RIM hit by plummeting sales, prices and profits, announces layoffs
Once a rising star among smartphones, Canadian Blackberry maker Research In Motion announced sharply lower profits related to product delays an intense competition, pushing it to sack workers while the market attacked the company's valuation.
RIM announced to investors that its first fiscal quarter revenues of 2012 were up 16 percent over the previous year-ago quarter, but that growth paled in comparison to the 113 percent annual growth Apple reported on the back of iPhone sales in its most recent quarter.
However, RIM's earnings were down for the year and sequentially, reaching just $695 million this quarter compared to $934 million in the previous quarter and $768 million in its year ago quarter.
The rest of the smartphone industry has been expanding by an average of around 70 percent, leaving RIM's shortfall a particular anomaly. The company blamed new product introductions and delays for its weak earnings, and said the same factors would lead to "a lower than expected outlook in the second quarter," in the words of co-chief executive Jim Balsillie.
Balsillie added, "RIM?s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012."
Reacting to the disappointing performance in the quarter, RIM said it would "begin a program to streamline operations across the organization, which will include a headcount reduction." The company also announced a share repurchase program, which enables a company to return capital to its shareholders, a move made when a firm sees shoring up its stock price as more important than investing in its own growth.
In April, RIM had announced a readjusted outlook calling for just 13.5 to 14.5 million Blackberry devices to be sold during the quarter, but it failed to meet even that lowered expectation, with unit sales reaching just 13.2 million.
In contrast, Apple sold 18.65 million iPhones in its most recent quarter (which does not align exactly with RIM's).
In 2008, Apple's chief executive Steve Jobs announced in the company's third quarter results that "Apple beat RIM" in its unit sales, noting that "RIM is a good company that makes good products. And so it is surprising that after only fifteen months on the market that we could outsell them in any quarter."
RIM did announce higher shipments for its PlayBook tablet than analysts had expected (500,000 vs 400,000), but following its announcements investors failed to see much upside potential in that new product, trading the company down in value by more than 15 percent.
RIM announced to investors that its first fiscal quarter revenues of 2012 were up 16 percent over the previous year-ago quarter, but that growth paled in comparison to the 113 percent annual growth Apple reported on the back of iPhone sales in its most recent quarter.
However, RIM's earnings were down for the year and sequentially, reaching just $695 million this quarter compared to $934 million in the previous quarter and $768 million in its year ago quarter.
The rest of the smartphone industry has been expanding by an average of around 70 percent, leaving RIM's shortfall a particular anomaly. The company blamed new product introductions and delays for its weak earnings, and said the same factors would lead to "a lower than expected outlook in the second quarter," in the words of co-chief executive Jim Balsillie.
Balsillie added, "RIM?s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012."
Reacting to the disappointing performance in the quarter, RIM said it would "begin a program to streamline operations across the organization, which will include a headcount reduction." The company also announced a share repurchase program, which enables a company to return capital to its shareholders, a move made when a firm sees shoring up its stock price as more important than investing in its own growth.
In April, RIM had announced a readjusted outlook calling for just 13.5 to 14.5 million Blackberry devices to be sold during the quarter, but it failed to meet even that lowered expectation, with unit sales reaching just 13.2 million.
In contrast, Apple sold 18.65 million iPhones in its most recent quarter (which does not align exactly with RIM's).
In 2008, Apple's chief executive Steve Jobs announced in the company's third quarter results that "Apple beat RIM" in its unit sales, noting that "RIM is a good company that makes good products. And so it is surprising that after only fifteen months on the market that we could outsell them in any quarter."
RIM did announce higher shipments for its PlayBook tablet than analysts had expected (500,000 vs 400,000), but following its announcements investors failed to see much upside potential in that new product, trading the company down in value by more than 15 percent.
Comments
As a Canadian, I am sad to see that there has to be layoffs in our country. On another note, RIM has for too long forgotten that other phones can now email. That was the only thing that made the Blackberry so big in the past, was email and web browsing. Today with Droid and IOS, there is really no reason to have a BB. I know that some people will say that its more compatible with large organizations and more secure, but IOS is catching up and advancing by leaps and bounds every single year, while BB trys to hold on to its special "messaging" and its emailing abilities. They need to rethink everything.
Once iOS5 is out with iMessage will be the final punch to BB phones..
The smartphone segment is expanding at a rapid pace but mostly at the bottom end, neither RIM nor Apple which both have profitable businesses at the top end of it are certain to hold onto share of the smartphone segment, even if they manage to keep increasing their handset shipments.
A bit of proportion would be nice, this isn't the register!
Since when is not rising as fast as Android or Apple the same thing as plummeting? RIM are holding their own, 500k Playbooks is actually more than I was expecting, and may turn out to be better than most of the Android competition.
The smartphone segment is expanding at a rapid pace but mostly at the bottom end, neither RIM nor Apple which both have profitable businesses at the top end of it are certain to hold onto share of the smartphone segment, even if they manage to keep increasing their handset shipments.
A bit of proportion would be nice, this isn't the register!
