Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Research In Motion first quarter fiscal 2009 results conference call. (Operator Instructions) I will now turn the conference over to Ms. Edel Ebbs, Vice President, Investor Relations. Please go ahead.

Thank you. Welcome to RIM's fiscal 2009 first quarter results conference call. I’m Edel Ebbs, RIM's Vice President of Investor Relations. With me on the call today is Jim Balsillie, RIM's Co-CEO, and Brian Bidulka, RIM's Chief Accounting Officer. After I read the required forward-looking statements disclaimer, Jim will provide a business and strategic update. Brian will then review first quarter results and I will discuss our outlook for the second quarter of fiscal 2009. We will then open the call up 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 before 6:00 p.m. Eastern this evening. Some of the statements we’ll 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 our expectations and estimates with respect to revenue, gross margin, operating expenses, CapEx, depreciation and amortization, investment income, earnings, earnings per share, channel inventory, seasonality, and ASPs for Q2 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, replacement device sales, and other non-financial estimates; our product development initiatives and timing; developments 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, continue, and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made. Many factors could…

Thank you, Edel. We are pleased with our solid first quarter results with revenues of $2.24 billion, up 107% from the same quarter last year and earnings more than doubled year over year. We continue to grow our market presence and now have over 375 carriers around the world offering BlackBerry products and services. Our market share continues to grow and in first calendar quarter of 2008, according to IDC, our U.S. share increased substantially and was more than double that of our nearest competitor, whose share decreased significantly from the prior quarter. In May, we hosted the Seventh Annual Wireless Enterprise Symposium, which had record attendance of more than 5,000 people, with attendees coming from 90 countries and representing 390 wireless carriers. There were representatives from over 350 BlackBerry alliance partners in attendance and for the first time, we held a two-day carrier summit, with breakout sessions discussing the opportunities, strategies, and potential profit in the wireless data space. Topics included pricing strategies, merchandising approaches, managing the customer lifecycle, and targeting specific market segments. The feedback from carriers on this event was overwhelmingly positive and we look forward to continuing to work with our carrier partners to help them maximize the profitability of their business model. In Q1, we added approximately 2.3 million BlackBerry net subscriber accounts, which was in line with our April forecast and was 6% higher than the approximately 2.2 million net subscriber accounts added in Q4. This takes the total BlackBerry subscriber account base to over 16 million. We continue to see strength in North America and the heavy promotion of the BlackBerry Curve 8330 by our CDMA partners in the latter part of the quarter drove high numbers of net new subscriber account additions and upgrades throughout the U.S. and Canada. We also saw…

Thank you, Jim. Revenue for the first quarter ended May 31st was $2.24 billion, up 19% from $1.88 billion in the previous quarter. Handheld devices represented $1.84 billion, or 82% of RIM's revenue during the quarter, up from 81% of total revenue in the previous quarter. Total devices shipped in the quarter of approximately 5.4 million were up from 4.4 million in the prior quarter. Approximately 4.2 million new devices were activated in Q1, either for new customers or for replacements and upgrades, not including phone only sales. Channel inventory at the end of Q1 was up just slightly from Q4. Device ASPs in the quarter were approximately $341. We expect ASPs in Q2 to be slightly higher than in Q1 at approximately $350. Service revenue was $292 million, or 13% of revenue for the quarter, up $38 million from Q4. Monthly ARPU declined just slightly from the prior quarter. Software revenue was $67 million, or 3% of revenue. Other revenue, including non-warranty repairs and accessories, was $45 million, or 2% of revenue. Gross margin for the first quarter was approximately 51%, in line with our expectations. Operating expenses increased by 22%, slightly more than we had forecast last quarter. R&D spending was $128 million, or 6% of revenue for the quarter, and selling, marketing, and administrative expenses increased to $327 million, and were 15% of revenue. Included in operating expenses is stock option expense of approximately $10 million. The tax rate for the quarter was approximately 27.5%, slightly lower than our forecast, primarily due to the impact of foreign exchange relating to certain balance sheet items. The impact of this favorability in the tax rate was approximately $0.02 per share. Net income for Q1 was $483 million, or $0.84 per share diluted. Weighted average diluted shares used in the…

