Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Research in Motion Q2 2007 results 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 for you to queue up for question. (Operator Instructions) I would like to remind everyone that this conference call is being recorded on Thursday, September 28, 2006, at 5:30 p.m. Eastern time. I will now turn the call over to Dennis Kavelman, Chief Financial Officer. Mr. Kavelman, please go ahead.

Thank you, and welcome to RIM’s fiscal 2007 second quarter results 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 second quarter results, as well as our guidance for Q3. I will then turn the call over to Jim who will provide a business and strategic update. We will then open up the call for questions. I would like to note that this call is available to the general public by a call-in number and webcast. A replay of the webcast will also be available on the rim.com website. We plan to wrap up the call at 6:30 p.m. Eastern this evening. Some of the statements Jim and I will be making today constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities laws. These include statements about RIM’s ongoing management initiated voluntary review of its historical option granting practices, including statements regarding preliminary determinations and current expectations, our expectations and estimates with respect to revenue, gross margin, operating expenses, stock option expense, cap-ex, depreciation and amortization, investment income, earnings, earnings per share, and ASPs for Q3 and beyond, our expectations regarding RIM’s near- and long-term tax rates, our estimates of the number of BlackBerry subscriber accounts, subscriber account additions and other non-financial estimates, our product development initiatives and timing, development relating to our carrier partners, new and expanding markets for our products and other statements regarding our plans and objectives. We will indicate forward-looking statements by using words such as expect, anticipate, estimate, may, will, should, forecast, intend, believe, and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties…

Thanks so much, Dennis, and obviously we are pleased with the results of our second quarter and are looking forward to a very strong second half of the year. The new product launches, together with the dissipation of much of the competitive misinformation that has been in the market has served to further enhance RIM’s leadership position with our customers. We are experiencing unprecedented strength in several areas of our business, including retail and indirect channels, enterprise, BlackBerry Connect, application extension and carrier commitment to the BlackBerry platform. For a business update, in September, the new BlackBerry Pearl was launched simultaneously in all T-Mobile channels in the United States, and the response to the product has been exceptional. Net subscriber account additions at T-Mobile in the weeks following the launch were significantly higher than we had been seeing prior to the Pearl launch. To support the launch, T-Mobile is offering attractive pricing of $199 and $19.99 per month, and also making Pearl available for sale as a phone only, without the requirements that users purchase a data plan. T-Mobile is planning a number of marketing programs around the launch, including Pearl on the AOL Gold Rush reality show and running print ads in a number of leading lifestyle publications beginning in October. Product reviews and user feedback has been overwhelmingly positive, and we believe that we may have one of the most successful BlackBerry products ever on our hands. Outside of the United States, Rogers in Canada plans to launch the Pearl shortly, as does O2 in the U.K., and T-Mobile in a number of European properties. In addition, our carrier partners around the world are all eager to move forward with launch plans for the Pearl, and our ISB partners are excited to be developing applications that take advantage…

(Operator Instructions) Your first question comes from Gus Papageorgiou of Scotia Capital. Please go ahead.

Thank you. Jim, I want to focus on something you said here about the service fees that the carriers are going to charge for BlackBerry. I think this is key as to how successful the launch of the Pearl is. Obviously the T-Mobile plan of U.S. at roughly $20 a month is very attractive, and I know you do not have control over the carriers, but what is your sense of what the other carriers are going to launch in terms of plans for the Pearl? Is this $20 U.S. plan roughly what we are going to see as the norm, or is it kind of a one-off and the other carriers are probably going to try to charge more?

Everything we do with the carriers is partnership and collaborative. Let me put it this way -- BlackBerry is exceptionally profitable for the carriers, and it has been calculated to us that certain carriers say a BlackBerry subscriber is [bind] to fixed time, the profitability of a regular cellular subscriber, when you take ARPU and churn and look at carrier acquisition issues. I think it is fair to say that outside of BlackBerry and a little bit of PC card stuff, data adoption rates for a lot of plans maybe have not been quite what a lot of these carriers have looked for. I think the way to respond to your question is, with all the enhancements in BIS and as the sort of more sort of mainstream nature of Pearl, I think a lot of these carriers are sitting there thinking yeah, this is five to six times more profitable as our normal subscriber, but maybe if we notch down that sort of pricing strategy that isn’t quite so much -- I do not want to say a little more aggressive, will they hit a point in the elasticity curve where they can multiply the addressable market? We saw in Italy when they put in that kind of pricing plan, there was a several X of subscriber additions, like it was hundreds of percent increased in that market. So yes, I think a lot of the carriers are being persuaded to think of do you want to have it 500% as profitable as your average subscriber or sort of 350% with a multiple X on profitability? I think they are actively looking at that and realizing that a few bucks or a few euros up or down on the data plan, if that torques the elasticity curve, there is a wonderful return on it. But I cannot really comment specifically on what they are doing, but I think you are going to see some pretty positive plans.

