RIM’s Sixth Biggest Investor Dumps Over 50% Stake In Company And Says “We’re On Our Way Out”

Stephen Jarislowsky, chairman of Jarislowsky Fraser Ltd., said in an Bloomberg interview the day after RIM’s Q1 Fiscal 2012 earnings call that the Montreal-based investment firm has already reduced its holdings in Research in Motion by 50% or more and that the company is “on its way out” as far as the rest of it’s stake is concerned.  Jarislowsky said that “RIM is resting on their laurels”, and that “Steve Jobs is a much better marketer than RIM”.

[Read]

Discussion Piece: Yes! RIM Should Have Released New Hardware Running BlackBerry 6…

In last week’s discussion piece we asked the question “Should RIM Have Skipped BlackBerry 7 And Released New Devices Running BlackBerry 6 Sooner?”  Skipping BlackBerry 7 all together is still being debated, but, based on RIM’s Q1 Fiscal 2012 earnings call, there is no question that RIM would have been better off if they had released new hardware running BlackBerry 6 earlier in the year.

Because of delays in BlackBerry 7, RIM will miss the back-to-school shopping season meaning that the company will see their market share decline even more rapidly than it already is.  RIM says the hold up in BlackBerry 7 is carrier acceptance.  BlackBerry 6, however, already has carrier acceptance and RIM would have sold a heck of a lot more handsets if they had only released them running BlackBerry 6.

Consumers care about apps…

Unfortunately for RIM, the company is under the illusion that consumers actually care about BlackBerry 7.  Most consumer BlackBerry users have never heard of BlackBerry 7 nor could they tell you what the name of the OS running on their current device is.  Consumers care about apps.  Consumers care about all the cool stuff their non-BlackBerry using friends are able to download and install on their devices.  Consumers care about the lack of cool stuff that they can download and install on their devices.

The most popular mobile game in the world, Angry Birds, is being downloaded more than 1 million times per day, but, not by a single BlackBerry user nor will the overwhelming majority of BlackBerry users ever be able to download Angy Birds or hundreds of thousands of other applications like it.  Consumers care about apps, but, unfortunately RIM thinks that smartphones are still all about BBM and email.

BlackBerry 7 may be a dog that won’t hunt…

The more I think about it the more I believe that RIM should have taken a page out of Microsoft’s PlayBook when it comes BlackBerry operating systems beyond BlackBerry 6.  When RIM decided that the future for the BlackBerry is one where devices run on QNX, the company should have put everything into getting QNX on handsets as quickly as possible and said BlackBerry 6 is it for the BlackBerry OS like MS said Windows Mobile 6.5 was it for the old Microsoft mobile OS.  Because they didn’t and the fact that RIM is dealing with carrier acceptance issues, BlackBerry 7 may be a dog that won’t hunt.

Not that anyone really believes RIM when it comes to timelines the company is saying that BlackBerry handsets running QNX will be out in early 2012.  This poses two huge issues for RIM seeing how they won’t even release most BlackBerry 7 devices until the Fall and Winter of 2011.  A lot of folks are just going to wait it out it out and skip BlackBerry 7, and, it is going to be very difficult for RIM to convince developers to develop apps specifically for BlackBerry 7.  BlackBerry 7 could potentially just extend the types of issue RIM is experiencing with BlackBerry 6.

Research in Motion has a lot of problems they need to resolve.  RIM’s stock (RIMM) is tanking as I type this post and many analysts are saying that delays in BlackBerry 7 and in the touch Bold 9900/9930 could be the final nail in the coffin.  I still think that RIM sells way too many devices overseas to go that far, but, RIM could could be relegated to Nokia status of few years ago here in the U.S.

Research in Motion Reports First Quarter Fiscal 2012 Results and Revises Full Year Guidance

Press Release

Research In Motion Reports First Quarter Fiscal 2012 Results and Revises Full Year Guidance

Announces Plans to Streamline Operations and Accelerate New Product Introductions

Board of Directors Approves Share Repurchase Program

WATERLOO, ONTARIO–(Marketwire – June 16, 2011) – Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended May 28, 2011 (all figures in U.S. dollars and U.S. GAAP).

