Welcome to the Research In Motion first quarter fiscal 2011 results conference call. (Operator Instructions) I will now turn the conference over to Edel Ebbs, VP, Investor Relations.

Thank you. Welcome to RIM's fiscal 2011 first quarter results conference call. With me on the call today is Jim Balsillie, Co-CEO and Brian Bidulka, CFO. After I read the required cautionary note regarding forward-looking statements, Jim will provide a business and strategic update. Brian will then review the first quarter results, and I'll discuss our outlook for the second quarter of fiscal 2011. 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 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 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 our expectations and estimates with respect to product shipments, revenue, gross margin, operating expenses, CapEx, depreciation and amortization, earnings and ASPs for Q2 fiscal 2011 and beyond, our expectations regarding RIM's near and long-term tax rates as well as the effect of changes to Canadian tax laws, our estimates of the number of net subscriber account additions and other non-financial estimates, our product development initiatives and timing, developments relating to our carrier partners and other statements regarding our plans and objectives. We will indicate forward-looking statements by using words such as expect, plan, 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 cause our actual results, performance or achievements to be materially different from those expressed or implied by our forward-looking statements, including risks relating to our intellectual property rights, our ability to enhance our current products and develop new products and services, risks relating to competition, our reliance on carrier partners, third-party manufacturers, third-party network developers and suppliers, risks relating to network disruptions and other business interruptions, our ability to manage our production facility, security risks, risks associated with our international operations, our ability to manage growth and other factors set forth in the Risk Factors and MD&A sections in RIM's filings with the SEC and Canadian securities regulators. We base our forward-looking statements on information currently available to us, and we do not assume any obligation to update them except as required by law. I'll now turn the call over to Jim.

Thank you, Edel. We're pleased to be kicking off fiscal 2011 with a strong footing with unit shipments for the first quarter of approximately 11.2 million and the shipment of RIM 100 millionth BlackBerry smartphone. Earnings per share in the quarter were at the high end of our expectations and grew more than 40% over adjusted earnings per share in the same quarter last year. We added 4.9 million net new BlackBerry subscriber accounts for a subscriber base of approximately 46 million at the end of the quarter. Unit shipments in Q1 were impacted by later-than-anticipated shipment of certain new products scheduled for the latter part of the quarter. Revenue for Q1 was at the low end of the range we forecasted in March, primarily due to the slightly lower than expected shipments and the resulting product mix that favored lower ASP products. Product mix also led to the higher-than-expected gross margin in the quarter. Channel inventories remained relatively flat in Q1 and we're not anticipating a significant increase in weeks of channel inventory in Q2. BlackBerry smartphones are available through over 550 carrier and distribution partners in over 175 countries, and international markets continue to be a strong driver of growth. We saw ongoing success in our efforts to increase BlackBerry penetration in enterprise, consumer and prepaid markets around the world during the first quarter. Net subscriber account additions outside North America were particularly strong in Q1 and approximately 40% of the subscriber account base is now outside of North America. We are expecting second quarter BlackBerry smartphone shipments in the range of 11.6 million to 12.1 million and to add between 4.9 million and 5.2 million in net new subscriber accounts. Forecasting the second quarter is challenging given that we're planning two significant new product introductions that will…