I will just quickly follow up, could you just explain, on an all-you-can-eat plan, you get your regular monthly fee. On these pay-as-you-go plans, how is the service fee calculated from the carrier to RIM?

It is different with each carrier, but at the core, there tends to be some minimum amount that they pay us, and then there is some varying with the consumption plan, with a surprising number of the users going to the full flat rate plan, but it provides an entrée for them to try quickly or just to compare with other plans. So we become a, in sort of that ramping phase, with a minimum of some variation of the data plan. Generally, customers buy these things, they take a voice plan too and that is incredibly important business, of course, to the carriers.

The next question comes from Mike Abramsky of RBC Capital Markets. Please go ahead.

Thanks very much. Jim, you made a comment about I think you said competitive misinformation out there. There is a lot of talk of competition. Where do you see the competitive advantage being sustained in your expansion into the consumer space, and what key facets do you think you are going to continue to differentiate on?

I think the principal part of competitive misinformation is that there is new competition coming out there. I think one has to understand that most of these companies that are mentioned have been bringing an A game to this space, or bringing their best game to this space for over a decade. This kind of competitive reality is really -- it has been there from the beginning when we did not have anything like the resources and position and capacity and experience and so on that we have today, so it is a much more complex thing. Again, if it was so easy, why did all these best efforts not derail us from the beginning? In terms of the consumer point, really it is important to understand that a very substantial proportion of our subscribers on an ongoing basis are BIS, so there is clearly a market there, and this was before we have aggressive plans for the channel and the [bearable] BIS and products like the Pearl. I think what the carriers have discovered in the consumer side, like they have discovered in the enterprise side, is data is a system experience, and so there is all elements of care, in channel, in platform, in knowledge transfer, in branding and service availability and so on that make it very, very critical to even have the market take off. As a for instance, I have always -- I have started to realize that the gateway to consumers is very much through enterprise because you really have, even though enterprise is obviously a challenging market, we have done well, you have a chance to harden the service there because you go through a sophisticated IT department. In consumer, it has to be darn near perfect or it will just crush the carriers on care metrics and profitability metrics, which are tightly managed. As well, do you have the same platform interfaces in a non-contentious way with the broader Internet world that we -- the same thing we did on the enterprise. So bottom line is, it shares many similarities with the enterprise market on a structural platform basis, plus the fact that a high percentage, about 75% of B2B sims are bought on B2C channels, and now we have a product that can address both segments, the B2C channel, we will pay more attention to it because you can get both the business and consumer with one device and one platform. I think there are a lot of competitive dimensions that really support it, and they are slightly subtle, unless you are in the industry and they realize once you are in the industry, there are very formidable elements that are needed to be addressed to make this a proposition to the market.

Your next question comes from Mike Ounjian of Credit Suisse. Please go ahead.

Thanks for taking the question. Dennis, within the net add guidance you have given, could you give us some perspective about how you are thinking about the mix between enterprise and prosumer and how that might have compared with the August and May quarters?

Yes, it is a fair question. I cannot give you numbers because we do not break it out like that, but I can talk anecdotally. Clearly the launch of the Pearl is expected to increase BIS. As Jim said, we are seeing more and more come from BIS. I think I would characterize it as our enterprise business is growing solidly in the U.S. and very well overseas. We are just a couple of weeks into the Pearl launch, so it is sort of hard to really go out there on the size, but we are very encouraged by what we see so far, and it has only been launched with a few carriers. I think we are pretty excited about that rolling out to numerous other carriers around the world. I think in general, we expect to see the mix of consumer or BIS users continue to increase as a percentage of quarterly sub adds.

The next question comes from Brantley Thompson of Goldman Sachs. Please go ahead.

I was wondering if you could elaborate a little bit on the mix of maybe U.S., non-U.S. subscribers in terms of the growth rates you might have seen in the regions, and give us any indication you might about the level of BlackBerry Connect subscriber contribution. You talked about that a lot. Are we getting to a point where that is seeing some real critical mass here? Thank you.

