RIM Deathwatch: Extreme Losses Rule the Day and the Future (RIMM, AAPL, GOOG, NOK)

Everyone was already expecting Research in Motion Ltd. (NASDAQ: RIMM) to have very little or even no good news in its report.  Things got bad enough at the company’s last warning that the company even warned of operating losses.  Now the earnings are out and the situation looks even worse than most were expecting with some 5,000 more job cuts coming.

The troubled and former leader in smartphones reported earnings at -$0.37 EPS and sales fell by 33% to $2.8 billion in revenue.  The challenges of the Apple Inc. (NASDAQ: AAPL) iPhone and the Google Inc. (NASDAQ: GOOG) Android operating system phones are just overwhelming the Canadians.

Some 7.8 million units were sold in the quarter and the company is saying that the new Blackberry operating system is being delayed into the first quarter of 2013.  In short, RIM’s ‘upgrade’ is going to be late and it is going to miss the holiday season.  PlayBook tablet shipments were approximately 260,000 and we question if that is even worth the effort.

RIM shares closed down 0.5% at $9.13 in New York trading on 20 million shares against a 52-week range of $8.83 to $33.54.  We would advise that the short interest in RIM was massive at the June 15 settlement data and that may skew the trading reaction ahead.

UPDATE 4:50 PM EST: RIM shares are down 17% at $7.55 in the after-hours session and its prior 52-week low was $8.83.

RIM claims that the overall BlackBerry subscriber base continued to grow, and that the subscriber base grew in all regions except for North America. Cash, cash equivalents, short-term and long-term investments increased to $2.2 billion at the end of the first quarter and cash flow from operations was approximately $710 million in the first quarter.

The company guidance pretty much sums up just how bad things are going.  The warning is for the next several quarters to “continue to be very challenging for its business based on the increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10, pressure to reduce RIM’s monthly infrastructure access fees, and the Company’s plans to continue to aggressively drive sales of BlackBerry 7 handheld devices.”  RIM even sees an operating loss in the second quarter as its fixed costs are allocated over a lower volume of shipments.

Did you notice the term “Deathwatch” in the story title?  There is a reason and we wonder if it will be RIM or Nokia Corporation (NYSE: NOK) which bleeds out first.  Canada is getting closer to losing another ‘formerly’ great technology gem.  First it was Nortel.  Next is RIM.

JON C. OGG