RIM delivers pleasant surprise to investors; shares surge

TORONTO (Reuters) - Research In Motion Ltd reported a narrower-than-expected loss on Thursday and the strugglingBlackBerry maker bolstered its cash reserves, sparking optimism ahead of the launch of its make-or-break line of next-generation smartphones.

Shares of the RIM surged 20 percent in after-hours trade on indications the company will have plenty of cash to ramp up production of its new BlackBerry 10 devices and mount a robust marketing campaign for the revamped line, due in early 2013.

It was the biggest jump for the stock since a 50 percent surge in December 2003, underlining the importance of the BB10 launch. The company, which has fallen far behind its rivals in the smartphone market it once dominated, has staked its future on the BB10 and its completely redesigned operating system.

RIM's second fiscal quarter brought shareholders additional glimmers of hope, a break from a succession of dreadful quarterly reports. The company not only generated more revenue than Wall Street had forecast but it topped expectations on the number of devices shipped in the period, which ended September 1.

"It's very impressive," said Jefferies & Co analyst Peter Misek. "I didn't expect they could execute on the business given the models they have in the market, but they obviously did really well in emerging markets."

A one-time smartphone pioneer, RIM has failed to keep pace with rivals such as Apple Inc and Samsung Electronics Co, and its stock price has tumbled about 70 percent over the past year while its market share shriveled.

But the latest quarter showed that RIM is still able to lure buyers for its lower-end devices in more price-conscious emerging markets. That has helped make up for ground the BlackBerry has lost to cutting-edge devices such as Apple's iPhone and Samsung's Galaxy S III in North America and Europe.

"RIM and its products, however obsolescent, are still relevant in the parts of the planet where most people live," said CCS Insight analyst John Jackson. "The bad news is that these results have little or no bearing on what remains true, and that is, RIM still needs to execute on BB10."

In an attempt to create a buzz, Chief Executive Thorsten Heins gave a preview of the new smartphone and its features to app developers at an event on Tuesday in San Jose, California.

Analysts said RIM struck the right chords at the event but cautioned that it is hard to evaluate how well the BB10 devices will work in real world conditions until they are on the market.

"We are now just a few months away from our launch and our teams are working night and day to meet the expectations we have of ourselves," said Heins on a conference call after the results were released on Thursday.

Heins said RIM executives have met with dozens of carriers in more than 16 countries in the last few weeks and the feedback on the new devices so far, has been overwhelmingly positive.

QUARTERLY RESULTS

Shipments of BlackBerry smartphones were 7.4 million in the quarter, easily outpacing Wall Street's expectation of about 6.9 million shipments in the period.

The Waterloo, Ontario-based company reported a net loss of $235 million, or 45 cents a share, in its fiscal second quarter. That compared with a profit of $329 million, or 63 cents, in the same period a year earlier.

Excluding one-time restructuring-related items, the loss came in at $142 million, or 27 cents a share, in the quarter just ended.

Revenue rose to $2.9 billion, or 2 percent from the fiscal first quarter, but the latest result was down about 30 percent from the same period a year earlier.

Analysts, on average, had expected RIM to reported a loss of 46 cents a share, on revenues of $2.5 billion, according to Thomson Reuters I/B/E/S.

"You still have revenue declining 31 percent on a year-over-year basis but it's certainly not the train wreck that a lot of people feared," said BGC Partners analyst Colin Gillis. "They live to fight another day."

CASH PILE

RIM increased its cash to about $2.3 billion from $2.2 billion in the fiscal first quarter.

"They also lost a lot less money than expected, and the cash balance, even though they lost money, they were able to grow it slightly," said Sterne Agee analyst Shaw Wu.

Having sufficient cash on hand is seen as crucial to a successful launch of the BB10 line, as RIM will have to pour significant amounts of capital into marketing the devices.

RIM's chief financial officer said the company had entered into a new secured credit facility of $500 million which expires in September 2013, and in the first half RIM realized some $350 million of the up to $1 billion in cost savings it hopes to achieve in fiscal 2013.

The company, which earlier this year said it would cut about 5,000 jobs in a move to save money, said it has already laid-off roughly 2,500 workers.

"It's still bad, but it's a much smaller disaster than expected," said Wu. "These stocks all trade on expectations. Expectations were really low, and they were able to beat that."