Sure. On the U.S. versus rest of world, the percentage stayed flat with the prior quarter at 26%. I think the explanation is probably that the August seasonality in the summertime is more evident in Europe than it is in North America, so North America got a bit of a head start, if you will, in the month of August. Usually, we have been seeing rest of world growing at a faster rate, so that has been ticking up by about a percent a quarter. This time, it stayed flat. You did not ask, but going into Q3, it is interesting because you would think the normal trend would continue, except for the fact that we have made this new launch in a new market in North America, so I think it is going to be interesting to see how that plays out and which market grows the most. As far as BlackBerry Connect, we get asked every quarter to break out the sub numbers. We are not there yet in terms of making that disclosure. I would say that the numbers are starting to get larger and more meaningful. Jim talked about all the different handsets that are out there, so I think it is gaining some momentum, but I cannot tell you when we are going to start breaking out those numbers.

The next question comes from Maynard Um of UBS. Please go ahead.

Thank you. Can you just talk about the trends you are seeing on the BES side and whether your upgrades to BES 4 because of end-of-life should have any impact on the BES revenue going forward? Then, just quickly, any updates on your manufacturing capacity plans, given the number of new models you have introduced this year? Thank you.

Sure. We guided software revenue to be slightly higher in the next quarter. Whenever we do go through the end-of-life and bring on a new version of BES, it always has a little bit of a pop. It is not a stat we really focus on anymore in terms of external reporting, the number of BES, the number of companies was just -- the point was, we were in a lot of companies, and I think the number just kept growing and growing and we did not need to keep breaking it out, but I would say that we continue to grow the overall number of installed BES in a very healthy way and penetrate more companies and go deeper into existing companies. I think software revenue, as we said, is going to go up a little bit next quarter. It is a tough one to forecast. I think over the long term, we hope to continue to see increases there, and we just guide it quarter by quarter.

On the hardware side, the manufacturing?

Yes, sorry. We have been increasing and doing some work with the facilities in Waterloo and have been expanding that. The majority of our expansion plans, as we have talked about for quite some time, are going to be leveraging outsourcing partners, so we are continuing to do prototyping, new device runs here and we certainly have a good amount of capacity here, I think north of 5 million, but we are definitely planning on using our outsourcing partners for the majority of the expansion going forward.

The next question comes from Jeff Kvaal of Lehman Brothers. Please go ahead.

Thanks very much, Jim and Dennis. I was wondering if it is too early for you to characterize, for the Pearl, to what extent the demand is replacement sales and to what extent the demand does not carry a BlackBerry service agreement along with it? Thank you.

I can address the first one. I do not know the answer off-hand to the second. Jim might, but whenever you launch a new product, there is a high amount of upgrades, as all the folks who are currently using BlackBerry want the hot new one. I would say that, I am sure you have done your channel checks, et cetera. The feedback on new sub adds has been very promising and we are very encouraged by that. I think as we continue to go out, we think it is going to drive a lot of new subs. I spent some time before talking about upgrades. We do not mind selling upgrade handsets either.

It is a fair question, and it is a little early to give an answer, but I will share with you the strategies that are at hand, and that is that our belief is and the carriers belief is that a dramatic proportion of people want to use data services. The challenge is how do you get them into it? So we are really applying multiple strategies here in multiple channels, but for purposes of the offering, first of all, it is a very, very stylish and high performance phone. As we say, it is the triple crown. You have 100% BlackBerry, 100% stylish phone, and 100% media Smartphone, with no compromise. So by giving the option that you can buy it as a stylish phone, we think a lot of people will start to use the [share] type and say this is an awful lot nicer than multi-tap, but in the absence of trying it, and they may not have thought they wanted a data plan. Maybe they were more SMS oriented, or whatever. As well, with many of the carriers, we are also doing plans where it is nest it available for BlackBerry and you can just use it on a variable basis right out of the gate. So yes, I think we will sell a fair number of just voice alone. I think a lot of people will just start to nest it available for data BlackBerry services, and then when somebody uses it the first time, they all of a sudden discover it. What is different about this is to use BlackBerry, you have to deliberately go in and buy a full plan and all that, and it is a very considered sale. You could not discover your way into it. So I think we really want to offer all ways for people to on-ramp, but what we have found is once they try it and use a little bit, they tend to ramp right up to a flat-rate plan because they are so attractive and they are so compelling. The challenge is, how do we get them there? For us, yes, we are a great, sort of no compromise stylish Smartphone, but do I think a substantial proportion of those will thereafter trial data service and use BlackBerry service? I think so, but what is so exciting is all the different positioning and programs and rate plans and channels to do this. That is part of the reason we are just seeing the adoption really come on in a pretty nice way.

Does that affect your service pricing at all, your monthly fee?

