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Research In Motion Reports Second Quarter Fiscal 2012 Results

By Kevin Michaluk on 15 Sep 2011 04:19 pm EDT
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RIM

This just in!!  Stay tuned for our live blog starting up soon to go with the earnings call (Kicks off at 5pm ET). See the full press release on MarketWire. Watching RIMM stock on Google Finance, in the early minutes the after hours trading has the stock down some 12% as I type this. Will see if the slide continues.

Press Release

Research In Motion Reports Second Quarter Fiscal 2012 Results 

WATERLOO, ONTARIO--(Marketwire - Sept. 15, 2011) - Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported second quarter results for the three months ended August 27, 2011 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Highlights:

  • Revenue in the second quarter was $4.2 billion and service revenue surpassed $1 billion for the first time
  • GAAP net income of $329 million or $0.63 per fully diluted share; adjusted net income of $419 million or $0.80 per fully diluted share
  • The BlackBerry subscriber base grew 40% year over year to surpass 70 million
  • RIM's largest roll-out of BlackBerry smartphones was initiated with 7 new smartphones launched with over 90 carrier and distribution partners in 30 countries during the latter part of Q2
  • Approximately $780 million was invested as part of a consortium of companies that successfully bid to acquire intellectual property assets from Nortel
  • BlackBerry smartphone shipments in Q3 are estimated to grow between 27-37% over Q2 shipments

Q2 Results:

Revenue for the second quarter of fiscal 2012 was $4.2 billion, down 15% from $4.9 billion in the previous quarter and down 10% from $4.6 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 73% for hardware, 24% for service, and 3% for software and other revenue. During the quarter, RIM shipped approximately 10.6 million BlackBerry smartphones and approximately 200,000 BlackBerry PlayBook tablets.

"We successfully launched a range of BlackBerry 7 smartphones around the world during the latter part of the second quarter and we are seeing strong sell-through and customer interest for these new products. Overall unit shipments in the quarter were slightly below our forecast due to lower than expected demand for older models," said Jim Balsillie, Co-CEO at Research In Motion. "We will continue to build on the success of the BlackBerry 7 launch to drive the business as we focus our development efforts on delivering the next generation, QNX-based mobile platform next year."

The Company's GAAP net income for the quarter was $329 million, or $0.63 per share diluted, compared with GAAP net income of $695 million, or $1.33 per share diluted, in the prior quarter and net income of $797 million, or $1.46 per share diluted, in the same quarter last year. Adjusted net income for the second quarter was $419 million, or $0.80 per share diluted. Adjusted net income and adjusted diluted earnings per share exclude the impact of a pre-tax one-time charge of $118 million for the Company's cost optimization program that was implemented in the second quarter of fiscal 2012. Details on the cost optimization program are available in the Company's press release dated July 25, 2011 as well as in Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal period ended August 27, 2011, which will be filed shortly.

Note: Adjusted net income and adjusted diluted earnings per share do not have any standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of adjusted net income and adjusted diluted earnings per share enables the Company and its shareholders to better assess RIM's operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP financial measures in the context of RIM's GAAP results.

(1) During the second quarter of fiscal 2012, the Company implemented a cost optimization program to streamline operations across the organization. The Company incurred approximately $118 million in total pre-tax charges related to the cost optimization program. Substantially all the pre-tax charges are related to one-time employee termination benefits and the identification and elimination of redundant facilities, with the charges included in the relevant line items in the Company's consolidated statement of operations. During the second quarter of fiscal 2012 pre-tax charges of approximately $13 million were included in cost of sales, charges of approximately $19 million were included in research and development, and charges of approximately $86 million were included in selling, marketing and administration expenses. Additional charges for headcount related costs associated with our cost optimization program may also be incurred in subsequent quarters.

The total of cash, cash equivalents, short-term and long-term investments was $1.4 billion as at August 27, 2011, compared to $2.9 billion at the end of the previous quarter, a decrease of $1.5 billion from the prior quarter. Uses of cash included strategic purchases of intellectual property assets associated with RIM's participation in a consortium of companies that successfully bid to acquire Nortel Networks Corporation's patent portfolio, of which RIM's cost is approximately $780 million, capital expenditures of approximately $285 million, and working capital requirements.

