RIM misses on revenue, announces layoffs
BlackBerry maker reports $4.9 billion in earnings, below the $5.2 billion it expected, and announces layoffs starting next quarter. Shares of the company were halted just before the news hit.
Despite lowering its forecasts for the quarter in late April, Research in Motion announced first-quarter fiscal 2012 earnings today and still missed its revenue target by hundreds of millions of dollars. The mobile device maker also announced it will start layoffs during the second quarter.
RIM reported revenue for the quarter of $4.9 billion, down 12 percent from $5.6 billion in the previous quarter but up 16 percent from $4.2 billion during the same quarter a year ago. Earnings came in at $695 million, or $1.33 per share.
Analysts expected $5.15 billion in revenue and earnings of $1.32 per share, based on RIM's restated expectations of earnings between $1.30 and $1.37 per share and $5.2 billion and $5.6 billion.
The device numbers everyone was interested in: RIM says it shipped approximately 13.2 million BlackBerry smartphones and approximately 500,000 PlayBook tablets.
"Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower-than-expected outlook in the second quarter," co-CEO Jim Balsillie said in a statement. "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."
The company said in a press release that it expects layoffs to begin "in the second quarter with the benefits impacting results primarily in Q3 and beyond." RIM did not give any target for the number of staff reductions.
RIM already warned us these earnings weren't going to be that stellar. At the end of April the company said it expected earnings between $1.30 and $1.37 per share, and revenue between $5.2 billion and $5.6 billion, which was below the guidance the company had provided at the close of the previous quarter.
The falloff in smartphone sales overall came from problems in the U.S. market and the Latin American market, Balsillie said. In the U.S. specifically, the problems were "related to the age of the BlackBerry portfolio." In other words, the company has been slow to get new smartphones out the door. He added that those delays in new BlackBerrys planned for later this summer are a problem and will impact RIM's ability to take advantage of some of the back-to-school shopping period.
After one quarter of selling its first tablet, Balsillie admitted that the "PlayBook launch did not go smoothly as planned." He said it is now in 11 markets, with 5 more coming the next few months, and more than 1,500 enterprise companies have ordered PlayBooks.
Balsillie and his co-CEO Mike Lazaridis took time to address calls that have come from some shareholders to change the company's dual-chief executive structure.
"Frankly, few companies would have been able to survive (the recent turmoil), but we have," said Balsillie. "I believe neither of us could have taken this company this far alone."
Lazaridis echoed Balsillie's comments and added, "I truly believe we're approaching the final stage of this transition."
Just before the earnings news hit, The Wall Street Journal reported that RIM's longtime chief operating officer, Don Morrison, would be taking a leave of absence for medical reasons.
Trading of RIM shares was halted around 1:15 p.m. PT and were expected to resume again at 1:50 p.m. PT. When after-hours trading resumed, shares fell 13.87 percent to $30.43.
For the next quarter, RIM is forecasting revenue between $4.2 billion and $4.8 billion. It says it expects to sell between 11 million and 12.5 million BlackBerry phones during the quarter. The number is lower because new BlackBerry 7-based phones won't start selling until the end of the quarter.
RIM has also lowered its outlook for revenue for the full fiscal year. Now RIM is projecting earnings per share to be between $5.25 and $6.00, excluding any one-time charges or share repurchases.
Last updated with details from the earnings call at 3:05 p.m. PT.