RIM's Q2 sales surprise to upside: There's a pulse

RIM's Q2 sales surprise to upside: There's a pulse

Summary: RIM's second quarter was dreadful, but sales were well above Wall Street analysts. RIM has a lot of work ahead, but is holding the fort a bit.


Research in Motion's fiscal second quarter earnings were dreadful, but the company's revenue was better-than-expected by a wide margin.

In other words, RIM has a pulse---or analysts' expectations overshot on the downside.

Research in Motion reported a second quarter loss of $235 million, or 45 cents a share, compared to earnings of $329 million, or 63 cents a year ago. Revenue for the second quarter was $2.9 billion, down 32 percent from a year ago.

More: RIM's Q2: Ugly results on tap | RIM asks developers to keep loving BlackBerry. Do I say 'I do'? | RIM's BlackBerry 10: Why I still believe

Wall Street expected RIM to report a second quarter loss of 46 cents a share on revenue of $2.5 billion.

On a conference call, RIM CEO Thorsten Heins pointed out the following:

  • The BlackBerry 7 upgrade cycle off older BlackBerry operating systems is working well in South Africa, Saudi Arabia, United Kingdom and Indonesia. RIM is aggressively launching new BlackBerry 7 devices in those markets.
  • RIM is moving BlackBerry Bolds in developed markets such as Canada, U.S. and U.K. "As people move from BlackBerry six and older operating systems to new BlackBerry 7 devices, we are receiving very positive responses from users in terms of their personal and professional experience on the BlackBerry smartphone," said Heins.
  • Costs have been managed aggressively.
  • And the company is upbeat about BlackBerry 10. Heins added:

Over the past several weeks, we have seen competitors launch new products with technology and applications. These are strong products from great companies. But we believe that BlackBerry 10 platform will advance the operating system environment to a whole new level. One which gives developers the technology innovators and open environment to help create the next generation of mobile computing. We are now just a few months away from our launch and our teams are working night and day to meet the expectations we have of ourselves and our loyal BlackBerry customers have of us.

Heins also said that RIM's strategic review continues. Heins noted that he has met with several CEOs about partnerships and licensing of BlackBerry 10. These meetings were "very productive" and it was clear that RIM needs to remain a "relevant player in the mobile computing world." Heins said that the company was taking its strategic review seriously, but would address actions in due time. 

Meanwhile, RIM's outlook wasn't much to look at, but largely priced into shares. RIM said:

The Company expects that there will be continued pressure on operating results for the remainder of the fiscal year based on the increasing competitive environment, lower handset volumes, increased marketing expense associated with the launch of BlackBerry 10, and some impact from pressure by customers to reduce RIM's monthly infrastructure access fees. Also, the Company plans to continue to invest in targeted marketing and sales programs to aggressively drive sales of BlackBerry 7 handheld devices before the anticipated launch of the BlackBerry 10 smartphones. The Company expects to report an operating loss in the third quarter of fiscal 2013...

Shares surged in after hours trading. 



By the numbers:

  • RIM ended the quarter with 80 million subscribers.
  • The company had $2.3 billion in cash and equivalents at the end of the second quarter
  • RIM shipped 7.4 million BlackBerry smartphones and 130,000 PlayBook tablets.
  • RIM had inventory of $785 million as of Sept. 1, down from $1.02 billion as of June 2.
  • About 2,000 positions were eliminated in the quarter. 
  • 22 percent of sales came from the U.S. 
  • 58 percent of revenue in the quarter came from outside North America. 

Heins' recapped:

Despite the significant changes we are implementing across the organization, our second quarter results demonstrate that RIM is progressing on its financial and operational commitments during this major transition...Make no mistake about it, we understand that we have much more work to do, but we are making the organizational changes to drive improvements across the company, our employees are committed and motivated, and BlackBerry 10 is on track to launch in the first calendar quarter of 2013.


Topics: Mobility, BlackBerry, Smartphones

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  • Shares up ...

