Canada's Research In Motion (RIM), maker of the BlackBerry, has reported another period of poor performance. Q2 figures show revenues down again, this time by 10 per cent. The value of RIM shares fell by 20 per cent in after-hours trading. Martyn Warwick reports.
RIM shipped 10.6 million BlackBerry devices of a various hues over the course of the three-month period, well-below the 12.5 million some analysts had been expecting. The company also shifted a mere 200,000 of its PlayBook tablet, just half the 400,000 it had forecast earlier.
In an 'explanation' RIM claimed its Q2 performance was off because of reduced demand for older BlackBerry models and the late launch of the new BlackBerry 7 handsets.
Revenues for the quarter stood at US$4.2 billion from which was generated a profit of $319 million. RIM also took a one-off exceptional hit of $118 million to pay for its 'restructuring program' that was introduced in a bit of a panic back in July when it became evident that the company was not succeeding in digging itself out of the hole it has put itself in.
RIM has always been famous for having a big, fat cash cushion to fall back upon but that is not anywhere near as plumscious as it used to be having dropped to $1.4 billion after RIM took a position in a consortium that successfully bid for some of Nortel's patents. That cost the company $780 million for no apparent return - as yet.
No doubt some patently absurd litigation will follow some time down the line - after all, it's the trendy modern thing to do.
RIM's co-CEO, Jim Balsillie, tried to talk-up the figures, claiming that interest in the latest iterations of the BlackBerry is "promising" - an assessment that is not in accord with all analyst's conclusions.
Mr, Balsillie said, "We successfully launched a range of BlackBerry 7 smartphones around the world during the latter part of the second quarter and we are seeing strong sell-through and customer interest for these new products. Overall unit shipments in the quarter were slightly below our forecast due to lower than expected demand for older models.”
That's as maybe but the stark fact is that Q2's profit of $319 million is well under half of the $797 million profit the company made in the same quarter a year ago.
The trouble is that that RIM has an unfortunate history of issuing over-optimistic financial and other forecasts and guidance. To put it brutally, analysts and the market regard RIM's prognostications as being much more fluffy than they should be. There's a lot of over-promising followed by repeated under-delivery and Wall Street is now wary.
So, for the upcoming Q3, RIM yesterday forecast increased revenues (in the range of $5.3 billion to $5.6 billion) and says it will ship some 13.5 million to 14.5 million BlackBerry handsets and is obviously hanging many of its hopes on a good run of sales in the run-up to Christmas and the New year - despite the gloomy economic outlook, the global recession and diminution in the discretionary spending power of cash-strapped families and individuals.
Over-optimistic once again? Could well be.
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