Research In Motion has just reported their results for the first quarter of the 2013 fiscal year. We kind of knew what to expect after a business update was issued only a month ago, but it will be interesting to hear what RIM CEO Thorstein Heins has to say during the conference call. The CORE (cost optimization and resource efficiency) program still aims to save $1 billion by the end of fiscal 2013. RIM has faced a few challenges over the last few months but we're hoping that things pick up speed as we head toward the releae of BlackBerry 10. It's noted here that it's still "our number one priority" --however the updated release date for BB10 devices is now Q1 of 2013.
You can check out our full coverage and follow along with our live podcast and webcast during the call. Be sure to stick around after to hear our thoughts on it all. We'll be following up shortly with a breakdown of just what it all means, so be sure to check back later.
Press ReleaseResearch In Motion Reports First Quarter Fiscal 2013 Results
WATERLOO, ONTARIO--(Marketwire - June 28, 2012) - Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended June 2, 2012 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
- Cash, cash equivalents, short-term and long-term investments increased to $2.2 billion at the end of the first quarter
- Cash flow from operations was approximately $710 million in the first quarter
- Revenue of $2.8 billion in Q1, down 33% from $4.2 billion in the prior quarter
- GAAP net loss in Q1 of $518 million or $0.99 per share diluted; adjusted net loss of $192 million or $0.37 per share diluted
- Shipments of BlackBerry smartphones were 7.8 million and shipments of BlackBerry PlayBook tablets were approximately 260,000
- BlackBerry 10 smartphone launch now scheduled for Q1 of calendar 2013
- Restructuring efforts underway that will include a workforce reduction of approximately 5,000 employees as part of RIM's efforts to realize over $1 billion in cost savings, based on RIM's Q4 FY2012 run rate
- Launched World Tour BlackBerry Jam developer sessions in 23 countries resulting in strong adoption and support by application and developer partners for BlackBerry 10 platform
- BlackBerry App World continues to grow with over 89,000 applications available
- The overall BlackBerry subscriber base continued to grow, and the subscriber base grew in all regions except for North America
- RIM names Steve Zipperstein, former General Counsel of Verizon Wireless, as Chief Legal Officer
Revenue for the first quarter of fiscal 2013 was $2.8 billion, down 33% from $4.2 billion in the previous quarter and down 43% from $4.9 billion in the same quarter of fiscal 2012. The revenue breakdown for the quarter was approximately 59% for hardware, 36% for service and 5% for software and other revenue. During the quarter, RIM shipped 7.8 million BlackBerry smartphones and approximately 260,000 BlackBerry PlayBook tablets.
GAAP net loss for the quarter was $518 million, or $0.99 per share diluted, compared with a GAAP net loss of $125 million, or $0.24 per share diluted, in the prior quarter and GAAP net income of $695 million, or $1.33 per share diluted, in the same quarter last year.
Adjusted net loss for the first quarter was $192 million, or $0.37 per share diluted. Adjusted net loss and adjusted diluted loss per share exclude the impact of pre-tax charges of $335 million ($326 million on an after tax basis), which are predominantly non-cash related to the impairment of goodwill. This charge and its related impact on GAAP net loss and diluted loss per share are summarized in the table below.
"Our first quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January. I am not satisfied with these results and continue to work aggressively with all areas of the organization and the Board to implement meaningful changes to address the challenges, including a thoughtful realignment of resources and honing focus within the Company on areas that have the greatest opportunities," said Thorsten Heins, President and CEO. "Our top priority going forward is the successful launch of our first BlackBerry 10 device, which we now anticipate will occur in the first quarter of calendar 2013. In parallel with the roll out of BlackBerry 10, we are aggressively working with our advisors on our strategic review and are actively evaluating ways to better leverage our assets and build on our strengths, including our growing BlackBerry subscriber base of approximately 78 million, our large enterprise installed base, our unique network architecture and our industry leading security capabilities."
