RIM woes continue: Q2 earnings hit amid weak demand, product shift

Summary:RIM turns in another disappointing quarter, but co-CEO Jim Balsillie says demand for older devices was weak, but interest in new BlackBerry phones is promising.

Research in Motion's second quarter and outlook were disappointing across the board as the company struggled to manage a new product cycle.

RIM reported fiscal second quarter earnings of $319 million, or 63 cents a share, down from $797 million, or $1.46 a share a year ago. Revenue fell 15 percent to $4.2 billion in the second quarter. RIM's adjusted earnings, which exclude restructuring charges, were 80 cents a share.

Wall Street was expecting RIM to report second quarter earnings of 88 cents a share on revenue of $4.47 billion.

As for the outlook, RIM projected adjusted third quarter earnings of $1.20 a share to $1.40 a share on revenue between $5.3 billion to $5.6 billion. Wall Street was looking for fiscal third quarter earnings of $1.36 a share on revenue of $5.26 billion.

For fiscal 2012, RIM projected adjusted earnings "toward the low end" of its previous range of $5.25 a share to $6 a share. RIM is expected to report earnings of $5.10 a share on revenue of $20.33 billion for fiscal 2012.

Simply put, RIM's quarter was another disappointment for a company looking to rebound with new BlackBerry OS 7 devices. RIM didn't catch enough demand for its new devices to make a difference in its results. Meanwhile, sales of its existing products took a hit.

RIM co-CEO Jim Balsillie said that demand for older devices was weak, but sell-through for new devices was strong. Balsillie said:

"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."

What's unknown is whether the current barrage of BlackBerry devices can move the needle on RIM's sales when the company is really rushing to launch its QNX-based superphones. The company's outlook appears to indicate that third quarter sales will pick up. However, analysts paint a mixed picture for new BlackBerry demand. Here's what Raymond James found in its channel checks.

Investors don't seem to buy RIM's guidance. RIM's shares also took a hit in after-hours trading.

By the numbers:

  • RIM shipped 10.6 million BlackBerry smartphones. RIM had projected 11 million to 12.5 million devices.
  • 200,000 PlayBooks were shipped. That tally was 200,000 short of some estimates.
  • Service revenue was 24 percent of revenue as device revenue checked in at 73 percent.

Related:

RIM's new BlackBerry sell-through 'lackluster' as QNX phone rushed, says analyst

Topics: BlackBerry, Mobility, Security

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.