Thank you, Jim. Revenue for the first quarter ended May 29 was $4.24 billion which was slightly higher than the $4.08 billion reported in the previous quarter and in line with the guidance we provided on the April conference call. As Jim mentioned, shipments in the quarter were impacted by slightly later than expected shipment of the new Bold 9650 and Pearl 3G, as well as a lower than expected ASP of $300 in the product mix that included less of these new higher ASP products. Handheld devices represented $3.35 billion or 39% of revenue during the quarter, as compared to $3.3 billion or 80% in the previous quarter. Total devices shipped in the quarter were higher than Q1 at approximately 11.2 million units. Approximately 10.5 million new devices were activated in Q1 either for new customers or for replacements and upgrades, not including phone-only sales. We estimate that both four weeks and the absolute level of channel inventory at the end of Q1 were similar to Q4. We expect channel inventory in Q2 to remain similar to Q1, both on our four weeks and absolute basis. Device ASPs in the quarter were approximately $300, which was slightly lower than expected due to product mix, reflecting delays in shipment of certain higher ASP products. Service revenue was $693 million or 16% of revenue for the quarter, up $53 million from Q4. Monthly ARPU was down from the prior quarter due to growth in the adoption of bills [ph] and the success of certain lower-priced service plans. Software revenue and other revenue accounted for the remaining 5% of sales in the quarter. Gross margin for the first quarter was 45.4% higher than the guidance we provided in March due to mix of handsets shipped in the quarter leading to a higher…

Thanks, Brian. Before I discuss our outlook for Q2, I'd like to remind everyone that these forward-looking statements reflect management’s best current estimates and should be taken in the context of the risk factors listed at the beginning of the call and disclosed in our public filings. We expect to ship between 11.6 million and 12.1 million units in the second quarter and for revenue to be in the range of $4.4 billion to $4.6 billion. ASP in Q2 is expected to be similar to or slightly above Q1 levels. I did mention product mix as the primary factor affecting device ASP, and forecasting ASP for Q2 is particularly challenging given the variability that can result from shift in the mix, due to the timing of new product launches in the quarter. We continue to expect ASP to increase in the second half of the year as new higher priced products become a larger part of the total product mix. We are targeting gross margin for the second quarter to be approximately 44%. As we said in the last call, we expect quarterly growth margin percentage to remain strong in the low 40s throughout the second half of the fiscal year. We are targeting net subscriber account addition to the Q2 in the range of 4.9 million to 5.2 million. This reflects the potential for a decrease in activity in European markets throughout the seasonally slower summer months, as well as the timing of scheduled new product launches in the quarter. These new products are anticipated to drive an increase in net new subscriber account addition run rate once they are in the market. The timing differences between sell-in and sell-through may shift more of this benefit into the third quarter. Total operating expenses are expected to increase in Q2 by approximately 7% to 10% from Q1 levels. We expect R&D to increase by approximately 6% to 10%, and sales and marketing and administration expense increase by approximately 7% to 10%. In the second quarter, we expect depreciation and amortization to be approximately $100 million, and we expect CapEx to be approximately $350 million. In the third quarter, we expect CapEx to be slightly lower than Q2 levels. The primary areas of spending continue to be expansion and network infrastructure in facilities for R&D and IT operation. We expect the tax rate to be approximately 28% in Q2 and throughout the remainder of fiscal 2011. We expect Q2 EPS to be in the range of $1.33 to $1.40 per share diluted. This excludes the impact of any share repurchases that may occur during the quarter. I'll now turn the call back to Jim.

Thank you, Edel. Adoption of the BlackBerry platform in markets around the world continue to drive strong results and open up new opportunities. We're looking forward to the introduction of innovative new products later this quarter and throughout the remainder of the fiscal year and plan to continue to focus on building strong partnerships, delivering quality products and leveraging the unique capability of the BlackBerry platform to drive profitable growth in fiscal 2011. This concludes our formal comments. We would like to open the call up for questions. Please limit yourself to one question per person. We plan to end the call today by approximately 6:00 p.m. Will the operator please come on to handle questions?

(Operator Instructions) Your first question today comes from Ittai Kidron of Oppenheimer.

I wanted to dig in into your expectation of, as you mentioned acceleration of growth in the second half. Can you give us a little bit more color as to what you expect really to drive this? Is it mainly international markets that you expect some big step up, a big recovery here in the U.S., some hero campaigns? I mean, if you could give us a little bit more color on what you mean by that. And also, how should that be measured? Is that year-over-year growth in devices should accelerate as a percent when you mean acceleration? Can you be more specific in what is the financial item or performance item we need to look at when you say acceleration?

