European team

continues to work with closely with MMO2 property

to drive subscriber additions over their network.

The quality and of service in the UK and across

their properties is very high and roaming is

improving quickly. We are working on several new

programs for the remainder of the summer and the

fall. An agreement was announced with Vodafone on

April 15th to launch BlackBerry this summer to

Vodafone's UK corporate customers. Vodafone's

cited RIM's proven track record of success and

well established BlackBerry solution as the

reasons for working with RIM. Vodafone has

announced GPRS roaming capability across 14

European countries so BlackBerry users will be

able to maintain their link to the corporate

information when traveling. We are extremely

bullish about Vodafone's prospects in driving

significant BlackBerry sales in the UK and the

rest of Europe.

On May 13, Telecom Italia Mobile announced

commercial availability for BlackBerry in Italy.

TIM has already experienced a very positive

response from major Italian corporations that have

participated in trials of BlackBerry solution.

Both TIM and RIM will be working with wireless

solutions, a subsidiary of DADA, on the

development of additional corporate applications

for the Java-based BlackBerry platform as well as

on systems integration for the solution. With $24

million domestic subscribers we expect TIM to be a

very significant partner for RIM in Europe.

On June 12T-mobile announced commercial

availability of the BlackBerry 5820 complete with

voice capability for enterprise customers in

Germany. They also announce that they plan to

make BlackBerry available through affiliated

customers in other countries by the end of the

year.

Last Friday RIM announced a relationship with SFR

to distribute BlackBerry in France. More details

on the French availability for BlackBerry will

follow when appropriate..

We continue to work closely with other carriers in

Europe and will announce these relationships when

appropriate.

In North America, last week AWS commercially

launched BlackBerry service over GPRS network.

Services currently available in several

metropolitan area include Chicago, Seattle,

portland, San Diego, Sacramento, Dallas, Phoenix,

Detroit, Denver, and Orlando as well as roaming

agreements with other carriers throughout North

America. All global account managers and data

account managers coverage areas will be selling

BlackBerry.

Voice Stream launched BlackBerry on May 12 and has

made significant progress since that time. Voice

Stream and RIM have made many updates to the

network and to device software over the past three

months. The service is now fast and reliable.

Voice Stream now offers GPRS coverage to over

75 percent of the of the populated U.S. through

T-Mobile, U.S. customers can roam with a 5820

while in the UK, Germany, and Australia. Voice

Stream has a dedicated sales and support

organization that focusses on enterprise

customers. Soon BlackBerry will be marketed by

all Voice Stream channels.

Last week Nextel announced further details

regarding an upcoming BlackBerry offering. The

Nextel BlackBerry will include integrated speaker,

microphone, digital walkie talkie service, paging,

Nextel wireless web on line services as well as

traditional BlackBerry features. We will also

have a removable rechargeable battery and an

external antenna for enhanced in building

coverage. The Nextel BlackBerry is scheduled for

release in the calendar fourth quarter of this

year.

We've been working closely with Cingular and

trialing GPRS BlackBerry in several dozen of their

large customer accounts with the 5810. The

reaction has been extremely positive and we expect

Cingular to leverage their mobile text experience

with BlackBerry into a very strong GPRS BlackBerry

offering on the Cingular network.

We continue to work closely with other major GSM

and CDMA carriers in the U.S. and will provide the

details of these relationships as agreements are

finalized. In Asia on May 6, Hutchison

telecommunications announced commercial

availability of BlackBerry over Hutchison's Orange

Network in Hong Kong. Hutchison Telecom is the

first mobile operator in Asia to offer BlackBerry.

Hutchison also announced Macau and Mainland China

are the next targets for BlackBerry. Hutchison

and RIM will also work together to develop 3G

applications and to extend BlackBerry to 3G

markets worldwide.

On May 30th, Telstra and RIM announced an

agreement to bring BlackBerry to Australia.

Telstra has already commenced acceptance testing,

initial pilots in June and expects to roll out

commercially in upcoming months.

Now for a mobile text (phonetic) and data text

(phonetic) update. Cingular continues to sign up

a significant number of BlackBerry subscribers.

Over the next few quarters we expect end user

demand for handhelds using mobile text remain

relatively steady as nationwide coverage and good

service quality remain key customer purchasing

criteria. Specifically many government users are

expected to utilize the noble text network. We

are also using closely with Cingular in their G

press plans and expect to leverage this long

standing relationship as they launch G press

service later this year.

Rogers AT and T also continues to sell mobile text

products in Canada and our expectations for the

Canadian market are also for mobile text sales to

continue to have success and to target verticals

due to the quality of service and coverage

advantages.

Motion came out of chapter 11 following our last

conference call and we are working closely with

them to continue to successfully deploy BlackBerry

over there nationwide data tech network.

But for the BlackBerry road map announcement, last

week RIM showcased the latest hardware, software,

and services available for the BlackBerry

platform, and outright plans for taking enterprise

customers to the next level in wireless.