In the BIS area, to the extent that we have some minimum amount, but then we vary to our flat rate, yes, because if somebody is going to use a couple hundred K and the carrier is getting very little because it is just on a variable basis, then that is the only fair way to do it. That being said, what happens is most of them just trundle right up to the full rate plan, or the flat rate plan. It is just how do you get them into it where it is either pre-activated, and it is pre-activated, it is easy to try. So yes, this is very much a channel friendly, a user friendly, an adoption friendly strategy. It seems to be paying very good dividends.

The next question comes from Rob Sanderson of American Technology Research. Please go ahead. .

Thank you, and congratulations on some great product launches and acceleration in your outlook. A couple of questions, a lot of them have been asked and answered already, but just to follow along with Jeff’s question there, Dennis, the previous ranges that you have talked about for service pricing, is that still adequate to model for the medium-term outlook?

I think in the near-term, the BIS user range that we talked about is still intact, and certainly the BES user ranges are still intact. For people who just buy phone without a plan attached, et cetera, they are not connected to the BlackBerry, then they would not impact those ranges. I think as these new channels and programs and the number of users in these different areas grows, then we will be able to start to break it out, if necessary. I do not anticipate a material change in the near-term.

Then, I guess a housekeeping item on tax rate. It seems that the outlook for taxes is ticking up a bit from what we thought maybe a quarter ago. Is this reflective of better-than-expected results in the U.S. market?

What it is is long-term tax rates depend on your global corporate structure, where different jurisdictions you have business in and that income is and transfer pricing between all those jurisdictions. I guess the best way to describe it is just to say until things mature and develop in these different areas, you just have to be conservative until you can confirm that all these, any structures work or any -- the transfer pricing and all those things all make sense, and as the businesses have matured. I think the simplest answer is that you are just taking a more conservative outlook until all the global business matures.

The next question comes from Andrew Neff of Bear Stearns. Please go ahead.

I just wondered if you could talk at all about the new product directions, or things like that. You have the Pearl out. Can you talk how you plan to roll that? There has also been speculation about other types of products, such as Indigo and things like that. Can you give us any sense about what you are planning along those lines?

Suffice it to say, we have a very aggressive roadmap on our hardware, both for EDGE and for CDMA EVDO, for UMTS and then with HSDPA. It is a very exciting roadmap with the different transports and bands and modes. We also are addressing different form factors, with the QWERTY ensure type, as well as the Pearl seems to be just overwhelmingly well-received, and the media stuff and the expandable media is something that is being received very well. So for sure there is a real aggressive hardware roadmap and partner engagement and carrier engagement on that. Again, the part that is really exciting, and I sort of maybe should dwell on this a little bit, because I do not think I did enough on the call, but one of the CEOs of a major carrier in Europe was bemoaning to me that -- he said “less than 1% of the camera phones that I sell activate a data plan”. There has been so much discussion on media capabilities on Smartphones and what BlackBerry is is really a connected middleware platform. I think the missing link there has been you want media, but you want it in a connected structure. So what is exciting about these products is not only the hardware aspect of them, but what you can do with them now because you have a connected platform behind it. In roadmap, I think it is really important to not only say talk to me about the hardware and the media capabilities and the form factor, et cetera, et cetera, which is obviously -- and that is fair, and definitely talk about the channel strategies and the pricing and the service strategies and the carriers -- that is fair, but I think the one part is -- for instance, I am going to say this again. A couple of the main ISBs in the industry came up to us and said in the mobile area, 70% to 80% of the customers who want application extension that approach us, it is BlackBerry that they want. In other words, BlackBerry has become the dominant platform for wireless. As we have said, it is not about a client strategy -- it is about a connected framework strategy. So the applications are a lot less what can I do on the client, but what can I do in a connected construct? We are doing a ton on the devices and we are doing a ton on the partnerships so that you got this rich devices, but you also got great things to do with them that are not just on device.

The next question comes from Paul Coster of JP Morgan. Please go ahead. .

Actually, maybe I could take that forward a bit further, Jim. You have nearly 200 carriers now with whom you have integrated your platform, your billing systems, your operating model, et cetera. It seems to me that a content provider that wants to reach a global audience can do so almost immediately through BlackBerry without having to craft individual deals as all of these carriers. Is that going to happen? Are we going to see branded content distributed through BlackBerry within let’s say the next year, as value-added services that we have not previously seen?

