The Future Looks Grim for RIM
It was another bad week for Research in Motion (NASDAQ:RIMM).
The company reported its third quarter earnings on Thursday, disappointing investors more than expected. Its third quarter earnings per share of $0.27 did beat analysts’ expectations by 0.08 cents. RIM’s $5.2 billion in revenues were in-line but declined 5.5% as compared to the previous year.
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RIM said it expects a fourth quarter revenue of $4.6-4.9 billion with earnings per share from $0.80 to$0.95. BlackBerry smartphone shipments will decline 22% to 11-12 million during a time that the company usually sees a boost from end-of-year holiday sales.
One positive note for the beaten-down company: a rise in subscribers. In the third quarter, the company reported a rise of five million subscribers quarter over quarter and 20 million on a year over year basis to 75 million subscribers.
So what’s a company’s leadership to do in times like this? In the company’s Thursday conference call, RIM’s c0-CEOs and the company’s largest shareholders Jim Balsillie and Mike Lazardis volunteered to cut their salaries to $1–effective immediately. The two leaders also said they plan conduct a review of the company that will “leave no stone unturned.”
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One bright spot from the call, according to MarketWatch, was the executives said in the review, they will look at “opportunities to leverage the BlackBerry infrastructure.” Analysts have been all over this for awhile and something like this could include RIM licensing out its secure network technology to another smartphone such as Apple Inc.’s (NASDAQ:AAPL) iPhone and Google’s (NASDAQ:GOOG) Android.
The week ended with RIM’s stock falling to levels last seen in 2004. This has been attributed to its weak fourth quarter guidance and Thursday’s lackluster conference call.
Also on Friday, Nomura Securities maintained a ‘Neutral’ rating on the stock and cut its price target cut to $15 from $18.90. Analyst Stuart Jeffrey wrote in his research note, “We see a $15 break-up value, but believe the price may need to fall below $10 to attract bids.”
RIM closed at $13.44 on Friday, down 11.17%.