RIM's U.S.-listed shares surged 20 percent to $8.55 in trade after the closing bell on Thursday.

(Additional reporting by Alastair Sharp, Allison Martell and Cameron French; Editing by Frank McGurty)

 

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RIM posts big loss but not as bad as expected

TORONTO (AP) — BlackBerry-maker Research In Motion posted another large quarterly loss on Thursday, but the hemorrhaging was not as bad expected.

The Canadian company is still losing market share in North America, where it struggles to compete with Apple's iPhone and phones that run Google's Android software. But it has stepped up sales in developing markets and actually increased its subscriber base and cash position.

RIM's stock surged more than 20 percent in after-market trading on the news.

The company reported Thursday that it lost $235 million, or 45 cents a share, in its fiscal second quarter, which ended Sept 1. That compares with a profit of $419 million, or 80 cents per share, a year ago.

RIM reported revenue of $2.9 billion.

Analysts polled by FactSet expected a loss of 47 cents on revenue of $2.49 billion.

RIM said it shipped 7.4 million BlackBerry smartphones in the quarter, down from 10.6 million in the same period last year. Some analysts predicted RIM would ship only 6.4 million devices as the company prepares to launch much-delayed new BlackBerrys that have been deemed critical to its survival.

RIM pioneered the smartphone in 1999 but North American consumers have been abandoning BlackBerrys for flashier, touchscreen phones in recent years. RIM is banking its future on its much-delayed BlackBerry 10 platform, which is meant to offer the multimedia, Internet browsing and apps experience that users now demand.

Chief Executive Thorsten Heins said on a conference call with analysts that BlackBerry 10 is still on track to be released in the first quarter of 2013 — several months after the release of Apple's iPhone 5, which came out earlier this month. Heins said competitors have released strong products recently but vowed BlackBerry 10 "will advance the operating system environment to a whole new level."

Heins replaced co-CEOs Jim Balsillie and Mike Lazaridis in January after the company lost tens of billions in market value. He surprised many this week when he said at a conference for mobile applications developers that RIM has 80 million subscribers, up from 78 million in early June. Many analysts had expected RIM to start losing subscribers in the second quarter.

The results show that RIM is making progress as it transitions to its next generation of BlackBerry smartphones and completes its cost reduction plan, Heins said.

Jefferies analyst Peter Misek said RIM did a great job in the quarter, considering the challenges it faced. He noted, however, that doesn't account for much because its new smartphones are not out yet.

"They are driving sales in emerging markets and we think they will continue to lose subscribers in developed markets," Misek said. "It doesn't tell you anything about the long-term success of the platform or the company."

RIM's sales outside the United States, United Kingdom and Canada were about 58 percent of total revenue, said Brian Bidulka, the company's chief financial officer. He noted sales were strong in Indonesia, South Africa and Venezuela, but declined in the U.S.

Sales in the U.S. represented 22 percent of revenue, down from 25 percent in the first quarter and 27 percent in the second quarter last year. Bidulka said RIM's business will continue to be challenged until the new BlackBerrys are launched.

Research firm IDC says BlackBerry's U.S. market share has plummeted from 45.8 percent in 2008 to 2.7 percent in 2012.

RIM has been laying off thousands of workers to offset the losses.

Heins noted RIM's cash position stood at $2.3 billion at Sept. 1, up from $2.2 billion at the end of the previous quarter. The company is very focused on maintaining a strong financial position as it transitions to the new platform, he said.

Colin Gillis, an analyst with BGC Financial, said RIM's ability to grow the subscriber base while not hurting its cash position is encouraging.

"It does give them more time. The talk of bankruptcy has probably dissipated right now," Gillis said. "These are all the right moves, but does it change that their position is still bleak?"

RIM's stock rose $1.46 cents to $8.60 in extended U.S. trading Thursday. It had ended the regular trading session up 14 cents at $7.14. RIM's struggles have wiped out some $80 billion in shareholder wealth since 2008, a drop of over 90 percent.

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RIM surprises with cash boost and resilient sales; shares surge

TORONTO (Reuters) - Research In Motion Ltd reported a narrower-than-expected loss on Thursday and the strugglingBlackBerry maker bolstered its cash reserves, sparking optimism ahead of the launch of its make-or-break line of next-generation smartphones.

