RIM Misses Targets, New Blackberry 10 Phones Delayed
It has been a tough quarter and a tough year for Research in Motion (RIM). The BlackBerry vendor reported third quarter fiscal 2012 results late Thursday, showing a year-over-year revenue decline as the company missed expectations.
For the quarter, RIM reported revenue of $5.2 billion which is a 6 percent year-over-year decline. Net Income for the third quarter was reported at $265 million or $0.51 per share, a staggering decline from the $911 million or $1.27 per share the company reported for the same quarter last year. Going forward, the company provided fourth quarter guidance for revenues to be in the range of $4.6 billion to $4.9 billion.
RIM also delayed the launch of new BlackBerry 10 phones until the second half of calendar 2012, due to supply concerns over the chips that will power the devices.
RIM co-CEO Jim Balsillie noted during the company's earnings call, that product launch delays increased competition in the smartphone and tablet markets, and the October service interruption impacted RIM's sell-through in the quarter. "In Q3, we sold through approximately 13 million units, which was below our expectations," Balsillie said. "RIM's U.S. business is particularly weak."
Part of RIM's third quarter woes was attributable to the failure of the PlayBook tablet to achieve traction in the market. The company took an inventory-related charge in the third quarter of approximately $485 million related to the PlayBook. Despite the poor start for the PlayBook thus far, RIM's co-CEO Michael Lazaridis said during the company's earning call that they remain committed to the BlackBerry PlayBook. Lazaridis said that the PlayBook is an important aspect of RIM's longer-term smartphone and mobile computing strategy.
Lazaridis stressed that the new PlayBook 2.0 update that is coming in February of 2012 will be a major milestone for the platform.
"New enterprise-focused features include enhanced device manageability, enterprise application deployment and BlackBerry Balance," Lazaridis said. "BlackBerry Balance allows IT departments to be able to manage corporate information with trusted BlackBerry security while ensuring end-users' personal information and experience remains uncompromised."
Lazaridis added that the PlayBook 2.0 will provide a dedicated enterprise App World, so corporations can make enterprise applications easily available to their end users.
As to how RIM's leadership plans to turn things around, Balsillie said that they are exploring all options.
"We are leaving no stone unturned and are evaluating a number of areas, including product management and the number of SKUs offered, supply chain and building material cost efficiency, marketing and advertising, partnership and licensing opportunities, organizational and management structure and opportunities to leverage the BlackBerry infrastructure," Balsillie said. "I'm not going to try and paint anything that's overly rosy or anything that's overly pessimistic."
Balsillie noted that RIM has a very strong base of 75 million BlackBerry subscribers and they are seeing lots of growth in traffic.
"So yes, there's a very, very powerful system that we have here, and it's up to us to make sure that we use that infrastructure in a way and execute well to make sure that we create value for our shareholders," Balsillie said.