RIM demonstrated a new BlackBerry handheld which

included world band capabilities as well as an

integrated speaker, microphone, and removable

rechargeable battery. This world band BlackBerry

handheld is currently expected to be available in

the fall.

RIM also announced that the BlackBerry for

CDMA/1xRTT network is currently expected later

this year and will also feature integrated

speaker, microphone, and removable rechargeable

battery.

BlackBerry enterprise server will support multiple

wireless network standards including mobile tech,

data tech, GSM/GPRS, iDEN, and CDMA/1xRTT,

allowing customers to support mixed environments

and enabling current customers to support new

BlackBerry handhelds without changing their back

end infrastructure.

Incorporating feedback from customers that have

deployed wireless enterprise solutions broadly RIM

is adding new features to help IT departments

manage BlackBerry deployments more effectively.

IT administrators will have the ability to push

software to their user's PCs and set end user

policies wirelessly. New security features will

enable IT departments to wirelessly disable and

erase all data and a BlackBerry handheld and

remotely or change the user's password.

IT administrators will be able to implement and

wirelessly push group policies to BlackBerry users

without the need for users to cradle their

handhelds. These new features are expected to be

supported this fall for Microsoft Exchange and

this winter for Lotus Domino.

The new mobile data service of the BlackBerry

enterprise server will enable always on push

access to enterprise applications and information

using the BlackBerry handheld browser and software

development tools. By leveraging the BlackBerry

infrastructure with which supports multiple

networks using standard protocols and languages

including XML, HTTP, and Java, corporate

application developers and ISVs can quickly deploy

wireless applications without learning new middle

ware or operating systems.

RIM developed a new web based application called

BlackBerry web client. This will allow users to

access multiple existing e-mail accounts including

ISP accounts from a single BlackBerry handheld

through the potsry (phonetic) protocol and/or mail

forwarding. In addition, a default web mail

account is provided with each handheld.

Several carriers are testing BlackBerry web client

which is expected to be available later this year.

RIM also provided some insights to features under

development for BlackBerry including tri-ban

support, color screen, corporate voice mail

integration and additional wireless

synchronization features. RIM continues to build

strong alliances with leading IT suppliers such as

Microsoft, IBM, Sun, BEA, Computer Associates,

NetIQ, Compaq-P, Xerox, Cognos, and FAP to develop

and deliver a broad range of range of wireless

enterprise solutions. RIM also partners with ISPs

and systems integrators to develop vertical focus

applications for industries such as legal,

financial, construction, and healthcare.

Now for the OEM radio update. On May 1 RIM

announced the first two supply agreements for the

new family of GPRS OEM radios. Melard has

selected RIM OEM radios to wirelessly enable its

rugged handheld computers. The target market for

these products are mobile employees and the teleco

cable service field service and utilities

industries. Melard valued RIM's wireless solution

as it has already been tested, proven, and

successfully deployed.

Panasonic announced plans to integrate RIM's GPRS

radio modems into their line of Toughbook

ruggedized portable computers targeted to mobile

professionals in vertical industries including

government, field service, and sales, utility,

telecommunication, insurance, transportation,

[inaudible] and military. RIM and Panasonic have

an extensive relationship beginning in 1998 with

the CF25 Toughbook.

On the intellectual property front, on June 19th,

RIM and Ericsson entered into a license agreement

under which RIM was granted a nonexclusive license

under Ericsson's patent portfolio for the

GSM/GPRS, edge, and CDMA2000 standards. This

allows RIM to develop, manufacturer, and sell

products globally using Ericsson technology in

these areas. In return, RIM provides royalty

payments and a reciprocal patent cross license to

Ericsson.

Also on June 19th, RIM filed a complaint against

Good Technology, the complaint alleges that Good

Technology wireless goods and service infringe

upon four RIM patents within RIM's wireless

integration portfolio. RIM is asking the Court

for an injunction and an award of monetary

damages. In addition RIM asserts that good

technology's infringement is willful, thus

allowing the Court to award enhanced monetary

damages for Good Technology's infringements as

well as attorney's fees and costs to RIM. RIM

continues its review of Good Technology's goods

and services to determine whether any other rights

are violated.

In acquisitions, in June RIM acquired the assets

of Flaingsought (phonetic) Incorporated for $8

million. Flaingsought has a comprehensive

intelligent Tex input and display platform written

in both C plus plus (phonetic) and mid-P Java,

which is designed for small footprint devices.

This platform includes a text input engine to

support all major Chinese, Japanese, and Korean

input methods and a font rendering engine to

render Asian fonts. This font engine will also

drive exceptionally sharp text display on future

color displays.

In addition to the technology, RIM sought

Flaingsought CEO and developers who have been

relocated to Waterloo from Boston and Israel.

I will now provide an update on RIM's internal

operations. At the end of May RIM's head count

was approximately 2000. We continued to hire

selectively across different groups of the

organization, focusing on research and development

as well as sales and marketing support for new

carrier partners. A large part of the R and D group

is dedicated to working with our carrier partners

to prepare to offer them the BlackBerry service.

We also have the teams in place to support the new

reference design and licensing program. We

continue to work on the development of the new

iDEN BlackBerry handheld for Nextel and are on

track with established milestones.

