TORONTO (AP) —
Research In Motion Ltd. said Thursday that it sold about 1 million of its
critically important new BlackBerry 10 devices and surprised Wall Street by
returning to profitability in the most recent quarter.
The earnings
provide a first glimpse of how RIM's new touch-screen BlackBerry Z10 is selling
internationally and in Canada since its debut Jan. 31. The 1 million Z10 phones
were above the 915,000 that analysts had been expecting. Details on the U.S.
launch are not part of the fiscal fourth quarter's financial results because
the Z10 just went on sale in the U.S. last week.
In the quarter
that ended March 2, RIM earned $98 million, or 19 cents a share, compared with
a loss of $125 million, or 24 cents a share, a year earlier. After adjusting
for restructuring and other one-time items, RIM earned 22 cents a share.
Analysts surveyed by FactSet had been expecting a loss of 31 cents.
Revenue fell 36
percent to $2.7 billion, from $4.2 billion. Analysts had expected $2.82
billion.
Despite the
BlackBerry 10 sales, RIM lost about 3 million subscribers to end the quarter
with 76 million.
Bill Kreyer, a
tech analyst for Edward Jones, called the decline "pretty alarming."
"This is
going to take a couple of quarters to really see how they are doing,"
Kreyer said.
In pre-market
trading, RIM's stock rose briefly, but was down 7 cents at $14.50 at about 8:20
a.m.
The BlackBerry,
pioneered in 1999, had been the dominant smartphone for on-the-go business
people and other consumers before the iPhone debuted in 2007 and showed that
phones can handle much more than email and phone calls.
The new
BlackBerry Z10 has received favorable reviews since its release, but the launch
in the critical U.S. market was delayed until late this month. A new keyboard
BlackBerry, called the Q10, won't be released in the U.S. for two or three more
months. The delay in selling the Q10 complicates RIM's efforts to hang on to
customers tempted by the iPhone and a range of devices running Google Inc.'s Android
operating system. Even as the BlackBerry has fallen behind rivals in recent
years, many users have stayed loyal because they prefer a physical keyboard
over the touch screen on the iPhone and most Android devices.
RIM, which is
changing is formal name to BlackBerry, said it expects to break even in the
current quarter despite increasing spending on marketing.
"To say it
was a very challenging environment to deliver improved financial results could
well be the understatement of the year," Chief Executive Thorsten Heins
said during a conference call with analysts.
In a statement,
Heins said he implemented numerous changes at the company over the past year
and those changes have resulted in RIM returning to profitability.
"I thought
they were dead. This is a huge turnaround," Jefferies analyst Peter Misek
said from New York.
Misek said the
Canadian company "demolished" the numbers, especially its gross
margins. RIM reported gross margins of 40 percent, up from 34 percent a year
earlier. The company credited higher average selling prices and higher margins
for devices.
"This is a
really, really good result," Misek said. "It's off to a good
start."
The company also
announced that co-founder Mike Lazaridis will retire as vice chairman and
director. [Source]
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