RIM Revenues Up, But Not Enough for the Street
Research in Motion (RIM) posted year-over-year revenue growth of 16 percent for its first quarter of fiscal 2012 when it announced its results Thursday afternoon, but that failed to satisfy investors, especially in light of revising downward its guidance for the rest of the year and announcing layoffs.
Instead, RIM's (NASDAQ: RIMM) shareholders pummeled the company's stock on Friday, driving its share price as low as $27.08 -- a low for the past year and a nearly 21 percent decline on the day.
"Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter," Jim Balsillie, RIM co-CEO, said in a statement.
Revenue for the first fiscal quarter fell 12 percent from $5.6 billion in the previous sequential quarter to $4.9 billion. In contrast, the same quarter of last year came in at $4.2 billion.
RIM officials said the company shipped some 13.2 million BlackBerry handsets during the period and approximately a half-million BlackBerry Playbook tablets, which launched in the quarter.
The Waterloo, Ontario-based firm showed net income of $695 million or $1.33 per diluted share for the quarter, down from $769 million or $1.38 per diluted share the same time last year.
Officials also said they plan to "streamline" operations across the board, including "headcount reductions," although specific figures were not disclosed. Cost savings are expected to be reported beginning with RIM's third quarter.
"RIM's business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet ... we believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012," Balsillie said.
For the second quarter of fiscal 2012, which ends August 27, RIM expects revenues in the range of $4.2 to $4.8 billion, with diluted earnings per share (EPS) in the range of $0.75 and $1.05.
Meanwhile, diluted EPS for the entire fiscal year are expected to be between $5.25 and $6.00.
The firm's woes come at a turbulent time for most mobile wireless vendors. Many of the leading players are seeing major changes in their market shares as customers purchase more and more smartphones.
For instance, analyst firm IDC last week released figures predicting 472 million smartphones will be sold in calendar 2011, a 55 percent leap from 2010.
IDC also predicted that use of RIM's BlackBerry operating system will decline from 14.2 percent unit share this year to 13.4 percent in 2015, although it will hang onto to its current fourth place slot.