Shares of RIM surged 20 percent in after-hours trade on indications the company will have plenty of cash to ramp up production of its new BlackBerry 10 devices and mount a robust marketing campaign for the revamped line, due in early 2013.

It was the biggest jump for the stock since a 50 percent surge in December 2003, underlining the importance of the BB10 launch. The company, which has fallen far behind its rivals in a smartphone market it once dominated, has staked its future on the BB10 and its completely redesigned operating system.

RIM's second fiscal quarter brought shareholders additional glimmers of hope, a break from a succession of dreadful quarterly reports. The company not only generated more revenue than Wall Street had forecast but it topped expectations on the number of devices shipped in the period, which ended on September 1.

"It's very impressive," said Jefferies & Co analyst Peter Misek. "I didn't expect they could execute on the business given the models they have in the market, but they obviously did really well in emerging markets."

RIM was also able to bolster its cash pile by collecting on cash owed to the company, drawing down inventories and cutting costs.

ONE-TIME PIONEER

A one-time smartphone pioneer, RIM has failed to keep pace with rivals such as Apple Inc and Samsung Electronics Co, and its stock price has tumbled about 70 percent over the past year while its market share shriveled.

But the latest quarter showed that RIM is still able to lure buyers for its lower-end smartphones in the more price-conscious emerging markets. And that has helped make up for ground the BlackBerry has lost to cutting-edge devices such as Apple's iPhone and Samsung's Galaxy S III in North America and Europe.

"RIM and its products, however obsolescent, are still relevant in the parts of the planet where most people live," said CCS Insight analyst John Jackson. "The bad news is that these results have little or no bearing on what remains true, and that is, RIM still needs to execute on BB10."

In an attempt to create a buzz, Chief Executive Thorsten Heins gave a preview of the new smartphone and its features to app developers at an event on Tuesday in San Jose, California.

Analysts said RIM struck the right chords at the event but cautioned that it is hard to evaluate how well the BB10 devices will work in real world conditions until they are on the market.

"We are now just a few months away from our launch and our teams are working night and day to meet the expectations we have of ourselves," said Heins on a conference call after the results were released on Thursday.

Heins said RIM executives have met with dozens of carriers in more than 16 countries in the last few weeks and the feedback on the new devices so far has been overwhelmingly positive.

QUARTERLY RESULTS

Shipments of BlackBerry smartphones were 7.4 million in the quarter, easily outpacing Wall Street's expectation of about 6.9 million.

The Waterloo, Ontario-based company reported a net loss of $235 million, or 45 cents a share, in its fiscal second quarter. That compared with a profit of $329 million, or 63 cents, in the same period a year earlier.

Excluding one-time restructuring-related items, the loss came in at $142 million, or 27 cents a share, in the quarter just ended.

Revenue rose to $2.9 billion, a gain of 2 percent from the fiscal first quarter, but the latest result was down about 30 percent from the same period a year earlier.

Analysts, on average, had expected RIM to report a loss of 46 cents a share, on revenues of $2.5 billion, according to Thomson Reuters I/B/E/S.

"You still have revenue declining 31 percent on a year-over-year basis but it's certainly not the train wreck that a lot of people feared," said BGC Partners analyst Colin Gillis. "They live to fight another day."

CASH PILE

RIM also increased its cash to about $2.3 billion from $2.2 billion in the fiscal first quarter.

"In the last two quarters RIM has done a really good job on collecting on receivables," said Sterne Agee analyst Shaw Wu, but he cautioned that this was not sustainable over the long run and RIM would have to return to a profitable business model for it to thrive once again.

While RIM has warned that it faces another operating loss in its fiscal third quarter, it expects its cash position to remain stable unless it is hit by restructuring charges.

Wu believes that the company can achieve this by continuing to draw down on its receivables, which stood just shy of $2.2 billion as of Sept 1.

RIM's chief financial officer said the company had entered into a new secured credit facility of $500 million which expires in September 2013, and in the first half RIM realized some $350 million of the up to $1 billion in cost savings it hopes to achieve in fiscal 2013, which ends on March 2 of next year.

The company, which earlier this year said it would cut about 5,000 jobs to save money, said it has already laid off roughly 2,500 workers.

"It's still bad, but it's a much smaller disaster than expected," said Wu. "These stocks all trade on expectations. Expectations were really low, and they were able to beat that."

