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RIM Posts Loss; Reviewing Strategic Opportunities

RIM Posts Loss; Reviewing Strategic Opportunities
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3/29/2012 6:26 PM ET

Struggling Canadian smartphone maker Research In Motion Ltd. (RIMM: Quote,RIM.TO: Quote) said Thursday after the markets closed that it swung to a fourth quarter loss, hurt by lower revenue as well as goodwill impairment and inventory charges.

The company's quarterly earnings per share, excluding items, also came in below analysts' expectations as did its quarterly revenue.

At the same time, the BlackBerry maker announced departures of some senior executives, including the resignation of former Co-CEO Jim Balsillie from the board.

"I have assessed many aspects of RIM's business during my first 10 weeks as CEO. I have confirmed that the company has substantial strengths that can be further leveraged to improve our financial performance, including RIM's global network infrastructure, a strong enterprise offering and a large and growing base of more than 77 million subscribers," said Thorsten Heins, President & CEO of Research In Motion.

Heins, who was RIM's Co-COO before taking over as CEO in late January, also said the company is simultaneously conducting a comprehensive review of strategic opportunities including partnerships and joint ventures, licensing, and other ways to leverage its assets and maximize shareholder value.

Although Heins did not speak of a possible sale of the company, the statement and the latest results would keep the rumor mills going. RIM has been subjected to takeover speculation over the past year.

During the fourth quarter, RIM shipped about 11.1 million BlackBerry smartphones, down 21% sequentially, and more than 500,000 BlackBerry PlayBook tablets.

RIM was once the undisputed king of the smartphone market. Of late, the company is having a tough-time in the face of stiff competition from Apple Inc.'s (AAPL) iPhone and iPad, and devices powered by Google Inc.'s (GOOG) Android system.

This can be gauged from the fact that Cupertino, California-based Apple, RIM's major rival in the smartphone and tablets market, sold 37.04 million iPhones and 15.43 million iPads during its first quarter ended December 31.

For the fourth quarter ended March 3, 2012, Waterloo, Canada-based RIM reported a net loss of US$125 million or US$0.24 per share, compared to net income of US$934 million or US$1.78 per share for the year-ago quarter.

The latest quarter results include pre-tax charges of $355 million for the impairment of goodwill and $267 million for an inventory provision taken mainly on certain BlackBerry 7 products.

Excluding items, adjusted net income for the latest quarter was US$418 million or US$0.80 per share.

On average, 43 analysts polled by Thomson Reuters expected the company to earn US$0.81 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Gross margin for the quarter narrowed to 33.4% from 44.2% a year earlier. Excluding items, adjusted gross margin for the latest quarter was 39.8%.

Revenue for the fourth quarter fell 25% to US$4.19 billion from US$5.56 billion in the same quarter last year. Forty analysts had a consensus estimate of US$4.54 billion for the fourth quarter.

Looking forward, the company said it expects continued pressure on revenue and earnings throughout fiscal 2013.

Due to a desire to focus on long term value creation and the current business environment, RIM said it will no longer provide specific quantitative guidance.

RIM also said that former Co-CEO Jim Balsillie has resigned from the company's board of directors.

Additionally, the company said David Yach will be retiring from his role as CTO, Software, and Jim Rowan, COO, Global Operations, has decided to pursue other interests.

The company said it is currently conducting a search to hire a single COO with responsibilities to run its operations.

RIM shares closed Thursday's regular trading session on the Nasdaq at US$13.73, up 6 cents. The stock is currently losing 33 cents or 2.40% in after hours trading. On the TSX, the company's shares closed the day at C$13.69, up 3 cents.

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by RTT Staff Writer

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