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

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.