RIM blows earnings, investors punish shares
Filed under: Earnings, Research In Motion, Apple
Research in Motion (RIMM), the maker of the popular BlackBerry device, earned a Bronx cheer from investors Thursday after the company announced second quarter earnings that fell short of Wall Street expectations. Also disconcerting: the company issued a revenue forecast for the current quarter below what analysts had anticipated.RIM shares hit free-fall seconds after the announcement, plunging nearly 10 percent in after-hours trading. The company's poor showing is a slap in the face of Wall Street analysts who had been raising their RIM projections for last quarter and the current period amid growing buzz across the hand-held sector over the summer.
RIM's lackluster results highlight the continued weakness in consumer and business spending, as well as fierce competition in the wireless space from Apple's (AAPL) wildly popular -- if recently network-challenged -- iPhone, as well as Palm, the resurgent smart-phone maker.
"It wasn't a blow out quarter," Nick Agostino, an analyst with Research Capital, told the AP. "I think it will add fuel to the competition concerns."
On the plus side, RIM's revenue jumped 37 percent to $3.53 billion. But profit slipped. The company said it earned $475.6 million, or 83 cents a share, versus $495.5 million, or 86 cents a share, in the year-ago period.
Nevertheless, as is custom, RIM Co-CEO Jim Balsillie tried to spin the numbers in a positive light.
"We are pleased to report a strong second quarter with excellent financial performance, successful product launches and accelerating growth in international markets and new market segments," Balsillie said in a statement.
But some analysts suggested that all the hype surrounding new mobile phone launches had gone too far.
"People got far too giddy about this industry over the past three months," MKM Partners analyst Tero Kuittinen told TheStreet.com after the earnings report. "It's time to wake up."
Despite strong sales of its popular BlackBerry phones, RIM said that its earnings fell four percent in its second fiscal quarter, thanks in large part to a $112.8 million settlement over a patent dispute with Visto over wireless email technology. Without the charge, RIM said it would have earned $588.4 million, or $1.03 per share, meeting or slightly exceeding expectations.
The company said it added 3.8 million new subscribers during the quarter and moved some 8.3 million devices. But analysts had expected four million new subscribers with shipments between 8.5 million and 8.6 million.
Looking ahead, RIM disappointed Wall Street by predicting that this quarter's sales will be $3.6 billion to $3.85 billion. Analysts had expected an revenue forecast of $3.91 billion.
This after many analysts expressed heightened expectations for both periods. Shares are down 12.5 percent after hours.
Gross margins picked up a hair from the May period to 44.1 percent, but were still down significantly year-over-year, and RIM predicts they will fall to 43 percent next quarter.
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Reader Comments (Page 1 of 1)
9-24-2009 @ 7:45PM
Mel said...
I love the expression, "Wall Street Analysts." Are these the same people who kissed Bernie Madoff's *ss in Macy's window? Why do we have "Wall Street Analysts" in the first place? Why can't a company report earnings with no analytical comment at all and have the public or stockholders decide whether they like the results or not? And aren't forecasts, just that? Do they use the old dart board, the black 8 ball, or a plain old ouja board? What caused financial meltdown in this country is still alive and in play ever day we have forcasts and analysts. If you ask me, the proper description of these people begins with s and ends in ks as in schmucks.
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9-25-2009 @ 2:07AM
MICKEY said...
I agree Mel, who in the hell are these analysts and who gives them any power? They are all overpaid, under qualified jerks. It seems like a stock never wavers on its own. Its value is always predicated on whether or not it meets analysts expectations. What a crock of bull dung.
9-24-2009 @ 8:08PM
Irishtrader said...
The problem with American finance? We employ (and pay handsomely!!!) too many prostituted Wall Street puppets who, with cash in fist, will momentarily pump up (or alternately sneer at, depending on the immediate preferred investor cash need at any given time) the emotions of overwrought investors for sheer shock value. Like I've been saying for at least ten years now- this market is heinously and illegitimately overvalued - furiously attempting to market its fraudulent self in competition with the heinously solvent and on target markets of Asia. China specific. We are going to be in for very rude awakening to the REAL accounting numbers..... very very soon. This is just ridiculous. And plain unethical.