Well, we have specific Hero campaigns certainly in the United States, major and bigger campaigns than we ever had before. And we certainly have launches throughout the world. So yes, they're major hero campaigns, they're committed, it's both the products, the shipments, the promotion campaign, they're very substantial. And we also are rolling these out around the world. So we have normal execution issues to ensure we manage those in terms of timing and all of that. And we would like to get a certain amount of certain products in this quarter, and then it's a cut off between this quarter and next. There's always an issue of timing. But the commitment, the scale, the strategic positioning, the innovation is fantastic. And there's global plans on these products, some of them throughout the world. You're seeing constructive alignment's got a renewed value, efficiency's got renewed value. And these are the kind of products that allow you to have your cake and eat it too. They offer premium performance, the ability to have enterprise and consumer on the same device, high efficiency, and yet carrier platform extension. And we might have a couple of surprises up our sleeves in addition to that. So yes, we feel fantastic about the business. We feel fantastic about the product set. The hero campaigns, they're great, tremendous imperatives on execution of course. And these are all measured in degrees of acceleration and degrees of new levels of performance and sales. But we feel very, very strong and optimistic about what you're going to see coming out of us throughout the rest of the fiscal year.

Can you give us a sense of magnitude on new products, how much are they impacting the August quarter? How much of that is taken into the guidance?

Well, part of it is, and I think it was mentioned in the comments that some of these are high ASP. And we're now one month into this quarter, and so we’ve got two months left in the quarter. And how much of that you can get in this quarter is an important question, and how much of that changed the mix. And it's a quiet summer season, but there's all kinds of back-to-school. So, definitely some of this stuff is planned for this quarter. You bet.

Your next question comes from Maynard Um of UBS Securities.

I just want actually a clarification on the ASP trends. Just on ASPs, with the full quarter of the 9650 in the August quarter, shipments of new higher ASP products in later part of this quarter, and then seasonality presumably strong in 8520 I'm just curious why your mix actually wouldn't help your ASPs up sequentially. And then a question just on the competition. You used that BlackBerry built-in to allow non-BlackBerry devices to kind of hook into the BES. I'm just curious if you might have plans to create something like a sandbox application for other platforms, other OSSs, and I guess what the challenge is in doing something like that might be?

Maynard, this is Edel, I'll take your first question. I really wish forecasting ASP is that simple. But there's really a lot of moving parts in there, and I did say that it could be slightly higher in Q2 and it's really going to be a function of how much of the new products are shipped in the quarter, and then what the mix of the remaining products are. Even though we talked about the potential for somewhat of a slowdown in parts of Europe, that's not the only place where the 8520 sells well or the 8530 for that matter. So I think it's a lot more complicated formula than just that. But in the guidance, we did say that it could be slightly higher than this quarter and we're just going to wait and see how much some of these other products shift.

Yes, on the competition, the enterprise side is just going through a tremendous set of opportunities. I think that they're rethinking a lot of architectures, cloud and mobility and unified communications and companions and tablets, I think there's a lot of that going on right now. And we did the built-in program, the BES, there is several hundred thousand BESs out there when you consider BES Express and BESs also. They're not really coming out maybe for BlackBerry built-in; there used to be a time they were. The security issues are still important but the consumerization of IT is also important. They're much more interested in things like sandboxing, of dual profiles as we say, personal and corporate and so that you can still have your control, but you can have your non-enterprise part. The unified communications NBS is huge with WiFi. How one works tablets and companions into this is super-strategic to them. Push based application architectures like with Widget and also being able to have enterprise app stores and consumerization of elements of what users want. And then making sure you support cloud services. So to answer your question it hasn't been something that has been pushed in and a lot of our stuff we'd like to interrogate the boot ROM, it's not had any security compromises and I think they're aware of that. But I wouldn't strategically be super averse to it if it became something markets were pushing for. But if it's a half measure, it's a no measure in terms of enterprise requirements. And I can't say that they've come at me with that as a request, they come up with lots of requests, but I can't say that's one that's been the CIO. They're basically saying we love what you got, we love what you do and let's get it deployed, if it's NBF, let's get it working on all the different IP PBX Platforms, if it's dual profile, let’s get 6.0 out, if it's new form factors that would get them going. If it's other kinds of companions or things that may work with it, how you're going to architect that? So it just hasn't been on the agenda.

