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RIMM Beats, Warns

Tyler Durden's picture




 

Update: market so far seems to be happy with extracting cash from working capital so is squeezing the shorts 8% higher after hours:

Moments ago Blackberry stock was halted in advance of earnings. Here they are.

The good:

  • Revenues: $2.72bn, Est. $2.66 bn - beat
  • EPS: -$0.22, Est. -$0.35 - beat
  • Gross margin: 30.6%, compared to 26.0% last quarter, 27.2% year ago
  • Cash increase of approximately $600 million to $2.9 billion; Cash flow from operations was approximately $950 million; bulk of cash, however, appears to have come from Net Working Capital.

The bad:

  • Subscriber base: 79 million, down from 80 million
  • Phone units sold 6.9 million, down from 7.4 million
  • RIM's Chief Information Officer, Robin Bienfait, announces retirement
  • "The Company expects that there will be continued pressure on operating results as it gets set to launch its BlackBerry 10 platform in the fourth quarter"

Q3 result comment:

"RIM continued to execute on its product roadmap plans and to deliver on key financial metrics as it gets set for the global launch of BlackBerry 10," said Thorsten Heins, President and CEO. "During the third quarter, we continued to demonstrate our strong financial position, generating $950 million in cash flow from operations, and increasing our cash position significantly to more than $2.9 billion. More than 150 carriers are currently completing technical acceptance programs for the first BlackBerry 10 products, and beta trials of BlackBerry Enterprise Service 10 are underway at more than 120 enterprises including 64 Fortune 500 companies. This is an exciting time and our carrier partners, application developers and employees are all looking forward to unveiling the innovation and excitement of BlackBerry 10 to our customers on January 30, 2013."

 

RIM also announced today that Robin Bienfait, Chief Information Officer for RIM has made the decision to retire at the end of this year following 6 years of service to the Company. Robin has committed to continue supporting RIM in an advisory capacity to enable a smooth launch and seamless transition.

 

Under Robin's watch, the BlackBerry service infrastructure has grown from 47 petabytes per year to more than 33 petabytes per month at the same time as the internal corporate infrastructure for RIM has grown at a remarkable pace. Robin joined RIM in the beginning of 2007 with the mandate to take RIM's BlackBerry data services infrastructure from a single presence in Canada to a distributed model connecting to over 650 carrier partners worldwide. In addition, over this past year, Robin has led RIM's Enterprise business unit focused on enabling services for Enterprise customers and preparing for the launch of the BlackBerry 10 platform. Robin has led a distinguished career. Before joining RIM, Robin held a number of senior leadership positions at AT&T and Bell Labs for over 22 years.

Full outlook:

The Company expects that there will be continued pressure on operating results as it gets set to launch its BlackBerry 10 platform in the fourth quarter. The Company intends to continue to consider using pricing initiatives on BlackBerry 7 devices and service fees in some markets as a way to maintain our subscriber base and drive more BlackBerry users. The timing of the BlackBerry 10 launch event for January 30, 2013 could also impact sales of current BlackBerry 7 products as some customers may defer purchasing decisions and wait for BlackBerry 10 devices. All these factors are expected to impact unit volumes, subscribers, margins and service fees. In addition, the company will be significantly increasing its marketing spending this quarter as expected, to support the global launch of BlackBerry 10, and the Company expects to report an operating loss for the fourth quarter. Further details about the Company's outlook will be discussed on the conference call and live webcast to be held beginning at 5 pm ET today, information for which is set forth below.

How much more upside is there in a company which is now trading as if the Blackberry 10, long left for dead, will be the next iPhone.

And at what point will that fundamental equalizer: the broke consumer, who will very soon hit their saturation point when it comes to useless telephonic trinkets, finally start being considered?

 

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Thu, 12/20/2012 - 17:23 | 3084140 buzzsaw99
buzzsaw99's picture

they lost money but increased cash. nice.

Thu, 12/20/2012 - 17:30 | 3084154 Mark Carney
Mark Carney's picture

its the new normal.

 

Negative EPS equals $900M. Extra cash.....nice

Thu, 12/20/2012 - 17:51 | 3084221 orangegeek
orangegeek's picture

collect from your customers.

 

don't pay your vendors.

Thu, 12/20/2012 - 18:30 | 3084325 ball-and-chain
ball-and-chain's picture

Nothing makes sense any more.

Perhaps it's time to become a filthy pot-head.

I shall buy a school bus and live in the woods.

I will live on canned chili and squirrel meat.

Why not?

http://www.angrysinner.blogspot.kr/2012/12/yesterday-i-hiked-ten-miles-through_20.html

Thu, 12/20/2012 - 17:34 | 3084161 missingtrillions
missingtrillions's picture

"long left for dead"?