RIM's U.S.-listed shares surged 20 percent to $8.55 in trade after the closing bell on Thursday.

(Additional reporting by Alastair Sharp, Allison Martell and Cameron French; Editing by Frank McGurty and Edmund Klamann)

 

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News Summary: RIM's loss not as bad as expected

ANOTHER LOSS: BlackBerry-maker Research In Motion posted another large quarterly loss on Thursday, but the hemorrhaging was not as bad expected.

DEVELOPING MARKETS: The Canadian company is still losing market share in North America, where it struggles to compete with Apple's iPhone and phones that run Google's Android software. But it has stepped up sales in developing markets and actually increased its subscriber base and cash position.

STOCK RALLY: RIM's stock surged more than 20 percent in after-market trading on the news.

 

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Ahead of the Bell: RIM shares rise on 2Q results

NEW YORK (AP) — Research in Motion Ltd. posted another large quarterly loss and its BlackBerrysmartphone shipments shrunk 30 percent. Investors, expecting even worse, were relieved and sent the company's shares up 16 percent in premarket trading Friday. But analysts cautioned that RIM is still struggling in the increasingly competitive mobile market.

RIM shipped 7.4 million BlackBerry smartphones in its fiscal second quarter, down from 10.6 million in the same three months a year ago. The Canadian company is losing market share in North America, where Apple's iPhone and phones that run Google's Android software are increasingly dominant. But it has stepped up sales in developing markets and actually increased its subscriber base and cash position.

Its loss in the quarter ended Sept. 1 came to $235 million, or 45 cents per U.S. share. Revenue totaled $2.9 billion.

Analysts polled by FactSet expected worse: A loss of 47 cents on revenue of $2.49 billion.

But investors' temporary relief does not imply that all is well for the once-pioneering smartphone maker. Shares, up $1.16 at $8.30 Friday before the bell, remain a far cry from the company's heyday. The stock fetched nearly $150 in June 2008.

Yes, RIM boosted its cash balance, but its core operations are still losing money, said Sterne Agee analyst Shaw Wu. And he remains concerned that the company's upcoming BlackBerry 10 platform will not be able to compete well against iPhones and Android phones.

The company said Thursday that the BlackBerry 10 remains on track to be released in the first quarter of 2013. It is banking its future on the much-delayed upgrade, meant to offer the multimedia, Internet browsing and apps that users now demand.

And the better-than-expected quarter was largely the result of promotions and phone upgrade programs, which ultimately reduced the average amount of revenue the company generated from each of its customers, said Jefferies analyst Peter Misek. That doesn't bode well for the future.

"All hope is on BlackBerry 10. We won't know success or failure until next summer," he added.

 

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RIM shares pop as 2Q not as horrible as feared

NEW YORK (AP) — Shares of Research in Motion Ltd. popped Friday after the BlackBerry maker's results in its fiscal second quarter weren't quite as awful as investors had feared.

But analysts cautioned that RIM is still struggling in the increasingly competitive mobile market.

The Canadian company posted another large quarterly loss and its BlackBerry smartphone shipments shrunk 30 percent to 7.4 million in the quarter ended Sept. 1.

RIM is losing market share in North America, where Apple's iPhone and phones that run Google's Android software are increasingly dominant. But it has stepped up sales in developing markets and actually increased its subscriber base and cash position.

Its latest loss came to $235 million, or 45 cents per U.S. share. Revenue totaled $2.9 billion. Analysts polled by FactSet expected worse: A loss of 47 cents on revenue of $2.49 billion.

But investors' relief Friday does not imply that all is well for the once-pioneering smartphone maker. Shares, up 64 cents at $7.78 in late morning trading Friday, remain a far cry from the company's heyday. The stock fetched nearly $150 in June 2008.

Yes, RIM boosted its cash balance, but its core operations are still losing money, said Sterne Agee analyst Shaw Wu. And he remains concerned that the company's upcoming BlackBerry 10 platform will not be able to compete well against iPhones and Android phones.

The company said Thursday that the BlackBerry 10 remains on track to be released in the first quarter of 2013. It is banking its future on the much-delayed upgrade, meant to offer the multimedia, Internet browsing and apps that users now demand.