Our ongoing efforts in R and D are expected to yield

new innovations and new developments in hardware

products such as a 6700 product platform announced

last week, the BlackBerry software platform, and

new reference design and licensing programs.

In the sales and marketing, the sales and

marketing team continues to focus on outing

subscribers and supporting new challenging

partners. Despite the issues in the telecom

industry and the tight enterprise spending

environment, our sales marketing cares for

(phonetic) teams have succeeded in maintaining

strong subscriber additions and expanding the

BlackBerry brand globally.

We expect all of the investment in these carriers

and reseller programs to reach significant

dividends in the second half of the year.

Significant marketing programs by our North

American carrier partners should be very visible

over the next few months. Our European team is

extremely busy supporting new carrier launches and

the Asian team is operational in Hong Kong and

Australia.

In the administration and information technology,

the majority of RIM's IT focus during the quarter

continues to be directed toward connecting,

testing with new carrier partners in North

America, Europe, and Asia. Many new carrier

connections were established during the last

quarter. Projects during the quarter include -

included improving redundancy, site to site

failover capability for the Waterloo upgrades and

BlackBerry relay hardware and software,

improvements in the BlackBerry notification system

to facilitate additional carriers and networks and

to enable automated relay performance. Internal

projects focused on continued improvement to the

SAP system and improved customer care systems.

In summary, I feel we once again executed

performed well both financially and operationally

in the past quarter. We continue to deliver on

our commitment to sign up carrier partnerships on

a global base, continue to work with other

carriers in North American, Europe, and Asia and

will report the progress of these relationships as

they mature. While the carrier deals are

important, it is now crucial that we execute well

with these carriers to drive sales through and

subscriber growth over their networks. RIM's

target growth in the second half of this year is

very achievable and depends on our ability to make

our carrier partners successful.

The most important metrics for our stakeholders to

monitor as we go forward are the service launches

for BlackBerry by our care partners and subscriber

growth on these new networks. The fundamentals of

our strategy continue to strengthen.

We're in discussions with several potential

partners under the new reference designed and

licensing programs and we'll announce details on

new relationships as deals are completed.

BlackBerry continues to be the premier brand for

wireless enterprise data, the demand for wireless

data continues to be strong and we continue to

have a very bullish outlook on our new

relationships with carriers in mortgage America,

Europe and Asia.

I would like to remind everyone that we're going

to end the call by 6 15 p.m. This concludes the

formal comments, if the operator would please

commence on to handle questions.

Thank you. One moment, please.

Ladies and gentlemen, we will now conduct the

question-and-answer session. If you have a

question, please press the star followed by the

one on your touch tone phone. You will hear a

tone acknowledging your request. Your questions

will be polled in the order they are received. If

you'd like to decline from the polling process,

please press star followed by the two. Please

ensure you lift the handset if using a

speakerphone before pressing any keys. One

moment, please, for the first question.

The first question comes from Rob Sanderson of

Banc of America. Please go ahead.

Thank you. Congratulations, guys,

solid execution and positive development, tough

environment. A few questions. Jim, if we could

dig in a little more on the topic of intellectual

property, first on Ericsson. It's sort of

curious, we haven't seen, you know, other radio

announcers making similar announcements of the

agreement with Ericsson, is this sort of assist

with development [inaudible] or is this a market

requirement off of the text products?

And that's - okay. On that

one, no, there's large amounts of essential IPR

and essential intellectual property agreements

that are needed to make a GSM/GPRS module or

device and you must get these licenses with the

major players in order to supply products into

this market, and anyone who wants to be in this

market must get these rights. Major players have

to put it mildly, substantial intellectual

property portfolios and they justly want their

intellectual property protected or to collect a

return for it. This is a fact of life. And we

have a very experienced team that used to do this

previously or one of the large device holders and

we know this game.

So you know, making this comment

it sounds like there's probably a whole lot of

people that are potentially if violation of some

of these essential copyrights.

I'm not going to comment,

but because I don't know the nature of their

deals, but, you know, there's no way that these

companies would allow somebody to sell products

without licenses. It's the standard in the GSM

business, it's the standard in the GPRS business,

whether you're in a device company or module

company, and we have every intention of respecting

the intellectual properties of these very

established players.

Could you comment, then, on the

reciprocal license, comment on that a little bit,

what technologies of RIMs does this include.

I mean, I'm not going to go

into it in great detail, but there's elements of

cross licensing that goes into these and

fundamentally what it does is stands for the basis

of essential IDR and sort of core aspects of

making the GSM/GPRS radio. There's commercial

relationship and between the two companies that

involve, you know, appropriate commercial

compensation and obviously, you know, appropriate

licenses so there's not assertions of intellectual

property rights between the two players. But

it's, you know, defined within the context of the

radio, the GSM/GPRS device.

Okay. I guess under the topic of

IPR with the [inaudible] was good, what are the

next steps towards the restitution here and is it

too early to really get a sense of time line or

can you comment on what we should be expecting for

timeliness?

