RIM earnings fall as BlackBerry demand wanes
Research In Motion Ltd. reported revenue and profit that fell short of analysts' estimates and said it will discontinue giving financial forecasts as demand for BlackBerry smartphones wanes.
Fourth-quarter earnings excluding one-time items fell to 80 cents a share and sales dropped 25 percent to $4.19 billion, the Waterloo, Ontario-based company said today in a statement. Analysts predicted earnings of 81 cents and sales of $4.51 billion, the average of estimates compiled by Bloomberg. RIM also said Jim Balsillie, its former co-chief executive officer, has resigned from the board.
CEO Thorsten Heins, who took the top job in January, is trying to turn around a company which has lost market share to Android devices and Apple Inc.'s iPhone because of aging technology, marketing gaffes and product delays. RIM said it is reviewing strategic opportunities including partnerships, joint ventures, licensing, and other ways to “leverage” its assets.
“This is a step in the right direction but it's always in half measures with these guys,” said Ed Snyder, an analyst at Charter Equity Research in San Francisco. “They still need to make a big change and they need to do it quickly. They need a turnaround expert with no political investment in the previous decisions.”
RIM fell 2 percent to $13.45 in extended trading. The stock lost 75 percent last year and has dropped 5.3 percent this year.
RIM said it expects “continued pressure” on revenue and earnings throughout this fiscal year. The company said it won't give specific forecasts because of “ongoing weakness” in the U.S. smartphone business and “increasing competitive pressure” in international markets.
Net loss in the quarter ended March 3 was $125 million, or 24 cents a share, compared with a profit of $934 million, or $1.78, a year earlier. BlackBerry shipments fell to 11.1 million. Shaw Wu, an analyst at Sterne, Agee & Leach Inc., estimated 11.3 million.
RIM said Chief Technology Officer David Yach and Jim Rowan, chief operating officer of global operations, are also leaving the company.
While Heins has vowed to persuade more consumers to snap up new Bold, Curve and Torch models that offer better touch-screen navigation and Web browsing, that isn't yet happening, said Michael Walkley, an analyst at Canaccord Genuity in Minneapolis.
“The iPhone, Android smartphones and new Windows smartphones have extended the feature and functionality gap” over BlackBerry 7 devices, which are struggling with “weak sell-through,” Walkley, who recommends holding RIM shares, said before the report.
While the BlackBerry outsells the iPhone in Latin America and the Middle East, plummeting U.S. sales meant that RIM's share of the global smartphone market slid to 8.2 percent in the fourth quarter from 14 percent a year earlier, according to research firm IDC. Apple's share in that period rose to 24 percent from 16 percent.
RIM v. Apple
A comparison of smartphone and tablet computer shipments by Research in Motion Ltd. and Apple Inc.:
<b>Research in motion</b>
Quarter ending March 3, 2012: 11.1 million BlackBerry smartphones, 500,000 PlayBook tablets
Quarter ending Nov. 26, 2011: 14.1 million BlackBerry smartphones, 150,000 PlayBook tablets
Quarter ending Aug. 27, 2011: 10.6 million BlackBerry smartphones, 200,000 PlayBook tablets
Quarter ending May 28, 2011: 13.2 million BlackBerry smartphones, 500,000 Playbook tablets
<b>Apple</b>
Quarter ending Dec. 31, 2011: 37 million iPhones, 15.4 million iPads
Quarter ending Sept. 24, 2011: 17.1 million iPhones, 11.1 million iPads
Quarter ending June 25, 2011: 20.3 million iPhones, 9.25 million iPads
Quarter ending March 26, 2011: 18.65 million iPhones, 4.7 million iPads