Highlights:

  • Revenue in the first quarter of fiscal 2012 grew 16% over the same quarter last year
  • International revenue1 in Q1 grew 67% year over year
  • Gross margin in the quarter was approximately 44%, slightly higher than expected due to product mix
  • RIM launched the BlackBerry PlayBook tablet in North America and shipped approximately 500,000 units in the first quarter

Q1 Fiscal 2012 Results:

Revenue for the first quarter of fiscal 2012 was $4.9 billion, down 12% from $5.6 billion in the previous quarter and up 16% from $4.2 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 78% for hardware revenue, 20% for service and 2% for software and other revenue. During the quarter, RIM shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets.

“Fiscal 2012 has gotten off to a challenging start. 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.” said Jim Balsillie, Co-CEO at Research In Motion. “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.”

Net income for the quarter was $695 million, or $1.33 per share diluted, compared with net income of $934 million, or $1.78 per share diluted, in the prior quarter and net income of $769 million, or $1.38 per share diluted, in the same quarter last year.

The total of cash, cash equivalents, short-term and long-term investments was $2.9 billion as of May 28, 2011, compared to $2.7 billion at the end of the previous quarter, an increase of approximately $170 million from the prior quarter. Cash flow from operations in Q1 was approximately $1 billion. Uses of cash included intangible asset additions of approximately $560 million, capital expenditures of approximately $220 million and business acquisitions of approximately $30 million.

1 Includes revenue outside of the U.S. and Canada

Cost Optimization Program:

The company also announced that it will begin a program to streamline operations across the organization, which will include a headcount reduction. This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities and align with RIM strategic objectives, such as accelerating new product introductions. We expect to implement this program beginning in the second quarter with the benefits impacting results primarily in Q3 and beyond. Any one-time charges associated with this initiative are not included in our Q2 and full year outlook but will be identified and disclosed when we report our second quarter results.

Share Repurchase Program:

RIM’s Board of Directors today also approved a share repurchase program to purchase for cancellation through the facilities of the NASDAQ Stock Market (NASDAQ) or by way of private agreement up to 5% of RIM’s outstanding common shares. The share repurchase program may commence after July 10, 2011 and will remain in place for up to 12 months or until the purchases are completed or the program is terminated by RIM.

The price that RIM will pay for any shares purchased over NASDAQ will be the prevailing market price at the time of purchase. The share repurchase program will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, which contains restrictions on the number of shares that may be purchased on a single day, subject to certain exceptions for block purchases, based on the average daily trading volumes of RIM’s shares on NASDAQ. Any purchases made by way of private agreement may be at a discount to the prevailing market price at the time of purchase, and would be subject to regulatory approval.

RIM’s Board of Directors believes that a share repurchase program at this time is in the best interests of RIM and its shareholders, and will not impact RIM’s ability to execute its growth plans. Any shares purchased under the program will increase the proportionate interest of, and may be advantageous to, all remaining shareholders of RIM.

The actual number of shares purchased, the timing of purchases, and the price at which the shares would be bought under the share repurchase program will depend on future market conditions and upon potential alternative uses for cash resources. There is no assurance that any shares will be purchased under the share repurchase program and RIM may elect to suspend or discontinue the program at any time.

Q2 and Full Year 2012 Outlook:

Revenue for the second quarter of fiscal 2012 ending August 27, 2011 is expected to be in the range of $4.2-$4.8 billion. Gross margin percentage for the second quarter is expected to be approximately 39%. Earnings per share for the second quarter are expected to be $0.75-$1.05 diluted, excluding any one-time charges. Earnings per share for the full year fiscal 2012 are now expected to be between $5.25-$6.00 diluted, excluding any one-time charges or share repurchases.

Conference Call and Webcast:

A conference call and live webcast will be held beginning at 5 pm ET, June 16, 2011, which can be accessed by dialing 1-800-814-4859 (North America), 416-644-3414 (outside North America). The replay of the company’s Q1 conference call can be accessed after 7 pm ET, June 16, 2011 until midnight ET, June 30, 2011. It can be accessed by dialing 416-640-1917 and entering passcode 4445546#. The conference call will also appear on the RIM website live at 5 pm ET and will be archived at http://www.rim.com/investors/events/index.shtml.

500,000 BlackBerry PlayBook Tablets Shipped In Q1 Fiscal 2012

Research in Motion co-CEO Jim Balsillie announced on today’s earnings call that the company shipped approximately 500,000 BlackBerry Playbook tablets in Q1 Fiscal 2012.  Despite mixed reviews before the PlayBook was released, 500,000 units sold is actually a fairly impressive showing against the bevy of Android tablets all competing for the number two spot in the tablet space which is currently dominated by the iPad.