When you look at this stuff,

it's intellectual property rights, they're very

material and important part of what we do and we

deal with them very regularly and fairly and

fundamentally if someone wants to do what we do,

where we have a patent on it they need a license

and it's just that simple and really these things

go before the Court and they're, you know, they're

within a legal process. This is something we're

very experienced in. We have a very substantial

team both internally and externally and it will

follow its due process. I can't comment on it

right now a great deal, Rob.

Okay. Thanks. Maybe one

follow-up for Dennis, software and nonrecurring

development, was pretty strong again this quarter.

Can you give us a sense of how much was the

nonrecurring piece? You know, that seems it could

be a pretty lumpy stream, so can you give us a

sense of how we should be looking at that one

going forward?

Well, there's the base

offer component for the event sales and support,

continues to grow fairly steadily. We do get NREs

from some of the carrier partners to develop new

product, that's going to continue for the next

several quarters. I would say more than half of

the $8.8 million was related to ongoing

[inaudible] sales and revenue.

Okay. So then is that sort of a,

you know, do you expect to recognize more of the

NREs or every quarter flattish or is that going to

be lumpy?

Well, as you know, we've

had [inaudible] of NREs for the last four or five

years. Sometimes it is a bit lumpy, you get it in

one quarter and not in another. I would say we

see NREs will be continued to be recognized over

the next several quarters and then after that

we're always working on new programs, et cetera.

So certainly for the next several quarters it will

continue, but in the mean tile the underlying base

software business continues to grow as well.

Sounds good, guys. Thanks.

The next question comes from

Jeffrey Schlesinger, UBS Warburg. Please go

ahead.

Thank you. Dennis, can you give

us the mobile text versus nonmobile text hardware

shipments on the border and also on the gross

edition, what the mix was geographically?

Jeff, we haven't provided

a breakdown of mobile text versus GPRS. Obviously

it's going to continue to swing more towards more

GPRS as we go forward, but that's not a piece of

information that we have disclosed. On a

geographic basis, obviously the vast majority of

the sub ads continues to be in North America.

Europe is growing and Asia just launched, so it's

just beginning. So it's definitely a vast

majority of North America.

Can you give us a sense and based

on your predictions and the numbers you gave going

forward, what would you expect that European ramp

is going to give us? How do you expect that's

going?

And also at the analyst meeting we talked about a

big upgrade cycle from mobile text to these

GSM/GPRS products and we, you know, the numbers

were talked about like 100,000 of the 300,000

small brace at a time. What's your thinking on

that upgrade process now given essentially what

you know, essentially 90 days in the last quarter?

I won't go into specifics

on your question. Obviously we have some pretty

solid targets in Europe as the roaming issues get

sorted out, that works much better in the 5820 and

thin this fall with the 6720 launching with the

integrated speaker mic. I'm not going to go into

specific details, but certainly Europe will become

a more significant percentage of overall revenues.

With respect to the number of mobile tech

customers that are going to turn or upgrade into

GPRS, I don't think our view on that has changed.

I think that once the coverage and the user

experience is very strong as it's becoming as all

the roaming agreements are in place so you can use

GPRS anywhere in North America and cross border

with Canada, et cetera, I think it's very

reasonable to assume that a lot of people are

going to move to these new networks.

And last question, if I could, on

the extension of the BES server beyond obvious

e-mail application to support other enterprise

applications, can you give us a sense of any

developments there, post BEA deal, anything more

concrete since the analysts' meeting? Thank you.

Well, this is Jim Balsillie.

I mean, clearly the - the new BES is in test or

developed to and integrated in Beta tests with a

number of places right now. Fundamentally, what

it gives you, as you know, is security, HTTP so

you get that triple link, and it supports HTTP and

XML. So what it does for all those on the call is

a very simple plug-in of existing corporate ops

and they come to your handheld phone. What I

can't say a substantial number of companies are

planning to use it. We just came off of sapphire

which is the big SAP show. The new BlackBerry was

in the hands of several C level IT people with

access to SAP securely data stores and we could

see that this is an enormous step forward in

making the carrier more of a platform for

applications for IT departments. So I think stay

tuned, there's an intense piloting evaluation and

then it's in development programs underway through

the summer and I encourage you to stay tuned

during the summer for lots of news in the

autumntime.

Thank you.

The next call comes from Ray

Sharma, BMO Nesbitt Burns. Please go ahead.

Good afternoon, guys, got job on

the op-ex. Dennis, I've just got a question for

you to start on the earnings potential of the

business model going forward. We've seen gross

margins continue to creep higher and higher since

subsequent recent quarters. Tax rates are reduce

the op-ex in the last quarter as I mentioned was

brought in mind. What is it implying when we look

into fiscal 04 without giving obvious details,

both profitability, does profitability accelerate

through fiscal 04 and what does it mean in return

on investment on previous investments the company

has made and the implications and forward

profitability?