And your next question comes from the line of Ehud Gelblum of Morgan Stanley.

Just a couple of quick questions. If you can go a little bit more into the detail on delay in the new Pearl and 9650, what caused the delay. So it still didn't come out with Sprint at the time when Sprint appeared to be, after you announced at your Analyst Day. So that seemed to be on time. Verizon followed up a little bit afterwards, but can you go into a little bit when you were expecting them to come out versus when they did and why. And then, Edel, on international units, can you just confirm for us that international actually grew? The only number we have, sort of, international North America is that 40% number of subscribers you gave. I know there's a lot of rounding going on, but when you try and back into the number of actual devices, you sort of get that possibly international devices may have been relatively flattish. If you can give us a sense as to how much international devices grew, and how much U.S. and North America devices grew? And the last thing is again just a follow up on previous question, the guidance of 11.6 to 12 million units, what exactly does that presume with respect to the launch of these new products, because presumably, they both have BlackBerry 6 and the new WebKit browser. So, does your 11.6 to 12.1 assume that they come out August 20 or does that assume that they can out September 10 or 15? So if I were to pick a date what would I assume therefore?

That's a lot of questions, Ehud, okay. The last one is freshest. Yes, I mean in terms of, I mean I can't give you that kind of detail, it's a combination of a couple of products like I said and there’s timing issues where one of them is set for a certain date and that mean if the other one goes on time it may not have any impact at all. So it's a really hard question to answer and I'm not going to give a whole lot more detail that that. Obviously as Jim said we're expecting these products to launch this quarter, but I'm not going to give you any more in terms of what they're expecting or how many units or anything like that. Your first question was on the product delays. And there is different certification cycles, as I said, 9650 launched at Sprint and then at Verizon and if they are certified by one carrier doesn’t mean they will certify at the same time on the other one. So I mean it's really just kind of normal stuff in getting through certification. And I missed you middle question.

The growth in international. International is growing very, very well. We feels great. I mean the international and the carriers are planning major extension in international, they're doing tiering plans and deeper channel and quite frankly the constructive alignment strategy is working fantastic throughout the world. And you throw in these hero campaigns for new product launches and key carriers in the U.S. If you saw what we're coming along with for the back half of this calendar year, what's lined up and queued up, there is always lot of execution. We have to execute well. International continues to be fantastic. I think you're going to see a real swing in the United States. There's always little timing things, but none of these are what I would put in the category of long-term strategic, they're just operational execution timing things. And they are issues we've passed before. Sometimes you get a little more, some times you get a little less, you'll always take more than less; you'll always take earlier over later, but it doesn't change anything in the strategic point of view.

Next question comes from the line of Matt Thornton of Avian Securities.

Just one point of clarification. I think this one was alluded to on a previous question. The two devices that we're talking about, straddling the end of the August quarter, I assume those are both OS 6.0 and these are both higher ASP parts. Did I understand that correctly?

We hadn't commented on the software, on the product that you gave detail on features, but we think that they are higher ASP products.

Okay. Then just a couple of quick follow ups if I could, I guess one for Edel; on the ASP, was there any impact there from FX? I know it netted out to no impact at revenue. But did we see any impact on FX that was offset through the other revenue line?

No, there is nothing material there.

Your next question comes from the line of Phil Cusick of Macquarie Capital.

