As Blackberry Gains, Will RIM Add Infrastructure?

Shares of Research in Motion (RIMM) gained 6 percent yesterday after the company reported robust sales of its latest Blackberry, which doubled both revenue and net income from year-earlier levels. Sramana Mitra has more on RIM's results and outlook.

RIM may want to use some of that additional profit to beef up its data center infrastructure, which was widely faulted in a Feb. 11 Blackberry network outage that affected millions of Blackberry users. The downtime was blamed on a botched software upgrade on its e-mail network. North American traffic on the Blackberry network is managed at two data centers near RIM's head office in Waterloo, Ontario. Does RIM plan any near-term infrastructure spending?

In Wednesday's earnings conference call, RIM Co-CEO Jim Balsilie was asked whether the company had invested in infrastructure in the wake of the February outage. Balsilie instead emphasized that the company's investment was "pretty broad based" including "very, very heavy investment" in handheld designs. "And yes we are growing our infrastructure and more high availability and distributed architectures," he added, without any "heavy, heavy" emphasis or additional detail.

RIM also spent $310 million acquiring a patent portfolio during the quarter. Even at today's prices, that's the equivalent of a couple of data centers worth of infrastructure.