Well, Ray, I think

basically what it means is, you know, consistent

with the message that we've been saying for quite

some time is that there is a huge amount of

leverage in the model. Gross margins are

increasing and it is somewhat mix related with the

software and service, but the margins are

improving on hardware as well as we move to next

generation devices and improve our processes and

cost management on components and et cetera, so I

think that the high gross margins are sustainable.

I think we've always said that op-ex is high as

a percentage of revenue now because we're

investing into all these new programs and networks

and we're not really getting the new revenue yet.

So in short I think there's a tremendous amount of

leverage next year in the model and it's all

contingent upon revenue growth. This new market

grows the way we think it will, our model should

be extremely profitable and I think from our

return on investment point of view, all our

spending over the last two, three years in R and D has

been targeted on this GPRS platform, targeted on

the BlackBerry software, platform issues that

Jim's talked about, we've finally been able to

disclose like MDS, the ability to support

multinetworks and the whole geographical

expansions. So that's what we've been spending

on. All the SG and A expenses have been related to

building a sales and distribution teams for all

these new networks and all the IT initiatives have

been built on a scalable platform that can support

RIM as it grows, so I think all of the investments

we've made has been targeted toward this future

growth, and I think you're right, there's a lot of

leverage.

Okay. Is there any other ongoing

plans for share parts? Have you made any

additional share parts just from core direct?

No because it would be

inappropriate to make share purchases in our quiet

period, so we purchased shares in the previous

quarter and haven't done any more purchases

subsequent to that time.

And one of the points that you

brought to the analyst day was that service

pricing on a good thing mobile text's subscribers

were to come down there would be a significant

uptake in total subs, a question for Jim, is there

any questions to consider anything along those

lines, i.e, reducing pricing of services on

mobile text's basis, subs?

Well, I think that's

something entirely possible because just as a

small, for instance, Cingular is announcing a

program with an alternative e-mail solution and a

lot of people are using the two megabyte program

for $40 bucks. And that's their wholesale price

and it's because sort of inefficient approaches

toll them, mobile text's network chews up a lot of

the network and it chews up the battery awful

quick which we're really hearing in the market a

lot.

So when you look at BlackBerry, we use well less

than half a megabyte in a month. So if you sort

of extrapolate that, then, you know, that $40, you

know, and we're using a quarter of that and their

retail is $40 then we're a quarter, less than a

quarter of that so you should think our wholesale

prices should be, you know, less than a quarter of

that, and that's a retail basis.

So you, we think, you know, Cingular is

aggressively repricing their network and looking

at that, just refocus on the retail price of $40

for two megabytes and currently with our wholesale

rates we have to charge $40 for well less than

half a megabyte and we're sort of going into

discussions on that. We think there's just

through MFM and common carrier type circumstances,

there's quite a bit of downward pressure on that

and we're pretty excited about those prospects and

we'll certainly keep you appraised on that as it

unfolds.

Last question for you, Jim, just

when you mentioned the acquisition in regard to

Chinese, Japanese, Korean characters and the

recent price release at Macau and China were

mentioned. Can you just tell us a little bit

about your business developments in that region?

Well, you know, we say stay

tuned for future developments, but we get lots of,

sort of comments here, you know, there's a big

show last week in Asia and we're dealing with a

large number of operators and all of these

consortiums.

For sure, the business development teams over

there are drinking water from a fire hose in

opportunities right now and for sure, the demand

and interest in the BlackBerry type service is

very, very high as is. But what Flaingsought

(phonetic) does is allows us to localize it to

their fonts and give a rich experience as well as

the license referencing program, what's going on

there allows the carriers to sort of specifies,

customize hardware.

I can only tell you in these kinds of strategies

you work on them for quite a while and all of a

sudden, bang, they bear fruit and we're intently

committed to a localized Asian strategy and

[inaudible] aspect to that and the carriers are

very receptive to this and so, you know, stay

tuned. I mean, we talked about Europe for a long

time. We're still quiet on Latin America. We

talk about North America, but I think Asia is

going to garner quite a bit of attention.

And again, I sort of will stress, you know, with

the new 6700 BlackBerry and TRX roaming, you can

literally use that device, you can go bother your

carrier partner in the real near term. That will

work. I mean, I have one and it works seamless in

Hong Kong, Europe, and North America, you know,

and I just go U.S., Canada, Hong Kong, UK, no

problem. BlackBerry and cell phone follows me. I

can't - I can't stress how unbelievably

compelling the experience is when you get did that

way. It's hard to articulate.

Thanks, guys.

The next question comes from

Barry Richards, CIBC World Markets. Please go

ahead.

Good afternoon, Dennis and Jim.

We've seen a handful of carrier launches here this

year in 2002 and I was wondering if you could help

us maybe provide some guidance or at least some

clarity in modeling the quarter over quarter

subscriber growth and I'm thinking about a range

here because it's going to vary significantly, but

I wondered if you can give us some commentary on

how that ramp might happen.

Barry, I can talk in

overall terms. I'm not going to go carrier by

carrier. We're still loading strong numbers of

subscribers on mobile text. Motion is still

loading strong numbers of subscribers on their

data type network. Obviously the GPRS carriers,

as Jim said, are getting going and are poised, we

think, to derive some real growth over the next

several quarters. We guided an increase range of

net net [inaudible] of 35,000 to 40,000 range

which would indicate a fairly good growth

subscriber growth in the in the second quarter

even though it is the summertime and not usually a

corporate buying season.

