RIM under pressure, ahead of BB10 launch

21 DEC 2012
Thorsten Heins

RIM announced Q3 results which showed its continued struggle ahead of the launch of its anticipated BlackBerry 10 smartphones early next year, although its numbers were helped by a significant tax gain.

During the period, the company shipped around 6.9 million of its current BlackBerry smartphones, compared with 14.1 million in the same quarter last year, and down from 7.4 million in the earlier sequential quarter.

It also said its BlackBerry subscriber base was 79 million, up from 75 million year-on-year, but down from 80 million in the prior period.

For the quarter to 1 December 2012, the company reported a profit of $9 million, down 96.6 percent from $265 million in the prior-year period, on revenue of $2.73 billion, down 47.2 percent from $5.17 billion.

On an operating level, the company reported a net loss of $230 million, compared with a prior-year profit of $328 million.

Bloomberg noted that following RIM’s conference call, there was some concern that the company’s services business is set to see pressure, after Thorsten Heins, its CEO, noted that while subscribers that use “advanced security, mobile device management and other services” will continue to pay, others are “expected to generate less or no service revenue”.

In the most recent quarter, 36 percent of RIM’s revenue came from services, compared with 60 percent for hardware and 4 percent for software and other revenue.

In a statement, Heins noted that the company continues to deliver on key financial metrics, as it prepares for the launch of BlackBerry 10.

“During the third quarter, we continued to demonstrate our strong financial position, generating $950 million in cash flow from operations, and increasing our cash position significantly to more than $2.9 billion,” he said.

In the company’s conference call, Heins also said that following its strategic review, RIM “continues to meet with potential partners interested in exploring how we may be able to leverage each other’s strengths”.  However, no additional details were provided, other than that “we will share that information when appropriate”.

Looking forward, RIM said that there will be “continued pressure” on its operating results as it moves toward BlackBerry 10, and that it will “continue to consider using pricing initiatives on BlackBerry 7 devices and service fees in some markets as a way to maintain our subscriber base and drive more BlackBerry users”.

However, it acknowledged with the BB10 launch in the calendar for 30 January 2013, some customers will now defer purchases, and that it will also incur increased marketing costs associated with the launch.

RIM also announced the planned retirement of Robin Bienfait, its chief information officer, after six years with the company.

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