And the better-than-expected quarter was largely the result of promotions and phone upgrade programs, which ultimately reduced the average amount of revenue the company generated from each of its customers, said Jefferies analyst Peter Misek. That doesn't bode well for the future.

"All hope is on BlackBerry 10. We won't know success or failure until next summer," he added.

 

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RIM buys itself breathing room for BB10 launch

TORONTO (Reuters) - Research In Motion Ltd shares jumped on Friday after the embattledBlackBerry maker posted quarterly results that showed it was still able to pull off a surprise as it tackles the formidable task of getting consumers excited over its new smartphone line.

While RIM's performance gave Wall Street a modicum of optimism, analysts stressed RIM has to now prove that the BlackBerry 10 devices, due early next year, can halt its brand's downward spiral. That won't be easy, they said.

"I have to admit they did a very good job making the best out of a really tough situation. You've got to give management some credit for that, but they still need to nurse the company back to health," said Sterne Agee analyst Shaw Wu.

RIM stunned investors on Thursday with stronger-than-expected BlackBerry sales in the quarter ended September 1. It even managed to build up its cash reserves, giving it a fighting chance to market the new BlackBerry 10 line effectively, while ramping up production of the reengineered smartphones.

Investors responded to the rare glimmer of good news for the embattled company by pushing up RIM's downtrodden share price up by more than 8 percent in afternoon trading on Friday.

Until Thursday's results, RIM was being written off by analysts because of its failure to keep pace with innovations from rivals such as Apple Inc and Samsung Electronics Co.

Analysts said RIM needs to generate enough excitment about the new devices to be able to sell them at a healthy profit.

"The question is, even if they do sell BB10 units, what is the margin profile going to be," said Wu, who notes that RIM once realized gross margins in the mid-40 percent range. Margins are now below 30 percent.

"If the gross margin profile stays where it is, then it is going to be very tough to be profitable, even if they sell a lot of BlackBerry 10 phones," he said.

To be sure, RIM managed to boost average selling prices in its latest quarter compared with the previous three months. That was a positive signal in the lead-up to the BB10 launch in early 2013.

"The bad news is that these results have little or no bearing on what remains true, and that is, RIM still needs to execute on BB10 and do it in a way that draws clear and resonant distinctions between what it has to offer and what the rest of the market has to offer," said CCS Insight analyst John Jackson.

The company is counting on BB10, equipped with a revamped operating system, to arrest a precipitous decline in market share over the past year and longer.

But in the end, the success or failure of the BB10 will hinge by how warmly it's embraced by consumers, many of whom have already switched to high-end devices like Apple's iPhone and Samsung's Galaxy S III, especially in North America and Europe.

"In the big picture, nobody, not even RIM knows whether this is going to work for them," cautioned Charter Equity Research analyst Ed Snyder.

Test versions of the BB10 have won praise from carriers and developers, but the true test still hinges on RIM's ability to win over fans of touchscreen devices.

"I want to regain market share in the U.S. and I want to win back market share in the full touch segment - that's what the company is geared up to and that's what we are working toward," said RIM Chief Executive Thorsten Heins in an interview with CNBC on Friday.

RIM's second-quarter performance also reminded investors that the company still enjoys a strong franchise in emerging markets, where consumers have graviated to its reliable though outmoded legacy smartphones.

Even though RIM's aging line-up has lost ground in North America and Europe, the BlackBerry maker managed to top shipment and revenue expectations in its second quarter, thanks largely to strong sales of smartphones in countries like India and Indonesia.

"This performance is nothing short of shocking as RIM has found a formula to entice its global carrier customers to sell (its) product," said National Bank Financial's Kris Thompson.

On Friday National Bank Financial upgraded RIM's stock, while BMO Capital Markets and Barclays Capital were among brokerages that raised price targets on the company's shares.

Thompson, who is rated five stars by Thomson Reuters StarMine for the accuracy of his estimates on RIM's earnings, upgraded the stock to "outperform" and increased his price target on the stock to $12 from $8.

Shares of RIM, which rose 20 percent after the closing bell on Thursday, were up 8.5 percent at $7.75 in afternoon trading on the Nasdaq on Friday. Its Toronto-listed shares rose more than 9 percent to C$7.57.

(Reporting by Euan Rocha in Toronto, Fareha Khan and Aditi Sharma in Bangalore; Editing by Frank McGurty)

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