And Dennis, do you get monthly

visibility to those numbers from the carriers and

do you see a lot of variability between the four

and five carriers launched already?

It's too early to tell on

the new carriers launched already. Typically what

we do is get a lot of visibility on obviously the

direct sub ads. We get regular reporting from

resale of partners and the carriers on the

subscriber ads on a monthly basis. So we do get

good reviews and periodic updates throughout

quarters and we can get pretty decent visibility

into those amounts. The new carriers, it's just

too early to tell, but by all accounts their

forecasts we think are extremely conservative and

we try to be conservative in our expectations for

them embedded into the guidance that I provided.

Great. And on the new products, I

wonder if you had an interest in giving us some

further commentary on the timing, the time length

for CMA launch.

I think we talked about

availability this autumn, early autumn. I mean,

sort of mild commercial availability.

Is that consistent with, I guess,

your original view, Jim?

I mean, it's within the

range, plus or minus something. It's something we

feel quite good about.

And last question, Dennis, we've

seen a pretty noticeable change in the Canadian

dollar-U.S. dollar exchange rates and I wondered

if you could just talk about how that might affect

the results beyond your earlier comments to the

same.

Well, sure, we do report

in U.S. and our revenues are in U.S. dollars. The

majority of our costs of goods sold are in U.S.

dollars with the exception of plant salaries,

et cetera. Our Canadian expenses would be

salaries in Waterloo and Ottawa. Most of the R and D

expenses such as equipment and prototyping and

licensing would be in U.S. and sales and marketing

I've heard things like added expenditures and

advertising, et cetera would also be in U.S.

dollars. So it's basically salaries and I guess

utilities are Canadian expenditures. Obviously if

the Canadian dollar strengthens as it has

relatively in the U.S., that's going to be a

slight increase in expenses reported in U.S.

dollars, but it's not material.

Great. Thanks. Good luck.

The next question comes from

Andrew Lee, TD Newcrest. Please go ahead.

With regards to the guidance,

Dennis, are you going to reiterate or discuss the

actual number of subscriber ads in the fiscal 03?

Obviously, Andrew,

bringing the revenue into the 353, 75, that's

going to reduce the number of devices. I didn't

provide a specific range, but it will be lower

than the range we just discussed before. I think

it would be prudent to view subscribers also at

the low end of the 3 to 400,000 range that we had

discussed. I mean, if we did 34,000 net subs in

Q1 and are targeting 35 to 40 in Q2, that still

leaves a pretty ambitious growth path for the

second half of the year. We do think it's

achievable, but I do think it will be for all

intents and purposes I would say 250 to $350,000

that is.

In terms of the back log can you

qualitatively describe what your back log

vis-a-vis your carrier deals you announced or are

expected to announce is in comparison to the

devices built into your forecast, the device

shipments?

Most of the carrier

contracts that we have are over a longer period of

time than just the end of this fiscal year, they

run for 12, 18, or 24 months. There are forecasts

that get provided to us and we get PLs locked in

on a rolling three-month basis. There is some

flexibility beyond three months as to the timing

of when those units get shipped so I can't map the

back log directly quarter by quarter.

I will say our back log continues to increase as

we sign up more carrier deals and we have not

shipped substantial amounts of GPRS beyond initial

shipments into most of these carriers. We do have

a continuing regular base of mobile text and data

text that still do ship. I would say without

giving specifics that I feel comfortable where our

forecasts are in relation to where the back log is

and the expected timing both on the carrier

partners from our direct and from our own

reselling partners.

Two other quickies. Number one,

what is the sort of range that you would typically

ship to a new carrier? I don't know if the

[inaudible] someone is a get example for other

deals and do you tend to ship to any [inaudible]

in the quarter. Thanks.

I would say most of the

new carrier deals they would take initial

quantities. Obviously many of the carriers are

different sizes, anywhere in the 5 to 10-K range

would be reasonable initial quantity that would

get their internal sales folks using it, gets

trials underway with the hundreds of corporate

customers that they're each working on, so

therefore MMO2 wouldn't be a great example because

they were taking over a number of different

quarters and just had issues of network readiness,

et cetera.

So the typical initial shipment amounts aren't

onerous. We're not creating a great deal of

channel inventory and continued shipments to these

carriers will depend on sell through and so we're

very closely watching that and we did ship a small

number of units to Motion during the quarter.

All right. Thank you.

The next question comes from

Howard Lis, Griffiths McBurney. Please go ahead.

Hi, good afternoon, guys. Just if

you could talk a bit about your market

intelligence as the various carriers start selling

the devices commercially, and have their launches.

What sort of feedback and information are you

getting on an ongoing basis about the actual

additions during the quarter, the inventory level,

that sort of thing or do you simply operate more

on a rotating sort of 90-degree window of orders?

Thanks.

