Research In Motion Results Awful, but Better Than Expected
Following a halt in after-hours trading, Research In Motion Ltd. (NASDAQ: RIMM) reported fiscal third quarter 2013 results after markets closed today. The smartphone maker reported a quarterly adjusted diluted earnings per share (EPS) loss of $0.22 on revenues of $2.7 billion. In the same period a year ago, RIM reported EPS of $0.51 on revenue of $5.2 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for an EPS loss of $0.35 and $2.66 billion in revenue.
On a GAAP basis, the company posted EPS of $0.02, which does not include an income tax benefit of $166 million, or $0.32 a share.
The company's CEO said:
More than 150 carriers are currently completing technical acceptance programs for the first BlackBerry 10 products, and beta trials of BlackBerry Enterprise Service 10 are underway at more than 120 enterprises including 64 Fortune 500 companies.
CEO Thorsten Heins is referring to the January 30th launch of RIM's BlackBerry 10 hardware and operating system. To say that all RIM's eggs are in the BB10 basket is not overstating the case at all.
In its outlook comments, RIM said that it expects "continued pressure on operating results" as it launches the new BlackBerry. RIM "intends to continue to consider" (really, that's what the release says) knocking down prices on its BlackBerry 7 in some markets in order to maintain market share and drive new users. The company worries that the launch of BlackBerry 10 will cannibalize sales of BlackBerry 7 as customers wait for the new product. RIM's conclusion:
All these factors are expected to impact unit volumes, subscribers, margins and service fees. In addition, the company will be significantly increasing its marketing spending this quarter as expected, to support the global launch of BlackBerry 10, and the Company expects to report an operating loss for the fourth quarter.
The consensus estimate for that fourth quarter EPS loss is $0.26 on revenue of $2.87 billion. RIM will get one (short) month of BB10 sales to add to its total. The company better hope that BB10 is as attractive to buyers as it is to RIM.
Shares are up 0.4% in after-hours trading, at $14.18 in a 52-week range of $6.22 to $17.96. Thomson Reuters had a consensus analyst price target of around $9.70 before today's results were announced. Even analysts aren't paying attention - RIM's share price rose higher than that on November 19th.
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