The total of cash, cash equivalents, short-term and long-term investments was $2.2 billion as of June 2, 2012, compared to $2.1 billion at the end of the previous quarter, an increase of approximately $100 million from the prior quarter. Cash flow from operations in Q1 was approximately $710 million. Uses of cash included intangible asset additions of approximately $285 million, capital expenditures of approximately $155 million and a business acquisition of approximately $100 million.
BlackBerry 10 Update
The successful launch of the BlackBerry 10 platform and the delivery of high quality, full-featured BlackBerry 10 smartphones remain the Company's number one priority. Over the past several weeks, RIM's software development teams have made major progress in the development of key features for the BlackBerry 10 platform; however, the integration of these features and the associated large volume of code into the platform has proven to be more time consuming than anticipated. As a result, the Company now expects to launch the first BlackBerry 10 smartphones in market in Q1 of calendar 2013.
"RIM's development teams are relentlessly focussed on ensuring the quality and reliability of the platform and I will not compromise the product by delivering it before it is ready. I am confident that the first BlackBerry 10 smartphones will provide a ground-breaking next generation smartphone user experience," said Thorsten Heins, President and CEO. "We are encouraged by the traction that the BlackBerry 10 platform is gaining with application developers and content partners following the successful BlackBerry Jam sessions that we have held around the world since the beginning of May. Similarly, the reception of the BlackBerry 10 platform by our key carrier partners has been very positive and they are looking forward to going to market with BlackBerry 10 smartphones in the first quarter of calendar 2013."
RIM today also announced the appointment of Steve Zipperstein, former General Counsel of Verizon Wireless, as its Chief Legal Officer. Prior to joining Verizon, Mr. Zipperstein previously served as Deputy General Counsel for GTE Corporation and was employed with the United States Department of Justice as a federal prosecutor. Mr. Zipperstein joins Kristian Tear, Chief Operating Officer and Frank Boulben, Chief Marketing Officer as the latest additions to RIM's executive management team.
The Company announced its CORE (Cost Optimization and Resource Efficiency) program in March of this year. The program is focused on delivering operational savings through various initiatives, with financial objectives for the program targeted to drive at least $1 billion in savings by the end of fiscal 2013, based on RIM's Q4 FY2012 run rate. As a result of the shift in BlackBerry 10 launch timeline, the increasingly competitive environment, as well as the identification of additional cost saving and efficiency opportunities, the Company may increase the scope and magnitude of these programs, and considers these original estimates as minimum numbers it will be pursuing.
To date, the Company has started implementing a number of these initiatives including:
- a reduction in the number of layers of management to drive better clarity, efficiency and accountability across the organization;
- the continued streamlining of our supply chain, which includes the consolidation of our manufacturing footprint from 10 external manufacturing sites to three, and working closely with our suppliers and other partners to identify ways to drive further efficiency;
- outsourcing key parts of the Company's Global Repair operations, including management of device level repairs;
- targeted use of resources in our sales and marketing initiatives to more effectively leverage marketing windows and prioritize our marketing efforts and spend in regions that offer the highest opportunity and return;
- further outsourcing of non-core functions as determined during the implementation of the CORE program; and
- a global workforce reduction of approximately 5,000 employees, which is expected to be completed by the end of fiscal 2013.
The Company expects to incur restructuring related charges of approximately $350 million by the end of fiscal 2013, primarily associated with the global workforce reduction. Other charges and cash costs may occur during this process, and the Company intends to share more details throughout the year regarding its progress as programs are implemented or changes are completed.
The Company expects the next several quarters to continue to be very challenging for its business based on the increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10, pressure to reduce RIM's monthly infrastructure access fees, and the Company's plans to continue to aggressively drive sales of BlackBerry 7 handheld devices. The Company expects to report an operating loss in the second quarter of fiscal 2013, as RIM continues to invest in marketing programs and continues to work through the transition to BlackBerry 10, as well as the Company's fixed costs being allocated over a lower volume of shipments. This outlook excludes the impact of charges related to the CORE Program.