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9/28/2012
08:08 AM
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RIM Beats Earnings With Narrower Loss

RIM surprised analysts and investors by reporting a smaller loss than expected for its second fiscal quarter. What saved it? Emerging markets.

Research In Motion delivered some relatively good news about its financials after the market closed Thursday. Though the BlackBerry maker still lost money during its second fiscal quarter, it lost half as much forecast by Wall Street, and even managed to increase its cash assets.

RIM reported a net loss of $235 million in revenue of $2.9 billion. Revenue actually climbed 2% from the previous quarter, and cash flow from operations was about $432 million. RIM added to its cash pile by $100 million, bumping it up to a total of $2.3 billion at the end of the quarter.

RIM said it sold 7.4 million BlackBerry smartphones, down just a bit from the previous quarter's 7.8 million. The company shipped 130,000 PlayBook tablets. Its total subscriber base climbed from 78 million to 80 million around the world. The bulk of RIM's subscriber gains came not from its former North American and European strongholds, but from Africa, India, and other developing markets.

Wall Street predicted a loss of more than $500 million, and expected RIM's subscriber numbers to be flat compared to previous quarters. The less-than-awful results boosted RIM's stock price by as much as 19% in after-hours trading.

During the earnings call with investors, RIM CEO Thorsten Heins provided an update on three separate initiatives in the company: its progress with BlackBerry 10, its progress with its strategic review, and its progress with the core program of reducing costs.

[ Does the Blackberry maintain a security advantage? Android And BlackBerry Safer Than iOS For SMS. ]

According to Heins, BB10 is coming along nicely. He talked about the virtues of BlackBerry Flow and BlackBerry Hub, as well as the powerful browser and social networking features of the yet-to-be-released platform. Heins must be living in airports, because he and his team have met with dozens of wireless network operators across 16 different countries in order to sell BB10. He said the carriers who've seen BB10 are very excited about it. He concluded his remarks about BB10 by noting that though RIM's competitors are fielding some great products, BB10 will "advance mobile computing" across the industry.

One of the more interesting items mentioned by Heins was with respect to the company's conversations with its competitors. As part of RIM's strategic review, it is looking at ways to increase revenue opportunities. One such avenue could be through licensing BB10 to other hardware makers.

"We've met with CEOs at various organizations," said Heins, "about licensing BB10 and other technologies. These discussions have been productive and have helped us highlight solutions about how we can collaborate further. The companies we've shown BB10 to believe RIM is strong and innovative, and we are still meeting with potential partners."

That leaves the door fairly wide open when it comes to licensing BB10 and its software and/or services to other companies. Unfortunately, Heins didn't elaborate beyond these remarks.

Last, RIM shared remarks on its cost-cutting mission. The news here is good and bad at the same time: good because it is making progress as reducing expenditures, bad because that means people are losing their jobs.

The company reported a total headcount of 14,500 employees at the end of its second fiscal quarter. RIM eliminated more than 2,000 employees during the second quarter through attrition, retirements, and lay-offs. RIM plans to cut another 2,500 to 3,000 during its third fiscal quarter to reach the total of 5,000 job cuts announced earlier this year.

These and other efforts led to cost savings of approximately $350 million for the quarter.

These are all important numbers that show RIM's turn-around efforts are driving real results. Heins and his team should be commended for their work thus far.

But RIM still has a long way to go.

The company isn't seeding certification devices to its carrier partners until next month, which means it will be three or four months at a minimum before we see BlackBerry 10 devices reach the market. RIM still has to convince developers to create BB10 apps. It still has to finalize the BB10 platform itself, and convince consumers that they should care about it in the wake of the iPhone 5, Lumia 920, Galaxy S III, and other competitive products.

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Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
10/1/2012 | 1:15:08 AM
re: RIM Beats Earnings With Narrower Loss
A loss is a loss... speaks volumes that they're continuing to add cash while enduring these losses.

They're trying to resurrect features from webOS for their "new and world beating OS" and the product cycle with regards to the next generation Blackberry is getting to be a joke.

Most cell service providers offer their users the chance to change out their devices every two years - if you don't have a new device out within that two year window, you're running the risk of losing that user. Get it right, but it get it right... FASTER, or otherwise you're going to sink like a lead balloon in the consumer space.

Andrew Hornback
InformationWeek Contributor
NJ Mike
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NJ Mike,
User Rank: Strategist
9/28/2012 | 7:18:36 PM
re: RIM Beats Earnings With Narrower Loss
Is this article saying RIM's motto should be "We're not as bad everybody thought, so we're great!!"
AustinIT
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AustinIT,
User Rank: Apprentice
9/28/2012 | 7:07:04 PM
re: RIM Beats Earnings With Narrower Loss
Never say die... but the odds are definitely against them. Their only real chance at redemption in the short run is in the corporate realm. But, unless the BYOD movement reverses, RIM is looking at a Mt. Everest hurdle to become successful in the mobile market again.
dbtinc
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dbtinc,
User Rank: Apprentice
9/28/2012 | 2:30:04 PM
re: RIM Beats Earnings With Narrower Loss
It's over - deal with it. Game-set-match. All's that left is turning the lights out.
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