Thanks, Brian. Before I discuss our outlook for Q2, I would like to remind everyone that these forward-looking statements reflect management’s best current estimate and should be taken in the context of the risk factors listed at the beginning of the call and outlined in our public filings. We are forecasting revenue for the second quarter of fiscal 2009 to be higher than Q1 in the range of $2.55 billion to $2.65 billion. We expect hardware shipments to be over 6 million units and an ASP of around $349. The expected increase in volume of shipments is primarily due to continued strong sell-through of existing BlackBerry products, such as the CDMA Curve and WiFi enabled devices with our North American carriers, as well as some stocking for back-to-school promotions scheduled for August. While there will be some new products included in the mix, we expect shipments of BlackBerry Bold and other new products to really start ramping in Q3. We anticipate that weeks of channel inventory at the end of the second quarter will only be up slightly on a forward-weeks basis but are well within the range we are comfortable with. Software revenue in Q2 is expected to increase slightly. We are targeting net subscriber account additions for Q2 of approximately 2.6 million. As expected in Q1, we saw a very back-end loaded quarter in terms of net subscriber account additions. The launch of the 8330 CDMA Curve together with Mother’s Day promotions drove us to new highs in terms of weekly run-rates in the latter part of May. This momentum has continued into June. Typically the challenge in forecasting the second quarter is the seasonal slowdown that is characteristic of the summer months. Given the performance so far in June, and taking into account that while there will…

Thank you, Edel. We see tremendous growth potential ahead of us and we are taking the appropriate steps through targeted investment, new product launches, brand building and channel expansion to ensure we are in a position to capitalize on this exceptional opportunity throughout the remainder of RIM's fiscal 2009. We look forward to updating you on our progress again in September. This concludes our formal comments. Due to the large number of people on the call, we ask that you please limit yourself to one question per person. We plan to end the call today by approximately 6:00 p.m. Would the operator please come on to handle questions?

(Operator Instructions) Your first question comes from Jim Suva from Citigroup. Please go ahead.

Great. Thanks very much. Can you give just a little bit more color on the SG&A and the investments you are making in the future? I believe you guided this quarter for SG&A to grow like 17% to 18% and it came in around 22%, or $10 million more. So an incremental increase beyond a very healthy increase -- it just seems like, is this more marketing? Is this more new product or how should we feel comfortable with these increases that we are seeing and what are they for?

It’s really -- you know, we have a lot of stuff happening in Q3. We have product launches. We have a lot of carriers lining up some great programs and we really thought this is the right time to start investing. We really started last quarter, I mean Q1, started a branding campaign and I think you probably saw -- we talked a little bit about this at our analyst day -- you may have seen some of the ads on TV as well. There’s really two parts to it. There’s a brand building -- there’s brand building activities that we are doing and then there is more demand generation type activities that we are doing, and it’s really all designed to take advantage of all the stuff that we have happening in Q3.

And the big increase then for next quarter also and then does it level out after that or do we continue to see it upward?

I think you are going to continue to see it grow, as long as the programs are providing the return on them that we expect to get. But I mean really what it comes down to is what we are going to do on the top line.

Yeah, it’s a surge of -- it’s a surge of capacity building and branding and demand and other programs ahead of really what’s a flurry in the back half of this year. And we’re delighted with the top line growth, obviously, in Q2 which is normally not the busiest time. And what’s lined up for the back half of this fiscal year, especially the whole holiday season, is by far unprecedented for RIM. A lot of execution pressures, and really this is -- but we have a lot of brand and marketing and channel and program investments due ahead of that, so it’s really investing to drive the top line, shifting a little more out of the traditional R&D side of it and there’s a bunch of other execution things. But we are pretty excited by the growth prospects and it’s really an investment to drive that.

Thank you very much.

Your next question comes from Maynard Um from UBS Warburg. Please go ahead.

Thanks. Your top line guidance implies really strong fundamentals and I presume the visibility and lead times for hardware builds there give you good confidence in that range. The real question here, and too I guess your last comments and last question is really on the operating leverage side, and clearly it looks like you are building for something much larger in the back half of the year. I think you cited the strongest growth opportunities ever. In terms of the leverage in the model, I mean, do you anticipate that you need to continue to spend at this high clip going into the back half? Or should we anticipate with the top line growth a large part of that leverage should start to flow through in the back half and really taking advantage of the building that you started last quarter and into this quarter? Thanks.

It’s a fair question. There is leverage in the model. There’s no -- that’s something we believe clearly. There are many changes at hand because you are always kind of investing into such a strong growth amount, so in a sense the investment becomes a constant. Even though we are performing very well currently financially, you still are investing for -- you know, it is important to remember we had 107% growth year over year, and we are still growing very, very strong and we expect strong growth. So there’s a constant in investing into growth where the amount seems a lot today but it turns something so positive tomorrow that it is small by comparison. As well, there are a number of very, very positive things we see can be done with the model and it’s a question of timing and degree versus just purely driving top line. So right now, it really is an adoption acceleration game, as I see it, and a channel with a flurry of products and a strong channel adoption and new carrier launches and ecosystem enabling of new apps, and just a model that’s so powerfully positive for carriers. And so that aspect really focuses us right now and just -- you know, the top line is very important because as long as we keep that growth going, many, many good things fall out and if you stop investing for growth, yeah, you bet the model just torques right back. But we’ve always had to invest -- you know, you have to invest certain periods of time to manifest that growth, whether it’s a quarter later or two quarters later or a year later, so just be -- so yeah, the model is positive, very positive, but you are also investing into hyper-growth and sometimes they are currently expensed items that are just -- that just distort the model a little bit.

