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RIM opens up earnings season without a bang, misses analysts expectations

Posted: , by Daniel P.

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RIM opens up earnings season without a bang, misses analysts expectations
After resting on its laurels for about a year, RIM staged the biggest launch in its history, with the first BlackBerry OS 7 handsets scheduled to appear on 225 carriers worldwide

Unfortunately the new phones were announced the last month of the second quarter in RIM's fiscal year, which ended up in August, so the sales of enticing new devices like the BlackBerry Torch 9850/9860 haven't contributed much to the bottomline yet.   

Analysts were expecting a bad June-August quarter, which, for the sake of coherence with the reports from other manufacturers, we'll refer to as Q3, although it's a month ahead of the rest and referred to as Q2 of the 2012 fiscal year according to the way RIM reports earnings. In the previous quarter RIM made $0.904 of operating profit before tax on $4.91 billion of revenue, which translated to 18.4% operating margin - more than anyone other than Apple and HTC can flaunt, but a slump from the mid-twenties a year ago. The Canadians cut 11% of their workforce, though, to the tune of 2000 employees in July, so the severance is reflected in the quarterly costs now.

RIM opens up earnings season without a bang, misses analysts expectations
RIM also stopped reporting its ASP numbers last quarter, which can only mean they thought ASPs are going down, and our calculations indeed returned around $279 as opposed to $300+ in the previous quarters. So what's the market share situation now?  RIM's piece of the pie slightly declined in the US to 19% of the smartphone market at the end of July, but in Europe it went up more than iOS, compared to July 2010, reaching 9.4% share.

For the June-August quarter RIM just reported revenue of $4.2 billion and income before taxes of $0.414 billion (net income was $0.329 billion), or 9.8% margin, with the last two numbers quite below the average analysts expectations. RIM's stock plunged more than 16% in afterhours trading immediately after the announcement. Cash on hand diminished more than half, from $2.9 billion, to $1.4 billion, largely due to the $780 million payout for Nortel's wireless patents, and also restructuring costs connected with the layoffs. 

RIM opens up earnings season without a bang, misses analysts expectations
RIM opens up earnings season without a bang, misses analysts expectations
RIM shipped 10.6 million BlackBerries last quarter, below forecasts, and sales of the BlackBerry PlayBook have been the disappointing 200 000 units. The company says 73% of the $4.2 billion of revenue came from hardware sales, i.e. $3.066 billion. 

If we divide this amount to 10.8 million devices sold (we lump BlackBerries and PlayBooks together as 0.2 million tablets sold would hardly skew the numbers), we arrive at roughly $284 ASP, which is higher than last quarter. The profit margin from this average selling price has plunged, though, indicating that RIM needs to work further on costs. Co-CEO Jim Balsillie remained optimistic for the next quarter, citing strong sell through interest in the new BlackBerries with OS 7:

We successfully launched a range of BlackBerry 7 smartphones around the world during the latter part of the second quarter and we are seeing strong sell-through and customer interest for these new products. Overall unit shipments in the quarter were slightly below our forecast due to lower than expected demand for older models. We will continue to build on the success of the BlackBerry 7 launch to drive the business as we focus our development efforts on delivering the next generation, QNX-based mobile platform next year.

source: RIM

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posted on 15 Sep 2011, 15:56 2

1. Tmachaveli (Posts: 425; Member since: 01 Apr 2011)

how the mighty have fall...

posted on 15 Sep 2011, 16:01

2. M0nkeyBr (Posts: 77; Member since: 13 Jul 2011)

Release for prepaid blackberry and then we can see some action

posted on 15 Sep 2011, 16:34 3

3. bam99 (Posts: 10; Member since: 16 Aug 2011)

Remember when rim was everywhere like rap songs and rap videos never thought this day would happen rim neeeds to turn to android just take a chance guys please your a dinosaur living in the future

posted on 15 Sep 2011, 16:37 3

4. darth8ball (Posts: 520; Member since: 02 Aug 2011)

Blackberry has gone the way of the picture tube television. I have never owned a blackberry and never will because I feel the same way about them as I do about Apple. Proprietary Systems annoy and bother me, I like freedom and choice. RIP RIM...

posted on 15 Sep 2011, 17:07 2

5. gallitoking (Posts: 4721; Member since: 17 May 2011)

with that attitude i believe you are still single...

posted on 15 Sep 2011, 17:57 1

6. corporateJP (Posts: 2458; Member since: 28 Nov 2009)

So...RIM...do you still need "co-CEO's"?

Get ready for some huge investor pressure here in the next few months.

posted on 15 Sep 2011, 21:51

7. cheetah2k (Posts: 1746; Member since: 16 Jan 2011)

While its pretty obvious that RIM has done themselves a boat load of harm, the condition of the global economy has also played a role in what devices people buy these days...

posted on 15 Sep 2011, 22:15 2

8. hepresearch (unregistered)

funny... I thought earlier this year that Nokia would be leading the death-plunge, and they sort of did for a while, but it seems that Microsoft gave them a "golden parachute"...

HP's WebOS devices, which I thought would have the best chance of survival against the non-Android/iOS phones, followed like a little lemming, and when Nokia stopped short... well, HP decided to grab the corporate-suicide banner and lead the death-plunge anew...

As for RIM... well, after WebOS's fall, I thought for sure that BlackBerry would start to vie for that "3rd Mobile Ecosystem" spot with Microsoft's Windows Phone... and yet, they are bungling it pretty badly. Even though Symbian and WebOS will be gone, BlackBerry is not showing a whole lot of liveliness at the moment. I never really liked BlackBerry, but for the sake of "more choice", I hope RIM does better before they end up following WebOS and HP over the cliff...

posted on 16 Sep 2011, 07:20

10. Andy (unregistered)

RIM your products are a failure and garbage and nothing changes. Just close the doors already

posted on 17 Sep 2011, 18:16

11. iHateCrapple (Posts: 734; Member since: 12 Feb 2010)

Behind the times? Yes, but definately NOT garbage.

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