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

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.

SHARE:

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

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

Talkback

21 comments
Log in or register to join the discussion
  • RIM must adopt Linux or android

    to improve the sales.
    The Linux Geek
    • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

      @The Linux Geek

      It'll do one better. It'll run Android apps in a non-infringing Dalvik VM on top of QNX which is a much better OS for a tablet. The TabletOS UI is miles ahead of Anything Android or iOS.
      mapsonburt
  • I honestly don't understand...

    ...why RIM needs to analyse the fact the 9900/9930 is selling well, vs. the torch and curve models. The 9900 is well made and offers a good experience while the other models fall short in certain areas such as build quality (plastic screens on torch) and specs. I would hope that anyone at RIM could see that just by handling the phones instead of performing market research.
    dwb124
  • IDC got delusional with 'research' about 4.3 million non-iPad sales in Q2

    They said that 4.3 million non-iPad tablets were sold in the previous quarter, but there is no data to even remotely confirm that. Sales of non-iPad tablets are either falling (like PlayBook) or stagnant (others).

    Then how come IDC "researched" that the non-iPad sales grew from 2 million in Q1 (their report) to 4.3 million in Q2?

    They simply took 65-70% share they projected for Apple earlier, and applied it official Apple sales for iPad. So they got that non-iPad sales "must be" around 4.3 million, and whole market is 13 million units.

    <b>IDC is incompetent.</b>
    DDERSSS
    • research

      @DeRSSS
      right. the wintel "market research" companies are desperate too now. they just pull some numbers out of their as*es. because most of these companies don't report any tablet numbers they just make them up. in reality the ipad has 90% + of the market. but their clients wouldn't like this kind of "research".
      bannedfromzdnetagainandagain
  • mdn take

    and i love the "reporting" of mdn on the matter:<br>"Research In Motion reported a precipitous drop in quarterly profit on Thursday. The beleaguered cellphone maker was not helped by a lineup of antiquated BlackBerry dinophones and horrid sales of its PlayBook iPad wannabe."

    amateur hour is over.
    bannedfromzdnetagainandagain
    • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

      If only they'd called it a WorkBook.
      phil.davies@...
    • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

      @bannedfromzdnetagainandagain
      The iPad is the wannabe, it's quite lame compared to the Playbook.
      John Hanks
  • Playbooks: Terrible reviews

    After reading a broadsheet's terrible review of the RIM playbook... no wonder it's doing bad. RIM can win on the android skeptics who find the OS eats battery. I charge mine 2x a day. They speed up the OS and reduce battery, then heavy 4g users will move over.. easily. Apple releases 1-2 phone and tablets a year.. so.. RIM just needs to anticipate the market or wait for the haters, the ride the storm!

    http://www.guardian.co.uk/technology/2011/jun/16/rim-blackberry-playbook-review
    helruna
    • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

      @helruna Do you really think that's how it works? A device gets a bad review and people just believe it? Are you serious? Have you forgotten the iPhone 4 signal issue? But that's not even half the story. Apple's answer to this massively hyped 'issue' was to have Steve Jobs stand up at an improvised press event and ungraciously offer free covers - but only for 30 days! And that got slated too.

      There are enough Apple haters out there to make a story as bad sounding as that, to fly, and destroy the market for any product in weeks rather than months - if it was a real issue. But it wasn't. And that's the real difference.

      Your Guardian link provides the following [all we really need to know about the badly conceived and even more badly executed Playbook:

      "Summary
      Yes, we've reached that point already. There really is barely anything to say about the PlayBook. It's a nice piece of kit and comes with its own neoprene cover in case you want to take it to the executive pool with you. For a consumer, there's no point. For enterprises, there may be.

      Those in favour: interesting gestural interface; good-enough browser; ability to open and edit Office documents

      Those against: Soviet-era app store; lack of native apps; so-so battery life."

      What's untrue about any of that? Nothing. And it doesn't even mention the lousily conceived tie-in scheme that requires the user to have a Blackberry to take advantage of all its functionality! As soon as I read that I knew it was a failure [and said so here at the time]. Why? Because someone with a colossally arrogant ego that dwarfs his intellect [and everyone's at RIM], thought it would drive Blackberry sales, rather than kill them - as it has!

      Marketing is about customers first, not product first, then sales and customers last. It's that simple. Anyone who's even remotely surprised by this outcome should go back to 5th grade.
      Graham Ellison
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    RIP RIM... we wont miss you
    browser.
  • iPad has 95% of the market.

    That is the reality folks, deal with it!
    MSFTWorshipper
    • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

      @MSFTWorshipper
      Remember Android didnt exist 2 years ago and is now #1 that is reality! iPad has already dropped to 87% of the market and dropping fast. That is the real reality
      deasthom@...
      • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

        @deasthom@... How about a lesson in reality since you don't have a grasp on it. The first Android phones were released just over a year after the first iPhone, almost 3 years ago now not less than two like you were hoping we would believe. Android is #1 in overall smartphone market share but as an OS it does not have a larger install base than iOS. Even if the iPad is at 87% the remaining 13% is split between RIM, HP, Android devices and the Chinese Android knockoffs so what's your point? That is the real reality!
        non-biased
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    RIM has got to revamp their product architecture, and that's the bottom line. The IT camps in companies, small, medium and large, are pushing their users away from Blackberry devices because of how the data flows through RIM's systems. We want end to end encryption, and when I say end to end, I mean to say that point A is the mail system and point B is the client device. Anything else is a risk we're not willing to take.

    Edit: Also, many of us Exchange admins still have a bad taste in our mouth from Blackberry server..... Kill it, adopt newer, better direct push technologies, or die.
    jamisonmaxwell
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    Oh jeez, Don't let Toddy bottom perry NZ read your reply browser, he'll start crying again that Apple will have the tablet market locked up for the next 20 years, and consumers will have no choice, oh woe is me!!!
    T-Wrench
  • Torch

    I can see why RIM is in trouble, My wife bought a Torch early in the year only to toss it in favor of an iPhone. The unit constantly locked up / hung with little or no fixes coming from RIM to correct the flaws. Who has time for this c*** when your running a business? To AT&T's credit they tried very hard to fix this for my wife but even they were getting tired of the things they tried were not working. RIM in trouble? Not surprised!
    union pier
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    everyone I know with this product is having major battery problems!
    jgs25
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    I'm sure to RIM & all BB-lovers, this is REALLY good news! lol
    SBMobile
  • RE: RIM woes continue: Q2 earnings hit amid weak demand, product shift

    In South-east Asia, there is talk that RIM is shifting pat of its production to Malaysia's "Silicon Valley" state of Penang and irking some Indonesian bureaucrats. I wonder whether there is any correlation?
    joechow_88888888