TSX Commentary

RIM’s Q2 results and Q3 guidance was a little light due to lower revenue.
Regardless RIM continues its much better balancing of new product growth,
capturing market share and profitability. H2/F10 should yield new products
(Storm-2, Bold-2), positive seasonality and upticks in Int’l and enterprise.

Q2 rev. was $3.53B & EPS of $1.03 (vs. est. rev. $3.6B & EPS $0.97).
Shipments were up 6% at 8.3MM. New sub adds were unchanged at 3.8MM
(80% consumer). GM was better (44.1%) and opex was lower (by 6%).
Carrier inv. remained and is expected to stay low (>4 weeks).

Q3 guidance called for higher rev. (+6%), shipments (+15%), gross
margins (43%) due to manufacturing efficiencies and a better mix offset by
slightly higher opex (+7%). Q3 guidance: Rev $3.6B-$3.85B/EPS $1.00-
$1.08.

We would use the share price weakness from this slight miss as a buying opportunity as the upcoming two
quarters will benefit from new products and positive seasonality.

We believe that RIM will be able to maintain its enterprise market
share due to its superior security and push solution, although we do
expect competition (iPhone) to take its fair share of the market over
time.
RIM has been gaining market share in the consumer and international
market on the back of its increased spending in sales and marketing.
BlackBerry App World and the expanding product portfolio should help
drive new subscriber additions and device sales.

current price catalysts:

1. New product introductions tend to lead to positive revenue growth
shortly after announced as carriers around the world stock their
inventory channels.
2. Competitor announcements have negatively impacted the share
price, although in the past this has been offset by RIM’s consistent
growth in revenue and earnings. Competition has increased and the
company will have to prove it is able to maintain these growth trends
for this to continue.
3. Operating margin will be negatively impacted by higher R&D and
sales and marketing. When announced the shares were negatively
impacted. RIM needs higher volumes to benefit from operating
leverage.
4. The replacement cycle is likely to extend given the softening in the
economy. This will likely impact earnings in the short-term.