Your next question comes from Michael Abramsky from RBC Capital Markets. Please go ahead.

Thanks very much. What do you see, Jim, the company looking like after this period of investment for the next level? Is it just more of everything you are doing today, more products through the same channels, bigger brand, more capacity? Or is there something additional that you are trying to build that’s associated, for example, with your consumer push associated with some of the new things in front of you that you are wanting to capture in the market? Could you just give us a sense of where you are going strategically with these investments?

That’s a really fair question and I reserve the right to be cryptic in my answer, for the best interests of our shareholders. You know, this is a newsy space -- I mean, a day doesn’t go by when something strategic and interesting isn’t happening and this week has been no exception. And by the way, we’re barely -- you know, we’re only three days through this week and we see very, very positive structural things happening in our market, and ones that are worthy of considerable reflection. And so yeah, we see many aspects of the business shifting. You’ve seen some interesting capabilities on the B2C and the cooperation that is coming out of there. Some of the big enterprise guys like SAP, you know, the carrier and the channel, much more powerful applications going on, deeper, deeper sort of sectoral expansion. And we sort of slid in a bit of a sleeper today, which was the Australia Cisco Vodafone one, which is really a pilot for global rollout with Cisco and other carriers, where the carrier becomes a turnkey SMB IT play, which has been sort of a market that’s always been hard to bring about and it’s using the Cisco box, which has different names or different countries, and an MVS and quite frankly, there’s exciting opportunities to roll in Unite and you just have this turnkey box there. So there are many, many exciting levers at play and enablers that get the players who have strong positions in this space very excited. And it really becomes a question of timing and degree for us, but it all becomes moot if we don’t keep torquing adoption. And so as long as you feed adoption, as long as you have a strong carrier profit model, many other things are there and are going to happen. And we like where we sit, you know, and you see lots of dynamics in the market to sort of, you know, ignoring us or countering us or leapfrogging or seeking to or something like that. But we’re in a special position and if you really sort of reflect on the totality of what is going on, you really come to the conclusion that all roads lead to adoption right now and then definitely sort of streaming and enhancing and evolving later in ways that properly serve customers and carriers in the ecosystem. But it’s a bit of a land grab game right now.

And just to complete the question, just a brief follow-up -- you said that earlier you are going to see benefits, investors will see benefits in terms of revenue and earnings. How long are you willing to -- [or not be] defer margins in order to achieve the kind of land grab and growth and momentum that you want to achieve right now?

Well, I think by September you should have -- we should be able to give guidance as to how well we feel positioned for what’s coming up in that season. And if you see that the investments that we are making today bring satisfaction 90 days later, you know, I think there’s a return on that. If there’s -- and there’s also long-term strategic things because it drives the cascading of all these channels and so on. So you know, there’s a long-term strategic element but I think we’ve been pretty clear that we feel we’re in a very -- and I tried to be pretty clear on the call -- we’re in a very special time for this industry and with the carriers and the emergence really in the holiday season in the second half of this fiscal year. And to actually be growing this strong over the summer, you know, is really quite excellent and yet we feel that’s a modest harbinger of what’s to come if we can execute what we have before us and things emerge as we expect. So I think there are some near-term things but I think there’s some medium term things, but this has been a constant focus on our long-term goal in this company. You know, our strategies fundamentally haven’t changed in the past decade and we don’t expect them to fundamentally change but when you’ve got such rapid emergence, investing a bit, whether it’s currently expensed or capitalized, that’s an accounting thing we’ve considered wise and we think that’s why we’ve continued to grow so well and shareholders benefit.

Thanks, Jim.

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

Good afternoon. Thanks. It’s going to be a call filled with margin questions, so I’m going to jump on as well; just a lot of talk about operating expenses but can we talk about the gross margin implications and what to expect as the new products ramp up? Will it be much like we’ve seen in past product cycles or do you think there is something different in terms of the unit economics on the new phones as we move into more of a 3G era?

