Research In Motion (NASDAQ:RIMM) reported second quarter results at the low end of its forecast and below what many analysts had been expecting. During the quarter, RIM shipped approximately 10.6 million BlackBerry smartphones and approximately 200,000 BlackBerry PlayBook tablets--in its previous quarter, RIM shipped 500,000 PlayBooks and 13.2 million smartphones. Analysts had expected RIM to ship around 11 million smartphones and around 500,000 tablets in its second quarter.
RIM's stock tumbled more than 15 percent to $24.90 per share in after-hours trading in the minutes following the news.
RIM co-CEO Jim Balsillie acknowledged RIM's quarter wasn't stellar, but said the company's new lineup of BlackBerry 7 smartphones--sales of which began at the end of RIM's second quarter--was generating significant sales among both existing and new BlackBerry users.
"We believe we are well positioned to take advantage of the upcoming holiday season" with BlackBerry 7, Balsillie said, noting that RIM expects its carrier partners, including those in the United States, to heavily advertise BB7 in the coming months. "BlackBerry 7 has a lot of runway," he said.
As for RIM's PlayBook tablet, Balsillie acknowledged that shipments were "lower than we had anticipated." But he said RIM is planning to release its PlayBook 2.0 software update sometime after the company's developer's conference in October, and that the upgrade would add native email, contacts and calendar functions to the device, as well as the Android app player and a movie watching service.
Perhaps more importantly, RIM executives promised to offer a PlayBook incentive program for businesses, as well as rebates and deals for existing BlackBerry customers, in an effort to reduce the price of the tablet. The executives did not say how much they would cut from the PlayBook's current selling price.
The PlayBook will "ultimately be successful," said RIM Co-CEO Mike Lazaridis, noting that the tablet industry is still a nascent market. Research firm IDC said RIM commanded 4.9 percent of the global tablet market in the second quarter.
"We understand that the past few quarters have been challenging and we are confident that we are on track to return to growth in Q3 and beyond," Lazaridis said.
The results come at a rough time for RIM. Though the company continues to make some gains in international markets, it is suffering from dramatic declines in its U.S. business as Android and iOS grab BlackBerry market share. According to the latest numbers from comScore, which tracks Americans' cell phone ownership, RIM's share of the U.S. smartphone market has sunk from around 40 percent to around 20 percent during the past 12 months.
In response, RIM recently updated its platform and handset lineup with BlackBerry 7, which features a refined, touch-friendly interface and Web browser. Further, the company has promised to release QNX-based smartphones next year--QNX represents a ground-up overhaul of the aging BlackBerry OS. (Interestingly, RIM said it will show off prototype QNX smartphones to developers during its developer conference Oct. 18-20.)
However, RIM is struggling to maintain its position. The company announced in July it would cut around 2,000 jobs, or 11 percent of its global workforce, as part of a cost-cutting effort.
In its second quarter, RIM's revenues clocked in at $4.2 billion, down 15 percent from the previous quarter and down 10 percent from the same quarter of last year. The company's net income for the quarter was $329 million, a significant decline from the $695 million RIM reported in the prior quarter and the $797 million net income it posted in the same quarter last year. The decline in RIM's net income is likely due to the $780 million the company said it spent during the quarter related to its participation in the coalition of companies--Apple, EMC Corp., Ericsson (NASDAQ:ERIC), Microsoft (NASDAQ:MSFT), RIM and Sony--that paid $4.5 billion for Nortel Networks' patent portfolio earlier this year.
Looking toward its next quarter, RIM said it expects revenues of between $5.3 billion and $5.6 billion, and BlackBerry smartphone shipments of between 13.5 million and 14.5 million units.
For more:
- see this release
- see this IDC release
- see this AllThingsD article
- see this CNET article
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