Thanks. Can we focus on OpEx a little bit, I've seen the ad campaign around the city and it looks good. But should we be looking for a gradual increase in sales and marketing and then on the R & D line as well, that's been creeping up as a percentage of revenue. Is that sort of things that are getting ready for this whole new product launch cycle, and as I kind of drop back down as revenue ramps up, or is that something we should think about this as the new level. Thanks.

Definitely on sales and marketing and R&D, I mean, we have our plans in place to execute over a longer period of time. And it's not necessarily reflective of what's going on in the top-line of a particular quarter. I think as, Jim alluded to, we're expecting a pretty strong back-half of the year and while we continue to plan to spend on some of these sales and marketing activities that are doing so well, and continue to spend on R&D, you know, as a percentage of sales, that's really a function of it’s top-line growth that Jim’s talking about, and how well we execute on that.

Your next question comes from the line of Jeff Kvaal of Barclays Capital.

To follow up on Phil, should we assume that there would be some operating margin pressure to measure it with the gross margin tick-downs in the second half of the year?

Well, that's a tough one, I mean the guidance we're giving on gross margin, we're saying, given the pretty vague number there because it's just so dependent on mix, and it really does follow on to the question that Phil just asked, what the top-line looks like is going to be a big factor there. So that's a hard thing for me to give a whole lot of certainty on right now. Certainly we're targeting to improve operating margins, but it's really going to be a function of the top-line.

Your next question comes from the line of Jim Suva of Citi.

On the acceleration that Jim talked about of new products in the second half of the year, just to make sure I'm clear, I assume it's fair then to assume also a corresponding increase in SG&A marketing. I think that's pretty logical, if you have some pretty wild products coming out. And then just a clarification. I assume that EPS guidance does not have stock buyback built in because the timing of that will be subject to market conditions and your discretion.

The EPS guidance does not have any buyback built into it. In terms of the sales and marketing, yes, I think that obviously you want to back up big product launches and big plans in the market with support from sales and marketing, but we're also expecting a lot of support from our partners on these products. So while we're going to be out in the media and doing a lot of marketing around BlackBerry concurrent with this stuff, we are also expecting, and our carrier partners have plans to do a lot of marketing on these products as well. So there's sort of a compounding effect there in terms of the brand we get into the market.

Your next question comes from Vivek Arya of Bank of America Merrill Lynch.

Jim, I think the fundamental question that a lot of us and investors are grappling with this, what will help RIMM regain U.S. market share? But it seems that AT&T channel is very strongly aligned with Apple. And Verizon and Sprint seem to be aligning with Android. So where does that leave RIM? So the specific question I have is, what will motivate customers to buy a BlackBerry 6.0 product instead of say the new iPhone 4.0 or new Android products? Other than network efficiency, what kind of differentiator should we focus on?

Well, I mean, be careful about your implicit assumptions in your question, or shall I say explicit assumptions in you questions. Yes, I think you guys just have to watch and see what the plans are. I think there's a lot of implicit and explicit assumptions, and that maybe should be examined. And part of that is the question of how powerful is their innovation is a good question, what’s the timing of it, it's a good question. I think an important question to ask is, how much does constructive alignment matter to a carrier, because that's been just an enormous issue throughout Europe and Asia, and definitely coming on in Europe. And I think how much does efficiency matter, and when you look at these pricing plans, I think that that should tell you something. So I mean, you watch and see. I mean, we have unprecedented campaigns and device programs and commitments in our history. And I'm just not going to talk anything more about our products and our launches until their time.

And your next question comes from Gus Papageorgiou of Scotia Capital.

Jim, I know, in the past you said you spent a lot of your time on media. Are we going to see a kind of revolution in your media strategy in the second half of this year?

