Research in (Slow) Motion (RIMM, AAPL, GOOG)

Investing

Published: September 15, 2011 4:58 pm

Mobile phone maker Research in Motion Ltd. (NASDAQ: RIMM) reported second quarter fiscal 2012 earnings after the market closed today. The company posted revenue of $4.2 billion and adjusted EPS of $0.80. Analysts were expecting EPS of $0.87 on $4.47 billion in revenue.

Year-over-year, the company’s revenue fell -15% and GAAP-basis EPS fell from $1.46 to $0.63, down more than -50%. RIM eliminated a net $90 million from expenses to pay for its “cost-optimization” program, but even that didn’t pull the EPS up anywhere near last year’s level.

In its announcement, the company touted its introduction of seven new Blackberry phones and said it had shipped 10.6 million Blackberry phones during the quarter. Analysts had been expecting shipments of 11 million units.

And the worse news was shipments of the Playbook tablet. Just 200,000 shipped in the quarter, against expectations of 500,000-700,000. Not a hopeful sign.

The company also proudly said that it paid $780 million as its share of the consortium that bought the Nortel patents. Finally, RIM said it expects smartphone shipments to grow in the third quarter by 27%-37%. That will take some magic, as the company has been losing share to Apple Inc. (NASDAQ: AAPL) and all the other major handset vendors, as well as losing market share to the Android from Google Inc. (NASDAQ: GOOG) and Apple’s iOS.

RIM also updated its outlook for the third quarter and the full fiscal year. The company expects revenue in the third quarter of $5.3-$5.6 billion on gross margins of about 37%. Shipments for the quarter are expected to range between 13.5 million and 14.5 million units. Adjusted EPS is expected to be $1.20-$1.40. Analysts had projected EPS of $1.36 on revenue of $5.3 billion.

At the end of its first fiscal quarter, RIM forecast adjusted second quarter earnings of $0.75-$1.05 on revenue of $4.2-$4.8 billion. At the same time, the full year forecast called for adjusted EPS of $5.25-$6.00. The company gave no full-year revenue estimate.

For the full 2012 fiscal year, the company’s EPS estimate has not changed, but RIM did say that it expects to be at the low end of the range.

Shares are getting hammered in after hours trading, down nearly -12%, at $26.07, in a 52-week range of $21.60-$70.54.

Paul Ausick

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