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RIM posts Q3 profit due to tax windfall, but subscribers fall

Remove the favorable tax settlement, and the BlackBerry maker still lost money. The results were still better than investors expected.


Research In Motion posted a profit in the fiscal third quarter thanks to a favorable tax settlement, but it ceded some customers along the way.

The company reported a profit of $14 million, or 3 cents a share, compared with a year-earlier profit of $265 million, or 51 cents a share. Revenue fell by nearly half to $2.72 billion. Excluding the one-time item, it reported a loss of $114 million, or 22 cents a share.

The results were better than Wall Street expected. RIM was supposed to post a loss of 35 cents a share on revenue of $2.66 billion, according to an estimate taken by Thomson Reuters.

RIM's stock rose 7.6 percent to $15.19 in after-hours trading.

But RIM's customer base, which it has been proud of touting for a while now, shrank by 1 million to 79 million subscribers in the period. It shipped 6.9 million BlackBerrys and 255,000 PlayBooks.

The company has seen its shares rally over the past three months amid increased optimism for its upcoming BlackBerry 10 operating system, which is set to debut next month.

RIM also warned that it would face continued pressure next quarter, noting that it would consider using "pricing incentives" to move BlackBerry 7 devices and possibly lower its service fees to keep its customers and drive growth.

As a result of the potential promotional activity and the marketing investment for BlackBerry 10, RIM expects to post another operating loss for the fiscal fourth quarter.

RIM has periodically dropped hints and alluded to progress made with the adoption of BlackBerry 10, from moving through the carrier-testing process to having government agencies run the phones through a trial.

Research In Motion's test unit for BlackBerry 10.
Research In Motion's test unit for BlackBerry 10. CNET

A leaked picture uncovered by has the first BlackBerry 10 phone coming to the market as the Z10.

The real test comes when the carriers launch the first BlackBerry 10 smartphone early next year. RIM is in a battle with Microsoft and its own Windows Phone operating system to be the No. 3 player behind Google's Android and Apple's iOS platforms. While Microsoft boasts a number of big-name partners and the aid of its Windows 8 PC and tablet operating system, RIM has long touted its existing customer base of corporate users and BlackBerry holdouts.

RIM shipped half as many BlackBerrys in the quarter as a year ago, but surprisingly, it shipped more PlayBook tablets.

RIM also said that its chief information officer, Robin Bienfait, would retire at the end of the year. Bienfait helped build in the BlackBerry service infrastructure over the last six years.