RIM shares plunge after Q1 earnings report
RIM missed the mark and reported lower net income than last year
RIM shares plummeted 14.30% in after-hours training Thursday night after the company released its Q1 earnings for the fiscal year of 2012 and announced plans to cut jobs across the company. As you might imagine, the numbers weren't good…
While the company reported a 16% increase in revenues over last year to $4.9 billion, revenues missed the $5.1 billion mark analysts had predicted RIM would meet this quarter. Net income for the quarter was $695 million, or $1.33 per share diluted, compared to a net income of $934 million in the previous quarter, and a net income of $769 million in the same quarter last year.
And this is despite the launch of the Blackberry Playbook, which shipped 500,000 units in Q1. So it makes sense that the company is now predicting that second quarter revenues will be even lower, landing somewhere in the $4.2 million and $4.8 billion range.
In an attempt to salvage what it can, RIM is doing what any starving, dying animal does: it eats its young. As part of the “cost optimization program,” as RIM so euphemistically puts it, the company will be instituting mass layoffs. RIM didn’t say exactly how many people will be getting the boot, but it did say that the layoffs will begin in the second quarter and the effects likely won’t be seen until the third quarter.
“Fiscal 2012 has gotten off to a challenging start,” said RIM co-CEO Jim Balsillie in a statement. “The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter. RIM’s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012.”
Saying that RIM’s market share is still growing in markets around the world is a putting a positive spin on the reality that RIM’s market share is tanking in the U.S.—rapidly. Earlier this month, comScore reported that RIM has officially fallen to the number three spot behind Android and Apple in OS market share. Android first knocked RIM out of the reigning seat back in January. While it isn’t likely to fall below Microsoft’s meager 6.7% market share, there’s no denying that the Blackberry is on its way out.
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