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Earnings Preview: Research in Motion Ltd
Question of the Day
TORONTO (AP) - Research In Motion Ltd., the maker of the BlackBerry, reports its latest financial results after the market closes Thursday as the company needs a formidable challenger to popular smartphones from Apple and other companies.
WHAT TO WATCH FOR: Whether RIM gives any guidance about the launch of its next-generation BlackBerry 10 phones, formerly known as BBX.
Analysts say RIM’s future depends on the new software platform, but many of them expect the launch to be delayed until the second half of next year. RIM needs to come up with a compelling BlackBerry as U.S. users have moved on to flashier touch-screen phones such as Apple’s iPhone and various competing models that run Google’s Android software.
RIM already said on Dec. 2 that it sold 14.1 million BlackBerrys in the fiscal third quarter, which ended Nov. 26. The company warned then that it will sell fewer phones in the current quarter despite the holiday shopping season.
Peter Misek, an analyst at Jefferies & Co. in New York, said that if RIM reveals Thursday that it will ship no more than 12 million BlackBerrys in the current quarter, then the company needs to get its new phones out fast. Otherwise, RIM could lose money in future quarters as it continues to struggle to sell the current, stopgap models.
Misek also said it will be a disaster if RIM loses subscribers or shows no growth.
WHY IT MATTERS: Once an iconic brand, the BlackBerry is now struggling to compete. Although BlackBerrys are cheaper than some of their more popular rivals and remain popular internationally, RIM is struggling with delays in getting new phones out. In addition, its PlayBook tablet computer has been a dud, and its stock is at a five-year low. A company that was once worth more than $70 billion now has a market value of less than $9 billion.
WHAT’S EXPECTED: RIM already said revenue and earnings in the third quarter were lower than previously projected, but not a surprise to analysts.
RIM said it expects earnings at the “low to mid point” of the $1.20 to $1.40 per share it previously forecast. Analysts polled by FactSet on average expect $1.20 per share.
The company expects revenue slightly below the $5.3 billion to $5.6 billion in its previous forecast. Analysts expect $5.23 billion.
For current quarter, which ends in February, analysts polled by FactSet expect $5.07 billion in revenue and earnings of $1.15 per share.
RIM, which is based in Waterloo, Ontario, also said on Dec. 2 that it wouldn’t meet full-year earnings guidance of $5.25 to $6 per share, the third cut in a row.
LAST YEAR’S QUARTER: RIM earned $911 million, or $1.74 per share, on revenue of $5.49 billion.
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