Seriously Tyler, you need to take a better look at what they're doing with BB10 at RIM.  This phone is going to be a winner.

Thu, 12/20/2012 - 17:37 | 3084174 Cursive
Cursive's picture

@missingtrillions

iOS, Android, Symbian, Buba, WP8.  Crowded house.

Thu, 12/20/2012 - 17:48 | 3084209 missingtrillions
missingtrillions's picture

@Cursive

Indeed it is a crowded house.  No doubt there is plenty of competition.  I've followed this company very closely for the past two years.  They've quietly built a platform that, I believe, will be best in class.  They aren't only looking to play in the smartphone space.  They're also targeting the M2M space.  I'm a huge fan and looking forward to BB10 in just over a months time.

Thu, 12/20/2012 - 18:06 | 3084269 Cursive
Cursive's picture

@missingtrillions

Geez, does BBX/BB10 shine shoes as well?  What is left to accomplish?  WP8 is already garnering the "productivity" side of things, so BB10 has to overcome both the "doesn't have as many apps as iTunes" and "is it better for business than WP8" arguments".  And it's coming at a particularly bad phone upgrade cycle when the cellphone market has been flooded with lots of choices.  Oh, how are playbook sales?

Thu, 12/20/2012 - 18:17 | 3084294 Buckaroo Banzai
Buckaroo Banzai's picture

Worlds worst web browser + no apps = train wreck.

Bu-bye. This rally is an all-time short.

Thu, 12/20/2012 - 18:28 | 3084320 css1971
css1971's picture

Android apps are just Java. They can run a Dalvik compatible JVM and have access to just about all Android apps.

Apps and ecosystems don't matter.

Thu, 12/20/2012 - 18:44 | 3084365 missingtrillions
missingtrillions's picture

`"Worlds worst web browser":

Well, RIM finally got the message this year and as a result is placing huge emphasis on creating a killer mobile web browsing experience for BlackBerry 10. The company's forthcoming browser slaughters standard HTML5 tests, making the iPhone's Safari browser look like an antique. And now BB10's browser has cleared Ring 1 on the Ringmark test, becoming only the second mobile browser to ever achieve the ranking.

http://www.techvibes.com/blog/blackberry-best-mobile-browser-2012-11-09

Even weirder, Blackberry 10?s web browser is the fastest mobile web browser overall. The Blackberry browser didn’t win by a small margin either. It totally smoked the competition by over two full points. I don’t know about you, but I didn’t expect this as the Blackberry web browser was barely usable before Blackberry 6 was released last year.

http://www.macgasm.net/2012/11/06/inforgraph-chrome-19-fastest-mac-brows...

"no apps":

BB10 will launch with 100,000 plus apps.  The most of any platform in history at launch.

Thu, 12/20/2012 - 17:42 | 3084188 adr
adr's picture

The software looks nice but all the leaked images of the hardware so far look like crap.

I mean the iPhone could take fifteen minutes to make a call, but people still would have bought millions of them, cause its Apple.

RIM is dead with its own OS and terrible hardware. WP8 hasn't exactly taken off like a rocket, and some of the new phones have the best hardware around.

RIM should have embraced Android and made the best physical keyboard phones they could. Yes there is still a massive market for a great phone with a keyboard.

Thu, 12/20/2012 - 18:16 | 3084291 missingtrillions
missingtrillions's picture

I disagree about the hardware.  From what we've seen so far, and it's important to remember that this may not yet be the final build, I think it's nicer than iPhone 5.

 

http://crackberry.com/blackberry-10-l-series-caught-some-glorious-new-im...

Thu, 12/20/2012 - 17:54 | 3084228 Bay of Pigs
Bay of Pigs's picture

Maybe Tyler was referring to their shares going from $144 to $6 in four years.

Thu, 12/20/2012 - 17:50 | 3084208 orangegeek
orangegeek's picture

Android or Apple.  Microsoft - nice try.

 

RIM will be gone in a year or two.  Nice move in the stock - like Nortel's price movements in its dying days.

Thu, 12/20/2012 - 17:49 | 3084211 ZFiNX
ZFiNX's picture

Dead-cat peak.

Thu, 12/20/2012 - 18:03 | 3084249 LouisDega
LouisDega's picture

Rimmmmbuuuuuup

Thu, 12/20/2012 - 18:02 | 3084250 PeeramidIdeologies
PeeramidIdeologies's picture

I have been kicking my own ass since September when I was telling everyone around me that this stock was a buy, and didn't take my own advice. Have been waiting for a correction ever since. These guys have a very loyal consumer base in the world of business, as well as a good stock of patents. I believe it to be a little pricey at the moment but if they can get keep things turning up, there's lots of potential here.

Thu, 12/20/2012 - 18:50 | 3084395 unrulian
unrulian's picture

i personally enjoy a good Rim

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