Q3 and FY2012 Outlook

Revenue for the third quarter of fiscal 2012 ending November 26, 2011 is expected to be in the range of $5.3-$5.6 billion. Gross margin percentage for the third quarter is expected to be approximately 37%. BlackBerry smartphone shipments are expected to be between 13.5 million and 14.5 million units. Adjusted earnings per share for the third quarter, excluding the impact of charges related to the Company's cost optimization program, is expected to be in the range of $1.20-$1.40. Adjusted diluted earnings per share for the full year fiscal 2012, excluding the impact of charges related to the Company's cost optimization program, is expected to be towards the low end of the previously guided range of $5.25-$6.00.

Conference Call and Webcast

A conference call and live webcast will be held beginning at 5 pm ET, September 15, 2011, which can be accessed by dialing 1-877-974-0445 (North America), (+1)416-644-3414 (outside North America) or through your personalcomputer or BlackBerry PlayBook tablet at www.rim.com/investors/events/index.shtml. A replay of the conference call will also be available at approximately 7 pm ET by dialing (+1)416-640-1917 and entering passcode 4466490#. A replay of the webcast will be available on your personal computer or BlackBerry PlayBook tablet by clicking the link above. This replay will be available until midnight ET, September 29, 2011.

Reader comments

Research In Motion Reports Second Quarter Fiscal 2012 Results

33 Comments

There is a 18.7% chance of seeing it any day now...

(why of all the web pages crackberry.com is the absolut worst for the PB browser???, I hate how the keyboard disappears when typing. I had to edit this post cause the keyboard went away while I was typing and pressed post comment)

200,000 tablets??

That's the amount of Ipads my nearest Apple store sold yesterday!

Research In NO Motion

If was was going to be immature and mock the company name, i would at least have it flow better, ie Research not in Motion

You folks have it all wrong... "Research Immotive".

But really this whole thread is just another case of beating them because they aren't apple. It's sad that their brand value has diminished so much, but we'll see what the future holds.

Yikes... good to see they are projecting growth next quarter (which is what the analysts will really care about) but not good to see that they are below their guidance as that hurts their credibility for their growth projections. I notice they are now saying QNX phones NEXT YEAR... not early 2012 as before. Yikes.

Also, they are projecting for this next quarter what they did a year ago (same revenues/Shipments and lower EPS). The stock is going to get hammmered tomorrow. Yikes.

In their defense:
1. Next year is 2012, as they didn't say "in a year" the meaning (whether intended or not) is 2012
2. They never said early 2012, they never give anything that specific until a month or so before then... early 2012 was the rumored release date for the colt, which in itself is a rumor (though a fairly likely one)

makes sense - all the new OS7 devices came out at the end of the quarter, the next quarter or two will be very telling/important for RIM.

PB sales not looking good.....

Wow I got to say they sinking faster then a ship wow what happens when phone 5 comes out ?
They are only 300 million away in a quarter from not making money wow truly surprised I can't believe what these two jackass have done

Soooo..in summary. Not amazing. But down as expected. Still pretty profitable. But not as profitable as it was before, for sure. Stock will go down quite a bit, stablize, and grow a little, staying in the 25-28$ range until the more info on the QNX device comes out.

Except the QNX will be as half hearted as the PB further damaging the stock. RIM really needs a rethink. The whole aproach is just wrong for the market at this point and it is beginning to show.

i would say no, not as expected, much worse, profit cut in half, only 200k pb's SHIPPED, not sold, shipped...os7 sales bad, and QNX handsets aren't on the horizon, they can say they're going to show them off, but the fact remains that even if they come out in q1 RIM has to basically sit on it's hands until then, which is an eternity, what if profits get cut in half again the next 2 quarters? well then RIM will be alive only off it's cash reserves, and if you think they're going to operate a business like that, think again, they'll sell. stock is already down sub $25, and i'd say after this awful earnings report, tomorrow and monday are going to be the 2 worst days for RIMM ever.

It really couldnt have been any worse.
Why RIM did not issue cautionary statementsmuch earlier to cushion this blow is beyond me. The co-idiots really need to go now.
We are all going to wake up to intergalactic smugness and sarcasm tommorrow. Why did I ever fall in love with this brand?