Howard, there's a great deal

of feedback between our carrier teams and each

carrier partner. So we obviously when they

activate users it runs [inaudible]. We have a

very good idea of the level of their activations.

Our folks are working very closely with them in

all these accounts and helping run the trials and

the pilots, et cetera. So I would say we're very

well connected into that.

And do you have any information

about how many customers are signing up for the

new devices that are also taking the voice

packages, maybe not on a percentage basis?

I'm afraid I don't have

those stats with me right now. I think the

majority of the early users on Voice Stream and

AWS are putting voice on as well. I don't know if

that's indicative of final usage. I would

estimate with a 6700 platform, an integrated

speaker mic, you probably have get a much, much

higher percentage of end users having voice than

perhaps on a 5810, but I think their percentage

has been pretty high.

Great. And Dennis, sorry. It was

hard to get on the call. I was wondering if you

could review what you think the year end cash

balance would be and what you think the lowest

cash balance would be before you start generating

cash. Thanks.

I hadn't really provided

it in that way, but I said that we expect to burn

about $40 million in Q2, $20 to $30 million in Q3,

about $20 in Q4, so I guess cumulatively, that is

anywhere from $80 to $90 million. That would be

not including any potential share repurchases that

may happen on a go forward basis or of course any

acquisitions that aren't currently contemplated.

We're expecting to return to profitability in Q4

assuming cap-ex remains fairly steady at a modest

$15 to $20 little I don't know level or perhaps

even less per quarter through next year. I would

expect us to be overall cash flow positive by the

midpoint of next year.

Great. Thanks very much, guys.

Congratulations on a good quarter in a tough

environment.

The next question comes from

Deepak Chopra, National Bank Financial. Please go

ahead.

Good afternoon, gentlemen. Jim, I

was wondering if maybe you would talk about the

pace of 2 1/2 G deployments and what are the

issues now that you're seeing, are they moving in

technical to nature to more logistical and on the

reference design, the reference design platform,

what is the profile of the typical customers that

you're talking to at this point? Thank you.

Sure. The just I want to

get this down. The pace involvement, I would say

the number one resting item in the short of launch

of these networks was overall code readiness, and

that's, you know, that's - I mean, there's still

sort of network upgrades from switch providers

going on and clearly we have to work hand in glove

with that so we have to be tested and certified

against it.

So I would say the pace of development, you know,

truthfully the carriers that went first globally

experienced the sort of pain of having to harden

code of which other carriers get the benefits of

substantially, the benefit that they get from

going quickly is that they get a chance to mature

some processes. So I would say not as leveragible

by other carriers, that's specific to each

carrier.

So I think the pace is definitely accelerating,

one, because the code is starting to harden from

the switch players and there's two or three main

switch players and it's getting quite good and the

upgrades are less substantial and seem to nail the

key issues.

And second, we're getting better at understanding

processes. We've trained several hundred account

people and we have a whole training program with

carrier sales reps around the globe. Our

processes for helping them channel department,

develop and localization, go to market, there's

elements of that reusable and becoming optimized.

So I would say the pace of 2 1/2 G readiness and

introduction is clearly accelerating and

optimizing. And just look at the frequency of

announcements that you've seen in the last two,

three months and frequency accelerate, which we

think is a very positive story. And again, we get

a lot of visibility for this stuff going through

the painful stuff and sort of relief laden launch

stuff.

In terms of the reference design customer profile,

those tend to be big cellular phone companies who

are often sort of computer PDA companies too, and

these companies have both of these existing

businesses often very frequently they're Asian but

not always. And really there's a great belief,

you know, those are sort of separate businesses,

the computer PDA stuff and the cell phone stuff

and the belief is I think clearly with GPRS, 2 1/2

G, J to a me (phonetic), there's a merger of that

sort of computing world and the cell phone world

and really they want the design and plumbing to

get in that market but, you know, you look at

reasonable size, pretty good size different Asian

companies who do PDAs and/or do sort of phones,

slightly higher end GSM phones, very frequently

their ADI customers are hard core and they're the

dead on target that we're working closely with.

In terms of the company you

previously used to say you expected to be in 15

countries in 30 [inaudible] by the end of the

year. Are you willing to make a statement of that

nature now?

I mean, I think we're - I

mean, if I said that, I mean, I - I could have

represented something like that. Certainly we're

dealing with substantially more than that in terms

of number of carriers. I mean, you know, just by

turning on Voda you'll get 14 of those. And

that's turning on right now. With - and with

[inaudible]. So just by turning on T-Mobile's

design you get 12. In a sense some of those are

overlap countries, but you just add those together

that's 26. And probably Net Net there's a dozen,

so 15 country, it's in Hutch we've only launched

one but their GRX thing, to most Asian countries

right now.

So, yeah, I would say I feel quite comfortable

with that kind of representation. But truthfully,

the nature of this technology, I think, you know,

as long as things keep going the way we're seeing

them, we should shoot through that type of

capability quite quickly. There's a couple of

hundred of these carriers around the globe and,

you know, everybody wanted it.

