Wednesday, May 22, 2024

RIM Posts a Loss, But Beats Expectations

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As expected, Canada-based mobile device maker RIM posted another quarterly loss on Thursday, but the news wasn’t as bad as analysts expected. The company’s BlackBerry products performed very well in developing markets, leading some to speculate that RIM may not be headed for demise after all.

Writing for the Wall Street Journal, Will Connors reported, “The company’s loss was $235 million in its fiscal second quarter, compared with a profit of $329 million a year earlier, as RIM tamed costs through a restructuring process that included widespread layoffs and closing manufacturing facilities. Revenue fell 31% from a year ago to $2.9 billion, but it was slightly ahead of the first quarter’s figure and Wall Street’s expectations. RIM’s shares rose more than 18% in after-hours trading to $8.45.”

Bloomberg BusinessWeek noted, “RIM shipped 7.4 million BlackBerry smartphones in its fiscal second quarter, down from 10.6 million in the same three months a year ago. The Canadian company is losing market share in North America, where Apple’s iPhone and phones that run Google’s Android software are increasingly dominant. But it has stepped up sales in developing markets and actually increased its subscriber base and cash position.”

Some analysts were impressed by the report. Reuters quoted Shaw Wu analyst Sterne Agee, who said, “I have to admit they did a very good job making the best out of a really tough situation. You’ve got to give management some credit for that, but they still need to nurse the company back to health.”

But Eric Savitz with Forbes found that most analysts remain skeptical about RIM’s prospects. For example, Brian White from Topeka Capital wrote, “RIM will be competing with Apple’s launch of the iPhone 5 in 100 countries by the end of the year, a daunting task for any smartphone vendor and especially one that is undergoing a platform transition.” He added, “The new BlackBerry 10 platform remains on track for a Q1 2013 launch and RIM has received positive feedback from carriers; however, we believe this new launch will need to be an absolute home run for RIM to stay in the game.”

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