BlackBerry manufacturer Research In Motion (RIM) has released its first Quarter Fiscal 2012 results, showing a lower than expected drop in revenue. for the first quarter of fiscal 2012 was $4.9 billion, down 12 percent from $5.6 billion in the previous quarter and up 16 percent from $4.2 billion in the same quarter of last year.
RIM made a net profit of $695 million in the three months to May 28th, down from $769 million in the same period last year. Revenue breakdown for the quarter was approximately 78 percent for hardware revenue, 20 percent for service and just 2 percent for software and other revenue. During the quarter, RIM shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets.
Rim warned in April that its profits would be low because of lower shipments of its BlackBerry phones. The company was at pains to point out that is its international revenue is on a high and grew 67 percent against last year, but that just raises the issue that if international sales are so high, then US sales must be in the basement.
Dolby Laboratories then caused a second investor concern as it filed a lawsuit saying RIM uses Dolby's audio compression technologies in its smartphones and PlayBook tablets without proper licenses.There were simultaneous filings in the US and Germany, and a request for an injunction to halt sales of BlackBerry phones and the PlayBook.
In March, RIM's marketing boss, Keith Pardy, quit over the direction of the PlayBook tablet. Everyone has been underwhelmed by the lack of software applications for the PlayBook. RIM announced it shipped 500,000 units during the second quarter. However, the company did not release sales figures, leaving some analysts unsure just how well the tablet is actually performing.
On Thursday, RIM COO Don Morrison announced he is leaving the company for medical reasons. That's why RIM, despite having two other COOs on staff, is bringing in Larry Conlee, a former RIM exec, to fill in as a special advisor.
After their announcements on Thursday, RIM shares fell sharply in after-hours trading and had to be suspended briefly. On Friday, RIM shares slid deeper by midday weighing down the rest of the tech sector that got an initial early boost from a broad market upswing. US shares plunged more than 21 percent to $27.74 — setting the stock’s lowest level in nearly five years.
Rod Hall of J.P. Morgan, in a note to investors said: "We see the next few quarters as a potentially tough period for RIM characterized by further product delays." Hall suggested a neutral rating on RIM stocks.
Canada’s largest business newspaper, Globe and Mail had some editorial commentary that is very gloomy about RIM and Canada's tech future with RIM staggering.
"For years, BlackBerry-maker RIM has been the hub of Canada's technology universe, creating jobs, innovation and partnerships with wireless and software companies. RIM has a heavy influence on the economy of the Kitchener-Waterloo area in Ontario, where it is a major employer, innovator and charitable force. The current slowdown has huge implications for the company and its 17,500 employees, as well as its many shareholders, both personal and institutional.
Waterloo’s two universities could also be hit: Waterloo University and Wilfrid Laurier University gain huge academic and recruiting benefits from the RIM factor. Wilfrid Laurier, for example, is in the process of launching an executive master’s degree in technology management, taking the idea from a program it was already developing for rising RIM managers."
Doom and gloom continued with the statement released by Co-CEO and co-Founder Jim Balsillie, who was quoted stating:
"The reduction of our head count is an incredibly difficult decision, and Mike [founder Mike Laziridis] and I appreciate the impact of this on our employees, their families and the community."
This is a hard wake-up call for the co-founder Mike Laziridis, who infamously stopped the BBC interview after the journalist asked a question which wasn't pre-approved by RIM. As you can probably imagine, such displays of arrogance will be the thing of the past for some time into the future, if RIM recovers back to its strenghts.
Friday morning, Reuters is reporting even more worrying information, some of the company's largest shareholders are showing signs of bailing out. One of RIM's biggest investors, Jarisloswky Fraser, has already cut its stake in half, according to Bloomberg. "We are on the way out," Stephen Jarislowsky, chairman of Jarislowsky Fraser Ltd., told Bloomberg. According to the report, on March 30th, 2011 the investment firm was the sixth biggest shareholder with around 10 million stocks.
"They are resting on their laurels," Bloomberg quoted Jarislowsky as saying. "Steve Jobs is a much better marketer than RIM," he added, referring to Apple's chief executive officer. Jarislowsky had not confirmed to BSN* the Reuters claim of sales at press time.
Reuters said Another investor is giving RIM six months to get its business in order. "I think in the next six months we'll have a much better idea of where we stand," said the head of a fund with a major stake. "They've laid out a business strategy and we're measuring their ability to execute."
BSN* and the tech world have been underwhelmed by the BlackBerry PlayBook tablet. RIM appears to have a failed understanding of the tablet competition and the expectations of the buyers. Limiting the full functionality of the tablet to owners of select BlackBerry phones is something even Apple didn't dare to do with the iPad. The BlackBerry smartphone has been losing market share in the corporate arenas to both the Apple iPhone and the over 300 Google Android devices. Will RIM join Nokia and have Microsoft offering their Windows 8 helping hand to RIM?