Saturday, December 29, 2012

RIMM Halted, Jumps 9%: FYQ3 Rev, EPS Beat, Subscriber Count to 79M

Research in Motion (RIMM) shares were halted this afternoon just before the company reported fiscal Q3 revenue and earnings per share that beat analysts’ expectations.

Revenue in the three months ended in November fell 47%, year over year, and fell 5%, quarter over quarter, to $2.7 billion, yielding a net loss of 22 cents.

Analysts had been modeling $2.65 billion and a 35-cent loss per share.

The company shipped 6.9 million BlackBerrys and 255,000 of its PlayBook tablet computers.

Subscriber count in the quarter was down from the prior quarter at 79 million versus 80 million in fiscal Q2.

Gross margin in the quarter rose from the prior quarter’s 26% to 30.4%, which is likely to come as a surprise to many on the Street, as the average estimates had hovered around 27%, based on reports I’ve seen this week.

RIM ended the quarter with $2.9 billion in cash and equivalents, up $600 million.

CEO Thorsten Heins remarked, “”RIM continued to execute on its product roadmap plans and to deliver on key financial metrics as it gets set for the global launch of BlackBerry 10.”

Heins noted RIM

Continued to demonstrate our strong financial position, generating $950 million in cash flow from operations, and increasing our cash position significantly to more than $2.9 billion. More than 150 carriers are currently completing technical acceptance programs for the first BlackBerry 10 products, and beta trials of BlackBerry Enterprise Service 10 are underway at more than 120 enterprises including 64 Fortune 500 companies. This is an exciting time and our carrier partners, application developers and employees are all looking forward to unveiling the innovation and excitement of BlackBerry 10 to our customers on January 30, 2013.

RIM said that BB10 debut in January may delay purchases of BlackBerry, prompting an operating loss this quarter amidst continued pressure on prices in the smartphone market:

The Company expects that there will be continued pressure on operating results as it gets set to launch its BlackBerry 10 platform in the fourth quarter. The Company intends to continue to consider using pricing initiatives on BlackBerry 7 devices and service fees in some markets as a way to maintain our subscriber base and drive more BlackBerry users. The timing of the BlackBerry 10 launch event for January 30, 2013 could also impact sales of current BlackBerry 7 products as some customers may defer purchasing decisions and wait for BlackBerry 10 devices. All these factors are expected to impact unit volumes, subscribers, margins and service fees. In addition, the company will be significantly increasing its marketing spending this quarter as expected, to support the global launch of BlackBerry 10, and the Company expects to report an operating loss for the fourth quarter.

Chief information officer Robin Bienfait will retire at the end of the year, RIM said.

RIMM stock is up 6 cents, or 0.4%, at $14.18 in late trading before the stock halt. Shares are expected to resume trading at 4:40 pm, Eastern.

RIM management will host a conference call with analysts at 5 pm, Eastern time, and you can catch the webcast of it here.

Update:�RIMM shares have resumed trading and are up $1.26, or 9%, at $15.38.


 

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