    I dont see the positive numbers!?
    • Minus = Plus

      The 'positive' numbers is that they didn't lose as much as the stock market expected. Remember when Apple's shares went down because they made a profit jump of 'only' 32% over the year before.
      Ah, the stock market.
    • I'm surprised...

      It looks like the new CEO may make it to shore afterall. Obviously losing money is not a good thing but considering they virtually halved their losses and actually increased revenue from the prior quarter... not too shabby. They also still have over $2 billion in cash. Bottom line is the new phones coming out next year will really need the "wow" factor or it could get much worse for them. Next year is the "make or break" year.
      • The "wow" factor is coming

        I have one of the developer test units and it definitely already has the "wow" factor without even being complete yet. Apple's iPhone 5 was a bit disappointing in many ways, but RIM's new OS really has some great new concepts that are going to be great.
        N Wick
  • The news media loves to call things dead.

    In other news, the Earth is still revolving around the Sun.

    Meh, the news media loves to call things dead. Sensationalism sells.

    Most big business don't really close up shop, they just fade into the background. IBM is still around. AOL is still around.
    • so is even

      excite and lycos...!
  • Good for RIM

    I administer the BESE server and Blackberry phones for my orginization. They are not the most user friendly phones, however they work great with Exchange Server and easy to configure and manage for the end users. Easy to replace broken phones and very secure. We are now going to switch to OS devices. Those are easy to setup, but not as easy to manage. I can't wait to start dealing with itunes accounts and users locking themselves out of Outlook when they change their password!
  • Revenue for the second quarter down 32 percent from a year ago

    "Company's revenue was better-than-expected by a wide margin." That's analysts for you. I'll focus on the actual number thank you very much, and set my own dismal expectations for this holiday quarter.
    Johnny Vegas
  • RIM needs Facebook

    Facebook needs to have a product to truly prosper and RIM needs a new market....
  • But we believe that BlackBerry 10 platform will advance.....

    "But we believe that BlackBerry 10 platform will advance the operating system environment to a whole new level."

    Umm... didn't so big executive at RIM say this about their tablet?

    Just because you say it don't make it so.....

    • Playbook solid

      ThE playbook was a solid tablet with a lack of applications being its real problem and hopefully the steps BB are taking now will entice developers to put some solid apps for the new bb10 devices.
      • Except for it's inabilty to sync with Outlook!

        The one huge (for me) problem with Playbook is that I can't use it for e-mail. With my BB phone, I can sync with Outlook, and control my e-mail, contacts, and calendar. I can't do that with my PB. I am sure RIM has a good excuse for that, but it doesn't help me. I can use pop3 for my e-mail, except that I cannot delete anything, while leaving it on the server.
      • Very True...

        I still have my PlayBook and still think it is a fine device.
        Lalita Amos
  • Let's let the numbers speak for themselves...

    RIM has had to make painful choices to cut expenses and payroll to accomplish these kind of results. But what we are seeing is they also have the resources (e.g. cash and equivalents, working capital) to give BB10 a chance to develop.

    It's been said "Never waste a good crisis". RIM is in survival mode and that's a good thing. They know they need to innovate, market, and perform to continue as a player in this market. That's a far cry from the same company that dismissed the impact the iPhone and Android devices would have on their future. 2013 will be a fun year to watch and I am rooting for their success.
  • In short words...

    Sure!, Coming from almost 70 dollars a share to just 7 in two years is a promising future ... by the way I'm being sarcastic.
  • Cash on Hand

    Would like to know how cash on hand has changed quarterly for the past year or so, that is really going to be the deciding factor whether RIM can survive for very long. If the burn rate is to fast, they won't make it to BB10.
  • Interesting....

    So basically their revenue increased by 46% for September but their expenses only jumped by 20%, putting them in the positive finally.

    Well I hope for there sake its a trend and not a temporary thing. Still too risky of a company for me to invest in though.