RIM just announced its fiscal Q1 2012 earnings report and, well, things weren't exactly spectacular. The company's net income reached $695 million, down from $934 million in the previous quarter, while revenue reached $4.9 billion. Of course, RIM launched the PlayBook earlier this year and, ever since then, folks have been wondering exactly how well the QNX-powered slate has been doing. RIM revealed that it shipped 500,000 PlayBooks during Q1 alongside 13.2 million BlackBerry smartphones. It was also announced that RIM is introducing a "cost optimization program" beginning in the second quarter that'll include a "headcount reduction" in order to better focus on improving areas to increase growth, such as "accelerating new product introductions." It wasn't all bad for RIM, though, as the company declared that its international revenue grew 67 percent compared to the same period last year. The full press release from RIM can be found below.
Although 500,000 PlayBooks shipped certainly isn't something to sneeze at, it's not clear exactly how many of those devices have actually been sold to consumers. When you combine that fact with RIM's drop in revenue and net income as well as its cost optimization program, it certainly seems like the company may be in a bit of a rough patch. It's tough to say when RIM will recover, but it does still have the Bold 9900 and 4G PlayBooks on the horizon, so it'll be interesting to see if those devices can help RIM rebound. What do you all make of RIM's earnings report? Is the company in trouble?
Research In Motion Reports First Quarter Fiscal 2012 Results and Revises Full Year Guidance
Announces Plans to Streamline Operations and Accelerate New Product Introductions
Board of Directors Approves Share Repurchase Program
WATERLOO, ONTARIO--(Marketwire - June 16, 2011) - Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended May 28, 2011 (all figures in U.S. dollars and U.S. GAAP).
Revenue in the first quarter of fiscal 2012 grew 16% over the same quarter last year
International revenue1 in Q1 grew 67% year over year
Gross margin in the quarter was approximately 44%, slightly higher than expected due to product mix
RIM launched the BlackBerry PlayBook tablet in North America and shipped approximately 500,000 units in the first quarter
Q1 Fiscal 2012 Results:
Revenue for the first quarter of fiscal 2012 was $4.9 billion, down 12% from $5.6 billion in the previous quarter and up 16% from $4.2 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 78% for hardware revenue, 20% for service and 2% for software and other revenue. During the quarter, RIM shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets.
"Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter." said Jim Balsillie, Co-CEO at Research In Motion. "RIM's business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012."
Net income for the quarter was $695 million, or $1.33 per share diluted, compared with net income of $934 million, or $1.78 per share diluted, in the prior quarter and net income of $769 million, or $1.38 per share diluted, in the same quarter last year.
The total of cash, cash equivalents, short-term and long-term investments was $2.9 billion as of May 28, 2011, compared to $2.7 billion at the end of the previous quarter, an increase of approximately $170 million from the prior quarter. Cash flow from operations in Q1 was approximately $1 billion. Uses of cash included intangible asset additions of approximately $560 million, capital expenditures of approximately $220 million and business acquisitions of approximately $30 million.
1 Includes revenue outside of the U.S. and Canada
Cost Optimization Program:
The company also announced that it will begin a program to streamline operations across the organization, which will include a headcount reduction. This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities and align with RIM strategic objectives, such as accelerating new product introductions. We expect to implement this program beginning in the second quarter with the benefits impacting results primarily in Q3 and beyond. Any one-time charges associated with this initiative are not included in our Q2 and full year outlook but will be identified and disclosed when we report our second quarter results.
Share Repurchase Program:
RIM's Board of Directors today also approved a share repurchase program to purchase for cancellation through the facilities of the NASDAQ Stock Market (NASDAQ) or by way of private agreement up to 5% of RIM's outstanding common shares. The share repurchase program may commence after July 10, 2011 and will remain in place for up to 12 months or until the purchases are completed or the program is terminated by RIM.
The price that RIM will pay for any shares purchased over NASDAQ will be the prevailing market price at the time of purchase. The share repurchase program will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, which contains restrictions on the number of shares that may be purchased on a single day, subject to certain exceptions for block purchases, based on the average daily trading volumes of RIM's shares on NASDAQ. Any purchases made by way of private agreement may be at a discount to the prevailing market price at the time of purchase, and would be subject to regulatory approval.
RIM's Board of Directors believes that a share repurchase program at this time is in the best interests of RIM and its shareholders, and will not impact RIM's ability to execute its growth plans. Any shares purchased under the program will increase the proportionate interest of, and may be advantageous to, all remaining shareholders of RIM.
The actual number of shares purchased, the timing of purchases, and the price at which the shares would be bought under the share repurchase program will depend on future market conditions and upon potential alternative uses for cash resources. There is no assurance that any shares will be purchased under the share repurchase program and RIM may elect to suspend or discontinue the program at any time.
Q2 and Full Year 2012 Outlook:
Revenue for the second quarter of fiscal 2012 ending August 27, 2011 is expected to be in the range of $4.2-$4.8 billion. Gross margin percentage for the second quarter is expected to be approximately 39%. Earnings per share for the second quarter are expected to be $0.75-$1.05 diluted, excluding any one-time charges. Earnings per share for the full year fiscal 2012 are now expected to be between $5.25-$6.00 diluted, excluding any one-time charges or share repurchases.
Conference Call and Webcast:
A conference call and live webcast will be held beginning at 5 pm ET, June 16, 2011, which can be accessed by dialing 1-800-814-4859 (North America), 416-644-3414 (outside North America). The replay of the company's Q1 conference call can be accessed after 7 pm ET, June 16, 2011 until midnight ET, June 30, 2011. It can be accessed by dialing 416-640-1917 and entering passcode 4445546#. The conference call will also appear on the RIM website live at 5 pm ET and will be archived at http://www.rim.com/investors/events/index.shtml.