It doesn't matter - we're talking big countries,

but you go to places like Latin America and South

Africa and Middle Eastern and so on, they all have

the same issues and they all have, you know, big

companies in their domicile there or a couple of

people who are traveling through who want the

service.

So it's just wonderful because, you know, our

market of users sort of sees our demand base as

they travel globally. And like I said, this type

of ability to work in a bunch of countries already

is going to be quite commercial, I mean, many

people are living it and testing it as we speak

right now, so with a daily kind of pull the

curtain and say ta-da, here's our pricing scheme,

you know, is it going to be this summer in

September? You can debate that. But we're really

deep in this game and I really want to stress to

those on the call, this is stuff we've been doing

some heavy lifting for a couple of years to make

it simple and easy for the user. This is not out

of the box, trivial stuff.

Thanks.

The next question comes from

Garth Papageorgio (phonetic), Scotia (phonetic)

Capital. Please go ahead.

Thanks. Question for Dennis and

for Jim. Dennis, can you give us an idea of the

proportion of revenues that came from outside

North America in your last fiscal year, where you

are relative to that currently, and where you

expect that to be by the fourth quarter and then

for Jim, hearing some concerns out of the UK that

in terms of the roaming feature for the

BlackBerry, not as robust as traditional cell

phones. I was wondering if you'd talk about how,

when we can expect the roaming features to improve

and have - when do you expect to have seamless

roaming throughout the continent for both voice

and data?

This is Dennis. The

majority of our shipments outside North America

were the MMO2 and, you know, that was several tens

of thousands of handhelds in the November and a

little bit in the in the August quarter and then

November and February. I think obviously the

remainder of it was in North America. This year

it's going to be much, much different. I think in

the first half they said previously the majority

is still going to be North America but I think

Europe and Asia become very meaningful pieces in

the second half of this year. Without going into

specifics, I think that's a trend that we're

expecting.

Is it fair to assume that the

majority of the growth, quarterly growth in Q3 and

Q4 in your current run rate about be outside North

America.

I don't think that's

completely fair because we do have the issue of

existing BlackBerry subscribers moving to GPRS, so

that could certainly drive substantial hardware

sales. I think in terms of overall subscriber

growth there's a lot of AWS and a lot of Voice

Stream and a lot of Nextel sales reps out there

that are going to be working pretty hard in North

America so we're expecting a lot of growth if

North America, but yeah, the European and Asian

markets are a pure green field for us and that's

going to be nice, incremental growth.

On your second question, the - yeah, the

robustness of GRX roaming, that's still a

capability that in certain cases is available in

minimal countries, you know, maybe going from UK

to Germany on the MMO2. What I will say is our

test people and the carrier test people are in

internal datas experiencing a very positive GRX

capability, really drove most country, frankly in

Asia and throughout most of Europe, but this

hasn't been commercially launched and many of

these countries are on the cusp of turning on

their GPRS networks.

So yeah, those who have wanted GRX roaming haven't

had it, and that is a very near turn phenomenon by

many of these countries turning on. Like when did

TIM turn on, two, three weeks ago? Many of these

things, they work well but they haven't been

commercially launched. So yeah, it's been a

frustrating user experience in the sense that they

didn't have voice turned on much of the time,

which was turned on. They couldn't roam much of

the time, which is now being established. You

know, maybe these carriers hadn't turned on their

GPRS yet and also the issue of needing separate

hardware when you go from Europe to North America

and what I'm representing is guess what, all of

these problems have either been 100 percent

addressed or have been virtually completely

addressed and are very near term ready for

commercial launch and you bet, but this is all

aspects of the teething pains of getting a push

kind of enterprise service working in multiple

carriers, multiple jurisdictions, and that's the

kind of thing we've done, and I think the user

experience can be very, very compelling, very

short order.

Operator, we have time for

one more question.

The last question comes from Paul

Coster, JP Morgan. Please go ahead.

I'll try to slip in a couple, if I

may. The - are there any 10 percent customers at

the moment?

You mean as far as -

Concentration in terms of

revenues.

The largest customers in

the corner would continue to be Cingular, Voice

Stream, AWS always in North America and then some

distributions throughout Europe, most of them

being smaller than 10 percent.

How many of the (inaudible)

installations in the UK now, approximately, are

you prepared to divulge? I think it was 150 last

time we talked?

I think that BT had - or

MMO2 had disclosed a 250 number in their press

release several months ago. They have not

provided updated numbers therefore I can't

publicly, but I do know that they continue to get

it into many more companies.

How many shares can you buy back?

We have announced a share

repurchase plan of up to 5 million shares.

Thank you. And lastly, average

selling price, I just missed that.

Just one second. Handheld

ASPs were $445, up from $380 in the prior quarter.

Thank you very much.

And in closing I'd like to

remind everyone that there's a post view service

available, 416-640-1917. Reservation number is

181806 pound. You can also listen to the call at

www.rim.net\investors\index.shtnl. Thanks very

much.

Ladies and gentlemen, this

concludes your conference call for today. Thank

you for participating and please disconnect your

lines.