RIM May Be Feeling Heat From iPhone, Android
There was a time when, to many in the business community at least, "smartphone" pretty much meant a BlackBerry from Research In Motion (NASDAQ: RIMM). But today, the company facing white-hot competition from Apple and Android, which have both come on strong and grabbed away precious market share. Not just that, but in the past 12 months, while Apple's stock price has doubled, RIM has lost 20 percent share.
The results are starting to show in RIM's latest quarterly earnings. For its first fiscal quarter ended May 29, the enterprise smartphone vendor reported earnings of $769 million, or $1.38 a share, up 19.5 percent from $643 million, or $1.12, in the same period last year. Revenue rose 24 percent to $4.24 billion from the same quarter of last year
Those might be solid numbers -- topping Wall Street expectations of earnings of $1.34 a share, according to Thomson Reuters -- but revenues came up short compared to analysts' $4.35 billion consensus forecasts.
The Waterloo, Ontario-based company said it shipped 11 million phones in the quarter and added 4.9 million new subscribers for a total of 46 million subscribers -- also at the low end of what analysts had expected, according to Thomson Reuters: Analysts had anticipated the company adding between 4.9 million and 5.2 million new subscribers in the current quarter.
Still, the company pointed to its successes during the quarter.
"RIM achieved significant earnings growth and shipped a record 11.2 million devices during the first quarter, including its 100 millionth BlackBerry smartphone," Jim Balsillie, Co-CEO at RIM, said in a statement. "We continue to be focused on growing our business globally and we believe that the range of exciting new BlackBerry products being released in the coming months will create significant opportunities to accelerate RIM's growth in the second half of the fiscal year."
Devices comprised 79 percent of RIM's revenue during the quarter, while 16 percent came from services, 2 percent from software and 3 percent from other revenue.
RIM had a total of $3.27 billion in cash, cash equivalents and investments as of May 29, up about $400 million from the end of the previous quarter.
For the second fiscal quarter of 2011, ending August 28, the company projected revenue of between $4.4 billion and $4.6 billion, with earnings in the range of $1.33 to $1.40 per share. The company also said it expects to add between 4.9 and 5.2 million new subscribers.
The quarter should be a big one for RIM, as it is expected to ship version 6.0 of its BlackBerry operating system, a long-awaited overhaul and one industry watchers have said is badly needed to keep the company in the game with Apple and the growing number of Android-based devices.
iPhone maker Apple (NASDAQ: AAPL) recently released the new version of its mobile device software, iOS 4, along with the new iPhone 4 today, which resulted in sold-out preorders and blockbuster lines at Apple Stores.
Google (NASDAQ: GOOG), meanwhile, is laying the groundwork for the next version of its mobile OS, Android, yesterday open sourcing version 2.2 of the software (a release nicknamed "Froyo") to its manufacturing partners.
RIM's Board of Directors today has also authorized a share buyback program to purchase for cancellation up to approximately 31 million common shares at the going daily market price. This will begin at the end of this month and run for up to 12 months, or until all 31 million shares are repurchased.