RIM Earnings Take a Dip in 3Q, 4Q Forecast Below Expectations

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With tough competition from Apple’s iPhones and Google Android based smartphones, Canada’s BlackBerry maker Research In Motion (RIM) Ltd. has been losing market share this year to the emerging competition. RIM’s latest earning report is a clear indicator of this trend. The BlackBerry maker reported a sharp dip in its third quarter earnings as compared to the same quarter in 2010. In addition, the forecast for the fiscal fourth quarter is also bleak. The Wall Street Journal’s MarketWatch reports that RIM’s forecast for the current quarter was well below Wall Street's expectations.

RIM’s revenue for the third quarter, which ended November 26, was $5.2 billion, down six percent from $5.5 billion in the same quarter last year. However, it is up 24 percent from the previous quarter, which was $4.2 billion. The revenue breakdown for 3Q shows that about 79 percent of the earnings was generated from hardware and 19 percent came from service. The other two percent was contributed by software and other services. During this quarter, RIM sold over 14 million BlackBerry smartphones and about 150,000 BlackBerry PlayBook tablets.

The company’s GAAP net income for the 3Q was $265 million, or 51 cents per share diluted, compared to net income of $911 million, or 1.74 cents per share diluted, for the same quarter in 2010. Likewise, the adjusted net income for the third quarter was $667 million, or $1.27 per share diluted, for the same quarter.

Earnings for the fourth fiscal quarter, ending March 3, 2012 are expected to be in the range of 80-90 cents per share. However, reports indicate that the analysts were predicting $1.18 per share. Meanwhile, the revenue for 4Q is expected to be in the range of $4.6 billion and $4.9 billion, with smartphone shipments in the range of 11-12 million units for the quarter. This is much below analyst expectation of $5.12 billion revenue with 13.1 million units shipped for 4Q, according to MarketWatch.

Meanwhile, Bloomberg BusinessWeek reports that RIM has delayed the release of new generation of BlackBerrys to 2012. RIM is hoping that these new generation smartphones will drive the company back into the game. But, analysts fear that delaying the launch of new generation devices will only hurt the company.


Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves
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