logo
  Join        Login             Stock Quote

Research In Motion Q3 Preview: Cash, Blackberry 10 Update In Focus

 December 18, 2012 09:55 AM
 


(By Mani) Research In Motion Limited (NASDAQ: RIMM) (TSE:RIM) is expected to report another weak numbers when it announces its third quarter results on Dec.20. However, all eyes will be on the  BlackBerry 10, which is expected to be launched in the first quarter of 2013.

Wall Street, on average, expects RIM to report a loss of 35 cents a share. In the year-ago period, it earned $1.27 a share.

RIM may want to continue its upside surprise as its loss came in better than the consensus estimate in the second quarter. In the past four quarters, the company's earnings/loss came in past the Street view twice.

[Related -Google (GOOG) Gives A Lesson On The Importance Of Viewing Multiple Timeframes]

Quarterly sales are expected to be $2.65 billion, a drop of 49.4 percent from last year when it generated sales of $5.22 billion. In the past two quarters, the revenue drop was 33 percent and 19 percent, respectively.

Toronto-based RIM, a smartphone leader once with its BlackBerry devices is struggling to compete with Apple iPhone and other Android smartphones. Moreover, Blackberry's strength in the emerging markets is coming under more pressure as low-end Android vendors gain share.

In September, RIM said operating results for the rest of the year would continue to be impacted by competition, lower handset sales and higher marketing cost related to BlackBerry 10 launch. However, the company said it will continue to market BlackBerry 7 hand-held devices aggressively before the anticipated launch of the BlackBerry 10 smartphones next year.

[Related -Analysts' Upgrades And Downgrades: ENDP, FB, JDSU, LVS, HES, RIMM, QCOM]

For the second-quarter, RIM reported a net loss of $235 million or 45 cents a share, compared to profit of $329 million or 63 cents a share last year. On an adjusted basis, loss was 27 cents per share. Analysts polled by Thomson Reuters expected a loss of 46 cents a share for the quarter. Revenues for the second quarter dropped 31 percent to $2.87 billion.

For the third quarter, RIM expects to report an operating loss as it continues to work through the transition to BlackBerry 10.

As RIM has stopped providing guidance, the key metrics investors should be aware of are shipments, subscribers (if provided), service revenue and cash flow/burn.

"Visibility is somewhat limited, but based upon positive checks in some key developing markets, we believe that net adds will remain positive in the quarter. We continue to believe net adds are the most important metric for investors," BMO Capital Markets analyst Tim Long wrote in a note to clients.

RIM didn't launch any devices for the quarter, and lower average selling prices (ASPs) and upgrade programs are RIMs main levers to drive device sales. As a result, gross margins could be weak in the quarter as RIM sold more high end devices at lower prices and lower gross margins.

"Based on our supply chain checks, we are now forecasting just over 7m phone units for the Feb quarter, and assuming a slightly greater mix of BB10 devices and; therefore, slightly higher ASPs," UBS analyst Phillip Huang said in a note to clients.

RIM still has most of the February quarter to get through before BB10 launches, but investor focus will turn solely to BlackBerry 10. The launch event is scheduled for the end of January, and shipments will come a couple of weeks later.

"We remain skeptical that BB10 will have the traction needed to restore RIM to profitability," Long noted.

On the earnings call, the focus will be less on actual results and more on cash and cash equivalents balance and on company tone and outlook. 

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageFord Motor Company (F) Q2 Earnings Preview: Light on the Top Line?

Ford Motor Company (NYSE:F) will release its preliminary second quarter 2014 results at 6:30 a.m. EDT read on...

article imageTripadvisor Inc. (TRIP) Q2 Earnings Preview: On Target Enough?

Tripadvisor Inc. (NASDAQ:TRIP) will release its second quarter financial results after market close on read on...

article imageFacebook Inc. (FB) Q2 Earnings Preview: Scoring Big on the World Cup

Facebook Inc. (NASDAQ:FB) will post its second-quarter 2014 financial results after the market close on read on...

article imageThe Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater

The Boeing Company (NYSE:BA) will publish its second-quarter financial results before the open of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.