The only new product we’ve announced yet is Bold but I mean, I think generally most of our new products follow a pattern where certainly when they are first introduced, gross margins are lower, sometimes a fair bit lower than our average and as the products scale, you get gross margin improvements. So I mean, I think that sort of answers one part of your question. The other part obviously that goes into that is ASP and what do you do on pricing, depending on what segment of the market you are targeting. When we launched the Pearl back 18 months or more ago, you know, that product was launched at the lowest price point we’d ever put a product out at, around $300 and the gross margin was a fair bit lower, probably 700 basis points, maybe more, lower than what our average gross margin was at that time. And as that product scaled, it really improved to the point at which now it’s a very good gross margin product for us. So I think that’s the type of pattern you’d expect to see, depending on what ASPs you decide to use in the market. The other thing I did mention on the call was just some of the cost things we are seeing from some of our components providers related to foreign exchange. And I mean, I think that’s something that -- you know, we’ve been able to sort of absorb that for a little while but some of it is being passed through. We are doing some things to try to mitigate some of it. We are expanding our base of outsourcing partners. It will give us a little more flexibility there, so we are doing what we can but I think generally gross margins around where we are for Q2. I wouldn’t be modeling them going up significantly or anything.

Right. Just as a follow-up, Edel, you mentioned in your prepared comments about the mix of new products in the August quarter guidance. Is it fair to assume that’s kind of between 5% and 10% of the $6 million, or is that the right ballpark or --

I’m not going to give you a number, and some of it depends on -- I mean, new products are the hardest thing to predict, right? So I’m not going to give you a number but it would be a small percentage, yes.

Okay. Thanks very much. Oh, one quick question; what was the option expense this quarter?

I think we said $10 million.

$10 million.

Thank you very much.

Your next question comes from Scott Coleman from Morgan Stanley. Please go ahead.

Thanks, guys. I wonder if we could just shift the focus to cash flow and some of the uses of cash you expect over the next couple of quarters. I guess one of the things that stuck out with me was last quarter you talked about CapEx being about $180 million. It was up higher this quarter, 195, and if I heard the numbers correctly, I think you said $250 million for the next two quarters. Clearly this goes hand-in-glove, or at least I assume that it would with some of the higher SG&A expenses, but can you fill us in on what this capital is being allocated to? And then I guess a follow-up to that would be you spent some money on some patents last quarter. You are spending again this quarter, as well as some things that closed after Q1. Can you give us a little more color on what you expect to get from these expenses, or from this use of cash? Because I think clearly understanding where you are going with these intangible assets would help us out here.

Sure, Scott. I’ll take your first question and maybe Jim can take your second on the patent. Yeah, I mean, the CapEx -- it does -- one of the things with CapEx is that they tend to be big, lumpy expenditures. So while we guided for $180 million, it came in at 195, sometimes it’s just timing issues. You know, there’s been many quarters, probably the past couple where it’s gone the other way, where some of the CapEx was delayed. So those kinds of dynamics are at play. Where do we spend the CapEx? There’s a couple of areas, some of them Jim alluded to. We’re growing our R&D base very substantially, hiring a lot of engineers, not just in the Bochum and Florida operations that Jim mentioned but also here in Waterloo and other places in Canada, and in the U.S. So you know, you have to have buildings to put those people in, you have to buy them equipment, so there’s a lot of it going to that type of activity. Then there’s the investment in our infrastructure, building out additional network nodes, expanding our capabilities in our [NOK], building in redundancies, those types of things. So those would be the primary areas where they go. IT is also another area -- just, you know, everybody in here needs a PC, at least one, so there’s a lot of that as well. Your question on the patent as to what value we are getting from them --

Yeah, and --

Actually, if I could just interrupt, just to follow-up on that, Edel, what changed over the course of a quarter for your CapEx to be 40% higher in Q2 than you thought it was going to be three months ago?

I don’t have the exact details on what it was. It could be something as simple as just the real estate deal closing early or something that was pushed out from the prior quarter.

Okay, thanks. And I apologize for interrupting, Jim.

No problem. On the IPR stuff, I mean, we’ve just come across some fantastically fortunate circumstances to buy some essential GSM IPR that was not licensed to other players in the industry and that just gives RIM, as we emerge more and more, and it’s for a broad number of families that it’s absolutely essential IPR. And those of you that are familiar with the essential IPR game and the whole sort of roving issues on this in the cellular handset world, I can assure you that that is enormously valuable to a company, if only used on a defensive basis, because it allows you to have irrefutable aspects of IPR in the GSM world when companies come claiming rates that may or may not be reasonable and fair, some of which are public, some of which are not. When you have absolutely irrefutable IPR that sits upon their infrastructure and/or handset sales from the past decade and going forward for many, many years to come, it’s a very helpful trading card and licensing discussion, and we’ve just been very, very fortunate in certain circumstances where these weren’t of value to certain companies and they valued the fact that RIM was -- saw them as a good basis to help keep our products cost-effective to the market and we as a company are very, very fortunate to get those. They don’t come up very often and they are from special sources, and the fact that they are not encumbered by other cross-licenses with other players makes them especially helpful to RIM.