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9-24-2009 @ 10:31PM
tracy said...
Most Wall-streeters are anything but analyts. They go anyway the wind blows. There is almost no logic to anything these guys do anymore and they would admit it.
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9-25-2009 @ 12:16AM
Dave said...
This seems like the "tail wagging the dog." Why do we put more credence in the Wall Street analysts speculation than we give to the folks who are actually working to produce the financial results?
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9-25-2009 @ 8:09AM
sagg1948 said...
Where are the A-Hole analyst who put a target of 125 on rimm. Analysts are toilet paper you know what you do with it don:t you. Nothing ever changes on Wall ST thats why you should consider getting out when you can recoup some of your losses you cannot trust these pigs.
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9-25-2009 @ 8:46AM
Tom said...
Why was RIM (or ANY stock for that matter, outside of the reliable dinosaurs of MCD, Costco or Altria) being oversold to begin with. Why would ANYBODY listen to some overpaid self serving 'analyst' shovelling us crap about ANY stock that intuitively only benefits in an UP economy. Have these a*holes forgotten- we are in a recession??? NOBODY is buying ANYTHING they don't NEED right now. WAKE UP WALL STREET. HEAR the sounds. THERE IS NO MASS consumer buying of nonessential PRODUCT right now. Better yet... show some REAL sales and company cost numbers. NOT numbers you like. Greedy disingenuous nimrods.
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9-25-2009 @ 10:12AM
John147 said...
If RIM does not change it's busuness model it is not going to make it. With severe competition developing in the smart phone space RIM is raising it's fees for Maintenance of the BES server, and continues to gouge for license fees. Many enterprise customers are starting to look at alternate devices, such as iPhones, Windows Mobile, and even the google phone. RIM needs to focus on the devices, and eliminate the license fee for the BES and cut the maintenance cost by 2/3 if it is going to survive.
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9-25-2009 @ 2:39PM
Tom said...
YES, Obama will BREAK YET ANOTHER CAMPAIGN PROMISE and will RAISE TAXES on the middle class.
Also, baby boomers/seniors have this to look forward to: SAY GOODBYE TO your favorite doctor. And they plan to ROB BOOMERS OF THEIR MEDICARE and QUOTE: redistribute it.
We can all say goodbye to our favorite sports, movies, books, TV, any of our personal choices, even freedom on the Internet.
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9-26-2009 @ 12:04PM
Lanceaf said...
In a bull market, "price dictates value"... But, in a bear market, "value will dictate price"...
The analysts have no idea how bad it really is, because they simply look at the price of the stock and spin the numbers to fit...
Look at bank stocks... How can a company that doesn't make money, has massive debt, crummy business model, and tons of toxic assets be worth anything? Because people assume that if the stock trades 20 bucks, it's somehow worth around 20 bucks...
A lot of this stuff is just about worthless...
RIMM is over-priced, and that company makes some money.. (But, the future looks ugly as the economy worsens AND RIMM, AAPL, GOOG, PALM will all start cutting prices to remain competitive...)
And, speaking of PALM.. Here's a company that has lost money for years, has an inferior product, and after 15 years still talks about its potential... Yet, it continues to rally... Why? Because the float is small and illiquid... (Elevation Partners owns 42% of the company, and I'll bet they don't lend out any of the stock...).. So, the stock will continue to drift higher until these insiders can dump it on the stupid public... (Some idiots just bought the recent issuance at $16.25... Why?).... Or, eventually, the S&P's will plummet and the insiders won't be able to prop the stock up any longer.... We'll see.....
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9-26-2009 @ 9:45AM
G said...
Lessee now ... why should anyone be concerned over someone know as an ANALyst?
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