I think the answer to that is a resounding yes. I just had a flight back from the other side of the world, literally, last night and we met with -- for instance, five different sessions with CIOs in the country prior to that, and quote, unquote, and I did them with the CEO of the carrier, and quote, unquote, the answer is we like working with BlackBerry because we know that you are our partner and we can trust you when we work with companies and application vendors and content players. So to answer the question, yes, the carriers want to be a platform. They want the enabling, and the content vendors want the leveraging that this can sort of span 200 to 300 carriers, but I think part of the magic is we do the enabling, but the carrier is not disenfranchised. None of this is turning the carrier into a pipe. This is a service offering that the carrier avails a strategic platform to the specifications that they choose, and generally they are choosing to do a fair bit of enabling, but the key is they do not disintermediate themselves, so I would say 90% of the carriers are just absolutely going full speed on this. Those that are more careful and want to sort of wall the garden a little bit more, we say fine and we spec the offering that way on a media content point of view. But we are absolutely swarmed with content relationships and media extensions and application extensions. I think it is going to surge way beyond expectations because again, what we have tried to say is these devices are network appliances, and applications, when it comes to mobility, is fundamentally about a connected experience. It is not about the on-device disconnected framework. It is about the to the net framework. I think one could easily see a zero on the number of applications out there very, very quickly.

The next question comes from Vivek Arya of Merrill Lynch. Please go ahead.

Thank you. Jim and Dennis, my question is really about the longer term business model, specifically the product mix and impact on margins. The hardware sales have obviously been very strong, but the software sales have not grown, despite the two software acquisitions you have made. Even the service fees could be under some pressure, as you change the mix towards more BIS rather than BES, so my question really is as I look a year or two down the road, are we really going towards a model where hardware sales would be 80% to 90% of total sales? Or are there other things that you are thinking of doing that could still help maintain a good software and service mix into this product profile?

Part of the reason you see that shift now and then is when you have hardware that is surging so fast, you always lead a service relationship with a device. When you look at the service access fees and you buy a device, you have a couple of years of revenue, if not three years of revenue, that leads a service access fee. Then, when there is hot new devices, you have upgrades and some people have shown themselves particularly adept at sort of dropping these in the ocean and needing to replace them and stuff like that, so that happens as a natural utilization profile. But at the core, when you model it, it is when you are growing that fast, it naturally biases to more hardware, just because it leads -- it is like if Coke is growing in a place where it never was before, you are selling a whole bunch of Coke machines while you are positioning yourself in markets. I think if our growth keeps cranking up so fast, it is going to naturally buy us a little more, but over time, service and software becomes more and more, so no, I do not in any way think it is -- I think it will -- personally, my -- it is tricky to model, as well as devices are hot, but there is no question over time that software service is going to become a bigger and bigger percentage over time, but we are sort of pleasantly delighted by how much the market is starting to realize that a connected Smartphone that is the triple crown, as we say, 100% phone, stylish phone, 100% smart media phone, 100% BlackBerry, was kind of the missing link in the industry. That is part of the reason it pops up, when you fulfill the void of the triple crown, it happens a little bit, but that being said, no, long-term model software service is going to be an increasing percentage of sales.

A quick follow-up -- what is your expectation from the Slipstream acquisition and from Ascendant? We have not heard a lot about them. Obviously they are very recent, but what is your expectation from those two acquisitions?

They are very, very different for their purposes. The one thing about Slipstream is it is being built into our system. We expect several hundred percent of efficiency and compression. We have even had experiences where it is upwards of -- you know, you leave the hundreds and go to the next level of percent. What that means is if you can five or six X the compression, you five or six X the speed and you five or six X the network capacity, and you five and six X the battery life, so you get this virtuous circle, which really, really matters when you start moving to the media world, where the files get a lot bigger. So Slipstream, and it is very harmonious with faster networks and richer applications and carrier platform strategies, so we think -- and what they did is they built their business making the dial-up world perform just about as well as the broadband world. Well, in a sense, there is a kind of parallel with wireless. Sure, HSDPA will do a lot if it is not too busy, et cetera, and it is there, et cetera, and it is priced okay, but you still have to manage the battery and they still have to manage capacity and it is not going to be everywhere all the time. It is an exciting one and I think it is one that people do not sort of quite see yet, but one day they are just going to notice their BlackBerry for all these media things, just go so much faster, you almost will not even believe it. On the Ascendant one, we have been pretty active on the Ascendant. The customers -- it is the PBX synchronization, and I would say we have been overwhelmed…

Operator, we are at 6:30, so I think that is probably a good time to wrap up the call. I would just like to remind everyone that there is a post fee service available and you can listen to the call, which has been recorded and is available on the investor section of our website at rim.com/investor, so thanks very much.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your line.