That’s very helpful and maybe just to follow on that, when you say GSM I’m assuming you mean the GSM family, so extending into WCDMA? If you could just confirm, and is there a way that we can think about this from a margin perspective, that this will help you two or three points of gross margin on your --

Scott?

Yeah.

Sorry, that’s a lot of questions. We asked for one, and we gave you two more, so we’ve got to move one. We can -- Edel can chat offline.

Fair enough.

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

Thanks very much. I have a question about the gross margin line also; to what extent are there other variables about pricing that we should be considering? That question sort of morphs into a bit of a iPhone question as well, obviously some lower pricing there. Are you able to change the tenor of your conversations with carriers about subsidy levels? Are you worried about overlap with the Apple customer base as well?

I think the second half of your question doesn’t have particular relevance to our thinking but the first half does, and that is when you cross over to more consumer markets and you are getting hero product treatment into the prime buying season of the holiday, how should you price entry and acceleration and how should you do co-op and those kinds of things? And sometimes when they are dramatically bigger strategies than before, you know, the absolute contribution to the company is so much greater, do you do some special one-time entry things and that kind of stuff? And again, if it absolutely creates sort of a platform acceleration thing in kind of an emerging sector reality, is that a good business decision? And I think any way I look at it, it’s an enormously good decision because once you decide to become a BlackBerry user, you kind of stay there for life. And let’s not be too penny-wise, pound foolish when we do get very good absolute margin. Let’s not get trapped into a percentage game when there’s also a BlackBerry platform and tweaking the services thing in the future and helping the carriers and all aspects of this. And the fact that, you know, we have a model that’s so profitable for carriers that they want to have strategies to really in many respects multiply -- in fact, they are not looking at sort of double-digit percentage growth of the BlackBerry business. We’re talking triple-digit type growth strategies with carriers. So you can’t help but get into that discussion, and it’s a great discussion. And you have -- you reserve the right to say no and slow down your growth trajectory, and so is that sort of deleveraging a model in and out of the gate? I…

Okay, so thanks. That sounds like you aren’t seeing too much of an overlap then, Jim, with the iPhone customer base in particular.

No.

Okay. All right. Perfect. Thank you.

We have our last question from Simona Jankowski from Goldman Sachs. Please go ahead.

Thank you so much. I just wanted to ask you one question on the model, which is kind of comparing your activations number versus the device shipments. The gap there seems to be, if I heard the numbers right, about $1.2 million, which was again widening versus the last quarter, when I think it was more like $0.5 million and the quarter before was a little bit bigger, but not quite as big as this quarter. So I just wanted to get a better sense of how much of that gap you think is going into the phone only kind of shipments, and also how much of that is going incrementally into channel inventory? And then similarly, how you see that progressing into the August quarter.

Sure, Simona. I mean, the phone only -- I mean again, it’s an estimate, right? We do get some data points on it that are real but you know, we really do have to rely on our relationship with the carrier to get some of that data. I would say a few hundred thousand is probably phone only, give or take. And then beyond that, certainly some of it is going into channel inventory or going to replenish channels. You know, we had Verizon and Sprint both launch fairly late in the quarter with the 8330, so they are still taking product to support their channels and their channel fill. We are still expanding our downstream channels, so there’s a lot of indirects that need product, things like the 20-20 that we mentioned that we are expanding into in Europe. So I think as a level of, or our number of channels expand, the number of products you need to ship to even keep a few devices in each store gets bigger. So I really -- I mean, we’re quite comfortable with where channel inventory levels are. They are certainly well within the range that we are comfortable with. So while they are increasing on an absolute basis, I think with the run-rates that carriers are expecting in terms of sell-through, most of them are pretty comfortable and we are comfortable as well.

Thanks, Edel. Just to clarify, do you expect within your guidance that the absolute level of shipments into the channel in the August quarter is going to be larger or smaller than the absolute level of shipments into the channel in the May quarter?

I think we are expecting it to go up slightly on a weeks basis, so I think it might be just slightly higher.

Okay. Thank you so much.

Thanks. Thank you, Operator. In closing, I would like to remind everyone that there is a post-view service available at 416-640-1917, pass code 21252982 pound, or you can listen to the call, which has been recorded and is available in the investor events section of our website. Thanks everybody for joining us today and we’ll talk to you again in September.

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