RIM Earnings Slide, What's the Playbook Call for Now?

RIM (NASDAQ:RIMM) is a company in transition. The Blackberry maker is shifting to new versions of its Blackberry OS and trying to build a market for its Playbook tablet.

If RIM's second quarter fiscal 2012 results are an indication, it's a transition that is still an extremely challenging one. RIM reported second quarter revenues of $4.2 billion, which is a 10 percent decline on a year-over-year basis. GAAP Net Income plummeted to $329 million down from $797 million a year ago.

RIM blamed lower than expected shipments of Blackberry phones and PlayBook tablets for the shortfall. For the quarter, RIM shipped 10.6 million smartphones and 200,000 PlayBook tablets. RIM also had higher costs during the quarter as it spent $780 million as part of its contribution to a $4.5 billion bid for Nortel's patents.

Moving forward, RIM provided third quarter fiscal 2012 guidance for revenue to be in the range of $5.3 billion to $5.6 billion. RIM's third quarter revenue guidance is based on a forecast of BlackBerry smartphone shipments of between 13.5 million and 14.5 million units.

RIM is anticipating that its' BlackBerry 7 based devices,which are now entering the market, will help drive growth.

"On top of the powerful hardware enhancements, including upgraded processors, displays and memory, BlackBerry 7 devices offer faster web performance with industry-leading JavaScript performance, liquid graphics, the world's best mobile QWERTY keyboard on the BlackBerry Bold 9900 and NFC capabilities," Michael Lazaridis co-CEO of RIM, said during the company's earnings call.

Lazaridis admitted that the PlayBook has not met expectations to date, but he has a plan to change that.

"We recognize that the current availability of content and applications for PlayBook has limited the near-term uptake of the device in the market," Lazaridis said. "We are actively working with key partners to deliver the most desired applications and content to our targeted market segments."

The big event that will showcase RIM's plans for the future of the PlayBook will come during RIM's DevCon even in October. Lazaridis said that RIM plans to demonstrate new features at that time.

"Some of the key enhancements that we expect to be delivered in the PlayBook 2.0 release are: built-in native email, calendar and contacts," Lazaridis said.

Lazaridis added that RIM has promotional plans in place for the fall intended to drive both enterprise and consumer adoption of the PlayBook.

Patents

During the quarter, RIM participated in a successful bid for patents from bankrupt telecom vendor Nortel. Apple, EMC, Ericsson and Sony were also part of the bid and each vendor now has access to those patents.

"There's a structure where all the participants got license to the patent, so they're protected from them," Jim Balsillie, co-CEO of RIM said. "Then there was an element of drafting for particular ownership and certain ones are in approval. So it gives unique opportunities to both protect and monetize, as well as collective opportunities to monetize as well as assurance that the group will not be asserted by those patents."

Overall Balsillie sees RIM's patent portfolio as being a strength for the company as it competes in the mobile marketplace.

"I think the patents we've acquired in the past and the royalty structure that we've managed and the protection for the company as well as all the, literally, thousands and thousands of patents we filed in our innovation the last few years has fortified the company extremely well in this patent game," Balsillie said.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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