Time to take of your silk gloves Kevin.
Just admit it... Blackberry is a platform with one app... MESSAGING.
Outworking it will be "MAGICAL". Imagine APPLE buying of RIMM and securing their email, iMessage with RIMM infrastructure.

kevin, i'm pulling for BB as much as anyone, really. i've been negative, i've hated, i've predicted doom and gloom, but in all honesty, it was only because it was true, and things did indeed need to improve. i don't understand why there isn't an article up on the front page yet about how dismal this earnings report was. don't hide the truth. this is possibly RIM's ugliest moment. os7 sales are awful, PB is obviously a joke, SHIPPED 200K? what's that mean they sold 75k? let's just be frank about the situation, no need to say RIM is dead, but acknowledging that it's knocking on deaths/takeover/no longer a contenders - door is quite simply the truth. you have a huge fan base here that deserves straight forward information. it's great that RIM will unveil qnx handsets at devcon, if they actually do. but while it's been bad at RIM lately, it's going to be devastatingly worse until qnx handsets come out, to be polite about it. today is a very sad day for RIM, and i have a feeling that tomorrow and monday, all media outlets will be saying they're done for. this needs to be reported.

Sorry RIM you just don't get it do you? People want a NEW OS a New GUI and APPS. Unfortunately you are now in catch up mode and Apple and Android are NOT slowing down. Use to love my BB's but they are stale. Time for a REFRESH starting at the TOP! And if you think QNX will save you let me know how the BES integration with QNX is going? ( If anyone cares to know it's NOT.) SO there goes the enterprise folks or they will stay with OS 6/7 and the consumers will buy QNX devices and then question why can't I use this POS at work. IT's a lose/lose for RIM. Time for a takeover or at least replacing the CEO's. And OS7 devices will not save the company. 200k Playbooks???? Outstanding RIM. Apple makes that many iPads a day if not more. Apple sells approx. 8 million iPads a quarter. Whats that? 2.6 Million a month approx. So I would say PB=FAIL. Go ahed BB loyalists and say what you want but you seem to be the only folks buying them. Stupid move make a tablet that you HAVE to bridge to a Blackberry. What kind of idiot expects better sales when the PB is tied to the Blackberry. I really hope they didn't even think about taking on the iPad.

Down right sarcastic mocking:
You must run a fortune 500 and make six figures! Your so smart, the board needs to make you new CEO.

Trendy mocking(More fit for your personality):
Oh by the way. BMW is better then Mercedes and did you get the new, hip, whatchamacallit!

Dear Sir,
Conclusions. Conclusions. More Conclusions.

Not to be smug but:
Might want to read a bit. BES is being worked on with new phone development, issues are so deep in security that they can't guarantee a time because it relates to hardware and software alterations. Everything else needs to be argued, but its a waste with you.

To Rim:
Good job PB team. It ain't easy standing up to the older boys. Keep flooding the market and making yourself better.

Brandon Clark
LEAVE THE HYPE, GET THE FACTS

how is shipping 300k less playbooks than last quarters 500k flooding the market? bes/qnx are obviously not playing nicely together, and it's absurd that there is not only still not BBM and other services on the playbook, but that the new PB OS still won't have it. the playbook is CLEARLY completely killing their profit margins, so i wouldn't be congratulating it very much.

I obviously could do a better job than the two-headed monster they have now. And BTW Facts are Facts QNX and BES integration is an issue. Flooding the market with Pb's? Are you serious they can't even sell what they expect to ship. To flood a market with PB's would be the dumbest thing RIM could do. Security in development man dude you do drink the kool-aid. Numbers DON'T lie. Stock is down expectations were down. NO HYPE FACTS.

Oh yeah let's hear the excuses again just wait it will get better. Well all the folks who bought OS7 devices will be SOL because they CANNOT upgrade to QNX. So tell me how does RIM straighten out the cluster they made?

the ship is sinking slowly for sure. im not jumping off yet. i'm sticking with my ride or die RIM 2012. if nothing magical happens on end of 2012, it's time to let go.

I cannot believe that this is the crackberry site that I have grown to love. It seems that we have a lot of bashers here. Please all you I-Maxi-Pad users please leave comments on your site and leave our BB site alone, we bb users are doing just fine!

Not so creative change for customer.

A lot of new handsets?, but no change in closed network oriented business model.
To me, I should have, just more and more, patience to maintain using blackberry phone.

I aready odered Bold9900 again for QWARTY. But, strong concern about closed BIS model.
Why cannot RIM throw BIS model? I think that was already old model. if do, more competitive
and can survive.

The 9900 had the chance to help RIM to earn much more money, but with the weak battery and bad camera the sales will never be good enough. Half-made phones means bad sales, RIM! You are on the same way as once-upon-a-time Palm did...