BlackBerry Maker RIM Disappoints
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Research In Motion (NASDAQ: RIMM) today reported a drop in quarterly profits and an outlook that came in shy of Wall Street estimates.
For its second fiscal quarter of 2010, ended Aug. 29, RIM said income came in at $475.6 million, or $0.83 a share, down 4 percent from a profit of $495.5 million, or $0.86 a share, for the same period last year.
Revenue totaled $3.53 billion, up 3 percent from $3.42 billion in the previous quarter and up 37 percent from $2.58 billion a year ago.
But while RIM beat the Street on earnings, the BlackBerry maker said revenue for the current quarter would come up short of analysts' expectations. The company said Q3 revenue would fall in the range of $3.6 billion to $3.85 billion -- shy of the $3.95 billion analysts were expecting.
Meanwhile, third-quarter earnings per share were projected to be between $1 a share and $1.08 a share. Wall Street had been looking for $1.08 a share.
During the quarter, RIM shipped approximately 8.3 million devices, though it added only 3.8 million net new BlackBerry subscriber accounts. At the end of the quarter, the total number of BlackBerry subscribers stood at approximately 32 million.
Another discouraging trend facing the mobile giant is a declining average selling price (ASP). For Research In Motion, ASPs currently stand at about $320, down from $345 in the second quarter and even lower than the $357 in the first quarter.
"Our goal is to get more and more mainstream and get more and more volume," RIM co-CEO Jim Balsillie said during the earnings conference call, explaining why the average selling price will be lower still in third quarter.
"This is kind of a land grab," he added.
He went on to say that RIM is set to launch more high-end devices, which is widely expected to include the BlackBerry Storm 2, though details have yet to be disclosed.
"We have some higher-end devices teed up, and you'll be seeing more of those in the next quarter," Balsillie said.
The RIM chief was also upbeat about a slew of ad campaigns for the holiday season, saying the company is making progress in the consumer market. "We're not going to be a niche player -- that's not what we're planning here," he said.
While RIM dominates in the enterprise mobility space, it's been taking steps to shore up its position in the consumer-oriented market and to fend off competition from players like the Apple iPhone and devices based on Google's Android.
Research In Motion in July signed on with Verizon Wireless to open an app store later this year based on the network's open APIs, and also plans to introduce a new mobile browser next year after its purchase of Torch Mobile.
Shares of RIMM were off 11.14 percent to $73.81 in after-hours trading following the earnings report.