Research in Motion Ltd.’s second quarter earnings beat Wall Street estimates on Thursday, but not by enough to quell pessimism about the company’s longterm future.
The Waterloo, Ont. maker of BlackBerry smartphones and PlayBook tablets posted a Q2 fiscal 2013 loss of $235 million or 45 cents per share (27 cents a share excluding one-time items). That topped Wall Street estimates of a 46-cent per share loss.
The company also increased its cash stockpile by $100 million during the quarter to a total of $2.3 billion.
RIM also revealed an upside surprise earlier this week when CEO Thorsten Heins told the BlackBerry Jam developers conference that RIM has actually added two million subscribers to hit a total subscriber base of 80 million in the quarter ended Sept. 1.
During an analyst conference call, Heins fielded several questions about the impact of various factors on RIM’s average revenue per user (ARPU), including the expiry of existing BlackBerry subscriber contracts, the churn rate that sees BlackBerry users migrate to competitors’ handsets, and the lower revenues generated in emerging markets like some parts of Africa or Asia-Pacific, where RIM is seeing the most subscriber growth.
“The (new subscriber) growth comes very much from South Africa, Asia Pacific, Indonesia specifically and a lot of uptick in the Philippines,” Heins said during the call. “But these are real new customers we’re signing up, not churn.”
In the news release stating RIM’s Q2 financial results, Heins reiterated that the BB10 OS will launch as planned in the first calendar quarter of 2013. Asked during the analyst call how RIM will capture the attention of consumers when BB10 finally makes its debut, Heins said the company must expand its focus beyond enterprise and cater consumers driving the bring your own device (BYOD) trend.
“I think there will be a lot of elements in BB10 that will excite the consumer,” Heins said. “We need (to do) this in order to attract the consumer in the enterprise.” He added that initial response from carriers and partners to BB10 and its features has been positive, boosting his confidence that BB10 will appeal to consumers in a big way.
RIM stated in the earnings release that it expects to post a Q3 operating loss and face continued pressure on its operating results for the rest of its fiscal year due to “the increasing competitive environment, lower handset volumes, increased marketing expense associated with the launch of BlackBerry 10, and some impact from pressure by customers to reduce RIM’s monthly infrastructure access fees.”
Heins acknowledged that the onslaught of new devices launched by competitors during the upcoming holiday season will put even more pressure on RIM, especially since the marketing campaign for BB10 won’t really gear up until the holidays are over.
“The market is going to get tougher and even more challenging with new products hitting the market,“ Heins said, adding later in the call: “We will see some pressures on Q3 but we are confident we can manage through that.”