That's 500k Playbooks in retail stores, not consumer hands,in the quarter! Market share down. RIM not meeting financial goals. Now layoffs. Aftermarket tracings shows stock price tumbling. Most likely stock holders are dumping their stock as fast as they can.
This company is in the toilet and you'd have to be crazy to buy any of their products or stock at this point.
....This company is in the toilet and you'd have to be crazy to buy any of their products or stock at this point.
I wish my toilet was earning 640 million
Your quote is verbatim what people said about Apple in 1995. People said I was crazy to buy their computers.
RIM have to worry and react, but to say they are finished seems premature.
That's 500k Playbooks in retail stores, not consumer hands,in the quarter! Market share down. RIM not meeting financial goals. Now layoffs. Aftermarket tracings shows stock price tumbling. Most likely stock holders are dumping their stock as fast as they can.
This company is in the toilet and you'd have to be crazy to buy any of their products or stock at this point.
Short the stock/or Put options guys lots of money to be made
This company is in the toilet and you'd have to be crazy to buy any of their products or stock at this point.
I still disagree, Motorola & Sony-Ericsson are in the toilet, Nokia is falling into the toilet, RIM is balanced on, well the rim
Since when is not rising as fast as Android or Apple the same thing as plummeting? RIM are holding their own, 500k Playbooks is actually more than I was expecting, and may turn out to be better than most of the Android competition.
The smartphone segment is expanding at a rapid pace but mostly at the bottom end, neither RIM nor Apple which both have profitable businesses at the top end of it are certain to hold onto share of the smartphone segment, even if they manage to keep increasing their handset shipments.
A bit of proportion would be nice, this isn't the register!
The problem is that sales were up just 16% YOY, while smartphones sales were up 72% YOY, and while that's not entirely comparable, RIM has been adjusting their sales down for three quarters in a row, and their BB shipments, as opposed to the sales numbers Apple posts, were below the minimum they predicted for the quarter at 13.2 million. They predicted 13.5 to 14.5 million. Sales were also down from their predictions of just under $5.2 billion at $4.9 billion. Those numbers were not good. Profits were also less than last years' quarter.
And it's very curious that when asked about actual sales figures, they said that they didn't have them. That was both for the BB and the Playbook. So how many did they sell? We don't know.
Over all, they're in trouble. And when an analyst asked, after the co-CEOs' were busy praising each other and announced layoffs, if they weren't the problem, they said no, of course not.
As if it's never the fault of the guys on top who actually make all the decisions. I'll tell you something. I had two businesses, and all the successes and failures were the responsibility of myself and my partners, never the people who worked for us.
I wish my toilet was earning 640 million
Your quote is verbatim what people said about Apple in 1995. People said I was crazy to buy their computers.
RIM have to worry and react, but to say they are finished seems premature.
That's less profit than last years quarter.
But the difference between Apple and RIM now is that RIM has no one who can do what Jobs has done. Both of these guys at RIM are responsible for the mess it's in, and neither seems to understand that from the answers to the questions about that given in the call today. They both stated, a number of times, how vital they both were to the business, and neither accepted that it was their decisions that put RIM in the boat it's in now.
They're not finished yet, but everything they're doing has to work out just perfectly, or they will be. All of their top line phones that have come out in the past three years have either bombed, or have had, at best, disappointing sales.
I still disagree, Motorola & Sony-Ericsson are in the toilet, Nokia is falling into the toilet, RIM is balanced on, well the rim
But Moto has been doing better as of late. Even S-E has seen some sales increases, even though they've done poorly over the years, they've got two strong companies behind them.
RIM are on their way to being in serious trouble, but there is still time to sort things out.
I'll wait for there next quarter shipment see if the can keep up stacking garbage to retailers who will get anything for trying to surf iPad waves and crying see people get out of the mall thru their store with Apple bags.
Once iOS5 is out with iMessage will be the final punch to BB phones..
Not unless the iPhone comes out with a keyboard version. I love my iphone, but for everyday business communicator use, my 9650 is superior. Oh, and our corporate email has to be on BB, not iPhones, at least at present.
They held on to record sales and profits a lot longer than I expected. I hope, for their sake, thy have something really great in the works.
Judging by the Playbook, that's not bloody likely.
But Moto has been doing better as of late. Even S-E has seen some sales increases, even though they've done poorly over the years, they've got two strong companies behind them.
Moto & S-E are both earning razor thin profits, RIM is probably still 2nd or 3rd highest profits out of the handset makers. Which position would you prefer to be in, a commodity shifter of boxes running somebody elses OS on which you earn effectively nothing, or the sole maker of handsets on a successful, albeit stagnant proprietary OS which earns substantial profits?
To put this into perspective, RIM made $695mil net income for the quarter. Our last figures for Moto were 2010Q4 when they made 110mil, and our last for Sony-Ericcson were 2011Q1 - of 11mil. Short of a miracle, RIM made more in the first quarter than Moto & S-E combined will make in the entire year.
So if RIM is in the toilet, Moto & S-E have already been flushed.
Short the stock/or Put options guys lots of money to be made
you think they can go much lower?...I started buying Puts on April 13...made 5 figures could have been 6 if I kept the position open up to today. I may dip back in tomorrow for a quick scalp.