Yes, the way we see the media strategy, it's great, everybody on the outside is going to really talk in a beautiful way. Once you see the new App World, we talked about it, and once you see the new platforms, like you'll be all very surprised. And I said this on the last call, you'd be really surprised by it, and I'll think you'll just be amazed that how it's a quantum leap over anything that's out there. Point number one. Point number two, how this both leverages media that's out there. And I also know that constructive alignment with media matters, because if you think this intermediation by carriers has got them scared, go talk to media companies who are concerned about commoditization. And so I think focusing on beautiful innovation, focusing on efficiency in a world where innovation is valued, and design, focusing on efficiency when there's scarce resources and focusing on constructive alignment where you have very powerful stakeholders who have a decision, do they basically allow their business to be eroded, or do they invest heavily in those that have highly aligned strategies. And I don't think you'll have to wait too long to see tangible and powerful manifestations of this. And you bet, I think the immediate consumption side of this in different form factors, in very tangible commercial and technical ways is poised for re-definition here. And I think we have some credibility, because we played re-defining goals in this mobile computing in the past. And so I couldn't be more, I just wish I could wind the clock forward a few weeks, because I think I said it on the call. Was it the last call? And you would all say, I get it now. And I think we talked a little bit about it back then to say when you see the pieces come together, you'll say, now I see what they were doing. And it's really powerful. And we are still sustaining very, very well. I mean the international stuff is great, there is some timing stuff as there is always, and there's some powerful extension and re-engagement stuff happening in the United States. I can't say much more, but I couldn't feel better.

And our next question comes from Mike Abramsky of RBC Capital Markets.

How do you characterize the potential for the upgrade cycle from existing BlackBerry users and some of these new products you're expecting? Do you think that intentions to upgrade a change, now that there's a number of competitors in the market that obviously have been out there going very strongly, and do you think that that could be any headwinds, the upticks? RBC Capital Markets: How do you characterize the potential for the upgrade cycle from existing BlackBerry users and some of these new products you're expecting? Do you think that intentions to upgrade a change, now that there's a number of competitors in the market that obviously have been out there going very strongly, and do you think that that could be any headwinds, the upticks?

Well, our BlackBerry user world is pretty tight and I think from the BES side and from the BBM and from the form factor and from the brand and the capabilities, and we talked about that. I think that's pretty bright. The other thing is, you have to remember that you guys talk a lot about competition, that's all fair, but you do realize that the whole feature phone market is evolving to a smartphone market. And we're having some shifting in consumer electronics into sort of the architecture of the smartphone. So, yes, you definitely want to say, what's happening with the divvying up of the pie, but you also got to ask how big is the pie and how valuable is the pie. And so, are there more users, and is a platform user more valuable and what share of those you are getting. So it's very dynamic, very turbulent an ecosystem, and so I think upgrade position is extremely strong. We're still growing that subs. You saw how where we're growing. We're still having 5 million subs a quarter. Like I mean, you got to remember that, like those are net, those aren't gross. We're still growing to 12 million devices, and I know there's ranges and all that that Edel’s guided. But I also think there are turbochargers in the wings here, both in organizational transformation. It's a business productivity, but also in how people are consuming media, and how are the content players going to build rich media for those that work with them versus don't work with them. So there's lots of forces at play. I think the upgrade thing is pretty strong, but like I said before, this is much more of a kind of a land grab where the customers are so valuable, the space is growing so fast, you of course want to keep the customers you want and upgrade them, but this is much more about the sort of feature phone coming into the smartphone and the smartphone being consolidated, a lot more consumer electronics, and are you seeing is that the place to go? And I think that's much more where our thinking's at. But I think we are in very good shape on the upgrade side. But I think the opportunities and the contention is really much beyond that.

Ladies and gentlemen, this concludes the question and answer session. Ms. Ebbs, please continue.

In closing, I'd like to remind everyone, there's a replay of this call available at 416-640-1917, passcode 4310298#. Or you can listen to the call which has been recorded and is available on the investor events section of our website. Thank you.

Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation, and you may now disconnect your line.