RIM's Q1 unravels, operating loss on deck

RIM's Q1 unravels, operating loss on deck

Summary: RIM says: "The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace."

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TOPICS: BlackBerry
9

Dated. Very dated.

Research in Motion said it will post a first quarter operating loss, well short of Wall Street estimates, as its business unravels due to "the on-going competitive environment."

Wall Street was expecting RIM to report earnings of 42 cents a share on revenue of $3.65 billion.

Given the shortfall, the worst fears about RIM's volumes have been realized. Analysts had been worried that RIM just wasn't getting sell-through.

In a statement, RIM CEO Thorsten Heins said:

RIM is going through a significant transformation as we move towards the BlackBerry 10 launch, and our financial performance will continue to be challenging for the next few quarters. The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter. We are continuing to be aggressive as we compete for our customers' business - both enterprise and consumer - around the world, and our teams are working hard to provide cost-competitive, feature-rich solutions to our global customer base.

On the positive side, Heins said RIM will boost its cash position from the $2.1 billion at the end of the fourth quarter. RIM may need that war chest if it is going to hold the fort ahead of its BlackBerry 10 launch in the fall.

Here are the moving parts from RIM:

  • RIM said that it is seeing developer interest in BlackBerry 10, which is on track to launch in late 2012.
  • Subscriber tally is 78 million. That subscriber base is driven by international markets, but there's churn in the U.S. BBM users total 59 million.
  • The company is reviewing its organization to "clearly define accountabilities for all key businesses and business processes with a goal of eliminating fragmentation, duplication and inefficiencies."
  • There will be layoffs throughout the fiscal year.
  • RIM has retained JP Morgan and RBC to review the company's performance. That review is designed to "evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives."

Shares of RIM fell 10 percent in afterhours trading.

Earlier Tuesday, Wall Street analysts began to sound the alarm bells for RIM. Wedbush analyst Scott Sutherland said in a research note:

We continue to be cautious on RIM as we believe the company’s integrated strategy is too far behind Apple’s. We are lowering our estimates, as checks indicate minimal demand for products that have become long in the tooth ahead of the BlackBerry 10 launch by the end of 2012. While we believe the currently strategy could cause RIM to go the way of Palm, we see value in the parts and thus see risks to being overly negative at current levels.

Macquarie analyst Kevin Smithen added:

It should not be a surprise to followers of RIM that the company is seeing increased volume pressure during this transition period ahead of the BB10 launch later this year. While the company has pulled financial guidance, we nevertheless want to highlight that the May and August quarters will be especially difficult as emerging market carriers begin to embrace the iPhone and low-cost Android devices. Only patient value or event-driven investors should be involved with RIM at this point.

Topic: BlackBerry

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9 comments
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  • Tech Sites & Magazines Aided in Decline...

    End users waited patiently for the trickle out of the Android tablets, excited, while each and every tech site shot them down one by one protecting their Apple stock. Blackberry was never given a chance for the end users to get their hot little hands on to test drive before they were stamped by all with the label of "failure."

    That wasn't good enough they had to write follow up articles on just how bad the experience was. They did the same with the HP Slate which when discounted the entire Internet was trying to get their hands on one. End users and particularly the tech community uses equipment differently sometimes from what was intended or thought of. We just need to get our hands on it to do our own evaluations and we see value where you may not.

    Although they have manage to cattle-herd but not much, users to iPad, since they went from 91% to 61% in two years, users to it. They have not been able to successfully label Android smartphones as cheap, fragmented or unsecure. A whopping 51% of the market has ignored their claims. Samsung making it to the #1 manufacturer of OEM devices. The community responding "flavors" not fragmented, we don't want one size fits all and any version of Android is better than a version of iOS. They lost the unsecure battle when the FBI tried to break into a pimp's Android phone that just had the pattern lock engaged and could not.

    Give Blackberry 10 a chance, stop bad-mouthing technology because it doesn't suit your needs. Let consumers be the judge, after-all it is our money.
    techenduser
    • Nice!

      Thanks for some sanity. Larry is, well - Larry! :-D
      sagec
  • Picture caption: "Dated. Very dated."

    Of course it's "dated" - you're displaying a phone based on pre-previous OS generation. Nicely done sir!
    Mezomish
    • comparing blackberries with oranges

      he's still displaying an OS6... I've seen a lot worse, 2005 Pearls "illustrating" the non-stories on other sites :-)
      infektu
  • Beating a dead horse ..

    RIM already disclosed the coming quarter and up to BB10 sales will slow. Stateside RIM sales are pretty much limited to corporate or those that prefer keypads. Growth is being had in other countries but not anywhere near what they used to sell. BB7 and the JAVA based devices are just old at this point thus started 2 years ago to transition to BB10. Who launches a mobile OS platform in a year?

    ZDnet and the other tech blogs have had a hate on RIM for years now, it's clear who you favor but I question why anyone in Tech wants less competition, it's never been good for any industry.

    It's not like RIM is going to close it's doors and cease to work. They have money to operate. Millions of users many of which work of key goverment and almost every single fortune 500 company in the world. Is RIM to big to fail?
    MobileAdmin
  • RIM is done...

    Selling is the only real choice they have. The only value they hold is for their patents. Their hardware business has low margins. Their software platform is what has caused this whole mess in the first place. Subscriber growth has practically stalled. There is no way someone would actually be willing to license their platform. They may have a small shot of licensing their email & messaging services, but I doubt that would bring in much money.

    http://www.tech-thoughts.net/
    sameer_singh17
  • this is not news

    Moving inventory is good.
    They sit on 2.1bn in cash, said will increase it this Q.

    Why should RIM "close shop" (or listen to online "advisors" :-) ), if they can pay the bills and make a small profit?
    People who give this "advice" better mind their own business, if they have one. Or go play online games on the platform of choice :-)

    Nobody believes BB10 will get back to 80% market share, but it doesn't need to. If RIM has it out (in bug-free form!) in October, they could be selling 20M units a quarter, and the days of single digit PER will be over.
    If not, so be it, but I don't see why this would make anybody happy, except the stock shorters. For consumers and businesses it would be a very sad outcome.
    infektu
  • comparing blackberries with oranges

    Moving inventory is good.
    They sit on 2.1bn in cash, said will increase it this Q.

    Why should RIM "close shop" (or listen to online "advisors" :-) ), if they can pay the bills and make a small profit?
    People who give this "advice" better mind their own business, if they have one. Or go play online games on the platform of choice :-)

    Nobody believes BB10 will get back to 80% market share, but it doesn't need to. If RIM has it out (in bug-free form!) in October, they could be selling 20M units a quarter, and the days of single digit PER will be over.
    If not, so be it, but I don't see why this would make anybody happy, except the stock shorters. For consumers and businesses it would be a very sad outcome.
    infektu
  • BB = best phone

    As far as quality of the phone service goes, BB has it all over the other phones. All BB ever needed was a good Internet browsing experience, and hopefully o/s 10 will have this for them. BB is a good quality phone. I hope they stick around for a long time.
    ITOdeed