RIM posts weak Q1 BlackBerry shipments, plans job cuts

Research In Motion (NASDAQ:RIMM) reported weak quarterly financials and announced it will start a program of job cuts. Meanwhile, the company said it shipped 500,000 units of its PlayBook tablet in the quarter.

During the company's quarterly conference call with analysts, RIM's leadership attempted to explain the company's gloomy performance and outlook.

Specifically, Mike Lazaridis, RIM's president and co-CEO, said the company struggled to get its new BlackBerry OS 7 devices out into the market, but the products have stalled in carrier testing. However, Lazaridis promised that BlackBerry OS 7 devices, led by the BlackBerry Bold 9900, will be released shortly, and will be followed by a range of BlackBerry OS 7 devices in the high- and mid-range of the market for both CDMA and GSM carriers.

Lazaridis also addressed concerns about RIM's plans to release smartphones running QNX, the software powering its PlayBook tablet. Lazaridis said the company wanted to move to QNX earlier, but that doing so "would've left a product hole in 2012." RIM executives said the company continues to expect to release QNX-powered smartphones early next year.

Finally, Lazaridis addressed concerns about RIM's leadership structure; investors have called for a change of leadership from the company's current co-CEOs, Jim Balsillie and Lazaridis.

"Strong, consistent leadership is critical," Lazaridis said, defending the dual-CEO structure of RIM's front office.

"I truly believe we are approaching the final phase of this transition," Lazaridis concluded, explaining that RIM expects to emerge a stronger company next year.

The financial results, and job cuts
In its most recent quarter, RIM reported net income of $695 million in its quarter, down from $769 million in the year-ago period. The company posted net revenue of $4.9 billion, up 16 percent from the year-ago quarter's $4.2 billion. RIM said revenue outside the U.S. and Canada grew 67 percent year-over-year in the quarter. RIM shipped 13.2 million BlackBerry units in the quarter, up from 11.2 million in the year-ago period.

RIM's results are largely in line with a lowered forecast the company gave April 28 for profit and revenue. At the time, RIM said it expected shipment volumes of BlackBerry smartphones to be at the lower end of the range of 13.5-14.5 million it had given in March. Further, the BlackBerry maker had said it expected to ship more devices with lower average selling prices than previously expected. As a consequence, RIM said it expected revenue for the quarter to be slightly below the range of $5.2-5.6 billion it had forecast in March.

The BlackBerry maker did not say how many jobs it will cut as part of a program to streamline operations across the company. RIM said it expects to start the job cuts in its second quarter.

Meanwhile, RIM lowered its full-year earnings guidance. The company said it expects revenues in its upcoming quarter of $4.2-$4.8 billion. The company said its earnings per share for the full year fiscal 2012 are now expected to be between $5.25-$6.00 diluted, excluding any one-time charges or share repurchases.

The PlayBook, and possible 4G delays
RIM's PlayBook shipment figures are notable considering the troubles the company faced on launching the gadget. They also compare favorably with the results of Motorola Mobility (NYSE:MMI), which reported sales of 250,000 Android Xoom tablets in its first quarter. RIM executives during the company's quarterly conference call said they were pleased with the PlayBook's sell-through (the number of devices sold to end users), though they did not provide a specific sell-through figure.

Interestingly, on the PlayBook, RIM's executives said AT&T Mobility (NYSE:T) continues to test its BlackBerry Bridge software. The carrier has so far withheld offering the software due to pricing concerns.

Separately, RIM's executives promised to release WiMAX, LTE and HSPA PlayBooks in the fall. This appears to be a delay from promises that the WiMAX PlayBook for Sprint Nextel (NYSE:S) would be available in the summer.

"Sprint currently offers BlackBerry Wi-Fi Playbook. As for the 4G version, we did initially announce summer availability back at CES. While it may be available closer to the end of summer or the beginning of fall, we have not officially changed the expected timing. As soon as we have a confirmed date, we will share it widely," said Michelle Leff Mermelstein, a Sprint spokeswoman.

Finally, RIM said it is working with Verizon to sell the PlayBook to enterprise customers. Verizon in the past has said it doesn't plan to sell the PlayBook through its consumer-focused retail channels. A Verizon spokesperson could not immediately respond to requests for comment.

RIM's quarterly results come at a time of intense scrutiny for the company, especially from analysts and investors who have been impatient with RIM's slow pace of handset releases as well as RIM's dual-CEO management structure. According to research firm Gartner, RIM commanded 12.9 percent of the global smartphone market in the first quarter, down from 19.7 percent in the year-ago period. RIM's shares have dropped 38 percent since the company issued its profit warning.

Shortly before its earnings announcement, RIM said that one of its chief operating officers, Don Morrison, is going on medical leave and is expected to return later this year. Morrison, an 11-year RIM veteran, handles the company's domestic and international operations.

Additionally, RIM said Larry Conlee, a former RIM COO who retired in 2009, recently returned to the company to serve as a special adviser. The company also has two other chief operating officers: Jim Rowan, who manages global manufacturing and supply chain operations; and Thorsten Heins, who runs product engineering.

For more:
- see this earnings conference call transcript
- see this release
- see this WSJ article (sub. req.)
- see this BGR article
- see this VentureBeat live blog

Related Articles:
Analysts criticize RIM's dual-CEO structure, product uncertainty
RIM faces securities fraud lawsuit
RIM's PlayBook failing to make inroads at AT&T, Verizon
RIM co-CEO Lazaridis defends company's strategy, PlayBook
RIM slashes forecast on weaker BlackBerry smartphone sales
RIM chiefs counter PlayBook tablet criticism ahead of launch

Mike Dano contributed to this report. Article updated June 17 to include comment from Sprint.

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