Ina Fried

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RIM Has Another Tough Talk With Wall Street

Following a spate of bad news, Research In Motion is set to address investors and analysts in just a few minutes.

The earnings conference call follows the Canadian handset maker’s announcement of much lower than expected sales, a wider than expected loss and the revelation that its BlackBerry 10 operating system won’t ship this year.

Shares of the BlackBerry maker were plummeting following the news, trading recently at $7.42, down more than 18 percent from where the company’s shares ended regular trading on Thursday.

AllThingsD will have live coverage once the call starts around 2 pm PT.

2:00 pm: Call kicking off with RIM CEO Thorsten Heins and CFO Brian Bidulka.

The flogging, err, call, should last about an hour, RIM says.

RIM warns investors that the predictions it makes may not happen, though I think all of the investors know that by now.

2:05 pm: “This was a challenging quarter for the company on many fronts,” Heins said, adding he is not satisfied with the company’s results.

Revenue declined in emerging markets amid lower prices, but Heins said the company is introducing new products in the U.K., Middle East and in Asia/Pacific.

Despite the challenges, Heins said the company grew its subscriber base some, though RIM noted that it lost customers in the U.S.

2:07 pm: As for the BlackBerry 10 delay, Heins said that integrating various parts of the new software has proven more challenging than expected.

“These issues are not related to the quality of the features and functionality of the software,” Heins said.

2:08 pm: “I will not deliver a product to the market that is not ready to meet the needs of our customers,” Heins said. “There will be no compromise on this issue.”

Heins said many carriers actually prefer a Q1 launch. Heins promised a wide range of software will accompany the launch of the first BlackBerry 10 devices.

2:11 pm: The next few quarters should be challenging, Heins says, in what is likely an understatement.

RIM will have to sell its aging lineup against updated iPhones, Android devices and the first Windows Phone 8 devices.

2:14 pm: The 5,000 job cuts are painful but critically necessary, Heins said, adding that the cuts will be made over the remaining three quarters of its fiscal year.

2:16 pm: Heins said the company remains convinced it can deliver value as an integrated company delivering hardware, software and services.

RIM will have fewer devices in the market at a time and said that while the first BlackBerry 10 model will be touch only, a keyboard-equipped model will follow shortly thereafter.

The company is still evaluating whether to license its operating system, Heins said.

2:20 pm: CFO now going through the gory details of last quarter.

Sparing you the specifics, but it was all down. Lower margins, lower hardware sales, lower overall revenue, lower average selling rate.

Interesting that the company did generate positive cash flow during the quarter. Despite the brutal quarter, the company has $100 million more in cash than it did a quarter ago. Those holdings stand at $2.2 billion.

Meanwhile, RIM shares have recovered a bit from earlier lows but are still down more than 15 percent from where they ended regular trading, changing hands recently at about $7.69.

2:29 pm: CFO says there may be additional charges and costs beyond the $350 million restructuring charge announced Thursday, which is attributable primarily to the job cuts.

2:30 pm: Call got silent for me for a bit there, but back now.

2:31 pm: RIM expects its subscriber base to continue to drop in the U.S. and average selling prices to fall further.

2:32 pm: On to Q and A. Calls no longer in seethe-only mode.

2:33 pm: First question is key. How will RIM bridge what is now an even larger gap before it has new products?

Heins notes there are still a lot of BlackBerry 5 and BlackBerry 6 devices, which he said could help the company stay relevant.

“I expect us to be successful in bridging this gap and protecting our installed base,” Heins said.

2:36 pm: Checking the email inbox, Forrester analyst Charles Golvin sends along this assessment of RIM.

“The window for BlackBerry to remain a platform with viable growth potential is closing, and this development illustrates the pace at which it is closing,” Golvin wrote. “In the upcoming period before the BlackBerry 10 launch we expect a new iPhone, more Android devices running Google’s latest version, and a massive push from Microsoft behind all the next versions of Windows. For the first BlackBerry 10 device to win the attention of customers and developers at its new launch date it will have to prove itself better than the alternatives by leaps and bounds — the likelihood of that is very, very low.”

2:37 pm: Questions center around the fact that as bad as this quarter was, it seems likely to only get worse as an even more aging lineup is forced to compete against rapidly evolving competition.

2:39 pm: Analyst asks whether RIM will be able to maintain positive cash flow.

CFO says RIM aims to maintain cash position this quarter but is also looking at options to expand its credit lines.

2:42 pm: Call cut out for me again. But I think we have the sense of things.

2:45 pm: Back again. Sorry about that.

Insert question of,”How can RIM survive the next few months with the same product lineup that is already losing ground?”

2:48 pm: Heins said the company considered but rejected doing Android devices.

“We are not trying to be one of many,” he said. “We are trying to be different.”

2:54 pm: More questions on cash flow over the coming quarters. CFO won’t talk about next few quarters, but reiterates that he expects to preserve cash position in the current quarter.

2:56 pm: RIM is asked what it thinks its patent holdings might be worth.

Heins said he isn’t in a position to give a detailed answer.

“RIM is a very innovative company,” Heins said, adding that it has large research teams. “We are in a good position on patents.”

2:57 pm: RIM has 16,500 people now and expects to get to around 11,500 with the job cuts.


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