RIM Earnings: Expect the Worst, Hope for the Not-So-Bad
With its existing business in decline, RIM has been scrambling to reinvent itself by developing an entirely new mobile operating system and portfolio of smartphones to run it. But it has been hampered by repeated delays that have caused it to fall further behind nimbler rivals like Google and Apple. And while BlackBerry 10 is clearly moving closer to launch, with the company driving hard to actually meet its deadline this time — “We’re not sleeping much,” CEO Thorsten Heins said earlier this week — skepticism over its prospects for a turnaround abounds.
RIM’s struggle, which was already pretty dire, has become even more so in the months since it last reported earnings. Some formidable new marquee smartphones have hit the market — Samsung’s Galaxy S III and Apple’s next-generation iPhone 5 — and they will almost certainly continue to impact BlackBerry sales ahead of the launch of BB10. Meanwhile, fear is growing that the OS, RIM’s last-ditch effort to right its foundering business, is too late. As Jefferies analyst Peter Misek wryly observed to AllThingsD, “It’s tough to see anything good when we haven’t seen a new phone in what seems like years.”
And while RIM’s share price enjoyed a nice lift the past few days thanks to an unexpected increase in subscribers to its BlackBerry service in its most recent quarter, analysts say the optimism that news inspired will likely be short-lived. As Wedbush analyst Scott Sutherland said in a recent note to clients, “We remain cautious on RIM, and expect FQ2 results to be below expectations, and we expect reduced guidance. While we see some value in RIM, given the lack of content and device ecosystems, we believe RIM’s integrated strategy will continue to face significant challenges.”
So what sort of numbers is the Street expecting from the company? Consensus is a net loss of 47 cents per share — down from 63 cents a share in the same period last year — and revenue that has fallen 40 percent to $2.49 billion.
Investors will also be paying keen attention to the BlackBerry’s average selling price to get a sense of just how much it is reducing prices to gain market share. Another key metric: Cash on hand. RIM reported total cash and equivalents of $2.2 billion in June. What’s it got now and how quickly is it burning it as it scrambles to launch BB10? All these things will help investors determine how much faith to put into the claim Heins made earlier this week at BlackBerry Jam Americas: “I think we have a clear shot at being the No. 3 mobile ecosystem in the world.”