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RIM posts Q2 earnings: $2.87 billion in revenue, softer $235 million loss

jon fingas
Reporter
Updated ·7 min read

RIM may have given us hope that its transition to BlackBerry 10 has turned a corner, but that doesn't mean the dark clouds have entirely broken just yet. The company's second fiscal quarter saw it generate $2.9 billion in revenue, a slight gain over last quarter, while it posted a net loss of $235 million -- again better than expected, but not the best news it could deliver. Waterloo's main challenge was holding on to its smartphone base. While RIM did expand the total BlackBerry user base to 80 million, its phone shipments dropped from 7.8 million to 7.4 million and were braced by shipments of just 130,000 PlayBooks, or half as many tablets as were delivered in the spring.

The sunshine is mostly found in the total picture. RIM says it's still on track to deliver the first BlackBerry 10 phones in early 2013; while the smartphone maker is bracing for an operating loss in its ongoing third quarter, the higher revenue and reduced losses suggest to CEO Thorsten Heins that RIM is getting its fiscal house in order before BlackBerry 10 (hopefully) renews interest. Full details of the company's financial performance are available after the break.

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Research In Motion Reports Second Quarter Fiscal 2013 Results

WATERLOO, ONTARIO, Sep 27, 2012 (MARKETWIRE via COMTEX) -- Research In Motion Limited (RIM) RIMM +13.17% CA:RIM +1.16% , a world leader in the mobile communications market, today reported second quarter results for the three months ended September 1, 2012 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Highlights:


-- BlackBerry subscriber base increased to approximately 80 million global
subscribers
-- Cash, cash equivalents, short-term and long-term investments increased
by approximately $100 million to $2.3 billion at the end of the second
quarter
-- Cash flow from operations was approximately $432 million in the second
quarter
-- Revenue of $2.9 billion in Q2, up 2% from $2.8 billion in Q1
-- GAAP net loss in Q2 of $235 million, or $0.45 per share diluted,
including $136 million in pre-tax restructuring costs; adjusted net loss
of $142 million, or $0.27 per share diluted
-- Shipments of BlackBerry smartphones were 7.4 million and shipments of
BlackBerry PlayBook tablets were approximately 130,000

Q2 Results

Revenue for the second quarter of fiscal 2013 was $2.9 billion, up 2% from $2.8 billion in the previous quarter and down 31% from $4.2 billion in the same quarter of fiscal 2012. The revenue breakdown for the quarter was approximately 60% for hardware, 35% for service and 5% for software and other revenue. During the quarter, RIM shipped approximately 7.4 million BlackBerry smartphones and shipped approximately 130,000 BlackBerry PlayBook tablets.

GAAP net loss for the quarter was $235 million, or $0.45 per share diluted, compared with the GAAP net loss of $518 million, or $0.99 per share diluted, in the prior quarter and GAAP net income of $329 million, or $0.63 per share diluted, in the same quarter last year.

Adjusted net loss for the second quarter was $142 million, or $0.27 per share diluted. Adjusted net loss and adjusted diluted loss per share exclude the impact of pre-tax charges of $136 million ($93 million on an after-tax basis) related to the Cost Optimization and Resource Efficiency ("CORE") program. This charge and its related impact on GAAP net loss and diluted loss per share are summarized in the table below.

"Despite the significant changes we are implementing across the organization, our second quarter results demonstrate that RIM is progressing on its financial and operational commitments during this major transition," said Thorsten Heins, President and CEO. "Subscribers grew to approximately 80 million global users, revenue grew sequentially from the first quarter, cash, cash equivalents, short-term and long-term investments increased by approximately $100 million to $2.3 billion, and carriers and developers are responding well to previews of our upcoming BlackBerry 10 platform. Make no mistake about it, we understand that we have much more work to do, but we are making the organizational changes to drive improvements across the company, our employees are committed and motivated, and BlackBerry 10 is on track to launch in the first calendar quarter of 2013."

The total of cash, cash equivalents, short-term and long-term investments was $2.3 billion as of September 1, 2012, compared to $2.2 billion at the end of the previous quarter, an increase of approximately $100 million from the prior quarter. Cash flow from operations in Q2 was approximately $432 million. Uses of cash included intangible asset additions of approximately $253 million and capital expenditures of approximately $87 million.

Outlook

The Company expects that there will be continued pressure on operating results for the remainder of the fiscal year based on the increasing competitive environment, lower handset volumes, increased marketing expense associated with the launch of BlackBerry 10, and some impact from pressure by customers to reduce RIM's monthly infrastructure access fees. Also, the Company plans to continue to invest in targeted marketing and sales programs to aggressively drive sales of BlackBerry 7 handheld devices before the anticipated launch of the BlackBerry 10 smartphones. The Company expects to report an operating loss in the third quarter of fiscal 2013 as RIM continues to work through the transition to BlackBerry 10 and completes its CORE program. This outlook excludes any benefits or future impact of charges related to the CORE program.

Reconciliation of GAAP net loss and diluted loss per share to adjusted net loss and adjusted diluted loss per share:

(United States dollars, in millions except per share data)


Three months ended
September 1, 2012
------------------------------
Diluted loss
Net Loss per share
(net of (net of
income tax) income tax)
------------------------------
As reported $ (235) $ (0.45)
Adjustment:
CORE Program (net of tax)(1) 93 0.18
------------------------------
Adjusted $ (142) $ (0.27)
------------------------------
------------------------------
------------------------------------------------------------

Note: Adjusted net loss and adjusted diluted loss per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of adjusted net loss and adjusted diluted loss per share enables the Company and its shareholders to better assess RIM's operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of RIM's GAAP results.

(1) As part of the Company's ongoing effort to streamline its operations and increase efficiency, the Company commenced the CORE program in March 2012. During the second quarter of fiscal 2013, the Company incurred approximately $136 million in total pre-tax charges related to the CORE program. Substantially all of the pre-tax charges are related to one-time employee termination benefits, facilities costs and manufacturing network simplification costs. During the second quarter of fiscal 2013, pre-tax charges of approximately $68 million were included in cost of sales, charges of approximately $20 million were included in research and development and charges of approximately $48 million were included in selling, marketing, and administration expenses. Additional charges for headcount related costs associated with the CORE program will also be incurred in subsequent quarters.

Conference Call and Webcast

A conference call and live webcast will be held beginning at 5 pm ET, September 27, 2012, which can be accessed by dialing-1-800-814-4859 (North America), (+1)416-644-3414 (outside North America), or through your personal computer or BlackBerry(R) PlayBook(TM) tablet at www.rim.com/investors/events/index.shtml . A replay of the conference call will also be available at approximately 7 pm ET by dialing (+1)416-640-1917 and entering pass code 4501367#. A replay of the webcast will be available on your personal computer or BlackBerry PlayBook tablet by clicking the link above. This replay will be available until midnight ET, October 11, 2012.