Research In Motion Ltd. (RIM) reported a narrower loss than analysts had projected, helped by the growth of BlackBerry subscribers in overseas markets such as India, South Africa and Indonesia. The shares jumped 25 percent.
The fiscal second-quarter loss was 27 cents a share, excluding some expenses, Waterloo, Ontario-based RIM said today in a statement. Analysts had estimated a loss of 47 cents on average, according to data compiled by Bloomberg.
The results show that RIM can gain customers in lower- income markets such as Asia and Africa, even as it loses ground in the U.S. to Apple Inc. (AAPL:US)’s iPhone and devices built on Google Inc. (GOOG:US)’s Android software. The company also did a better job conserving cash than some analysts predicted, curtailing operating expenses 7.9 percent. Cash and investments grew to $2.3 billion by the end of last quarter, up from $2.2 billion three months earlier.
“They didn’t burn through cash, and that’s what’s calming investors,” said Neeraj Monga, an analyst at Veritas Investment Research in Toronto who rates RIM a sell. “Investors are thinking, ‘Perhaps they have a chance to come back.’”
RIM shares (RIMM:US) soared as high as $8.90 in extended trading after the report. The stock, which lost 68 percent of its value in the past year, had closed at $7.14 in New York.
Sales fell 31 percent to $2.87 billion in the period, which ended Sept. 1, topping a projection of $2.47 billion.
The company sold 7.4 million BlackBerry phones and 130,000 PlayBook tablets last quarter. Analysts on average predicted 6.9 million smartphones and 217,000 tablets. Apple, meanwhile, sold 5 million units of its latest iPhone in a single weekend.
RIM’s subscriber base climbed to 80 million at the end of last quarter, up from 78 million. Still, phones in those markets carry lower selling prices, making it hard to squeeze as much revenue from those customers.
“While this is a much more positive outcome than a shrinking subscriber base, it does not mean that the company has stopped the slide in average selling price,” said Colin Gillis, an analyst at BGC Partners LP (BGCP:US) in New York who rates RIM a sell. “It is too soon to tell if the company can rebound.”
The BlackBerry 10 lineup, due in the first calendar quarter of next year, is the linchpin of RIM’s comeback plan. The new phones have been delayed at least a year, making it harder for the company to compete with the latest Apple and Android devices. At RIM’s software developer conference this week in San Jose, California, Chief Executive Officer Thorsten Heins said the debut of BB10 is “a few short months away,” without being more specific.
The delays mean the BlackBerry 10 will miss the holiday season, when a clutch of new Android devices and phones built on Microsoft Corp. (MSFT:US)’s Windows 8 software will hit the market.
RIM’s share of the global smartphone market dropped to 4.8 percent in the second calendar quarter, from 12 percent a year earlier, according to research firm IDC. Still, Heins said this week that BB10 will have a “clear shot” at being the world’s third-largest mobile operating system. That would put it behind Android and Apple’s iOS, and ahead of Microsoft.
In the meantime, RIM faces a “very aggressive environment in terms of pricing,” Heins said today on a conference call. Second-quarter results were “still well below where we need to be, and this is why we are committed to making difficult choices and necessary changes,” he said.
Heins, who became CEO in January, has embarked on a cost- cutting plan to stem losses at the company. He’s eliminating almost a third of its workforce and shutting down manufacturing sites to boost efficiency.
RIM posted a net loss of $235 million, or 45 cents a share, compared with net income of $329 million, or 63 cents, a year earlier. RIM expects to have an operating loss this quarter and face “continued pressure” on its operating results for the remainder of the fiscal year, Chief Financial Officer Brian Bidulka told analysts on the call.
RIM also has hired JPMorgan Chase & Co. (JPM:US) and RBC Capital Markets to help explore its strategic options. Heins told analysts today that he’s met with CEOs at various organizations over the past several months to discuss BB10 licensing and partnerships. He plans to continue meeting potential partners and hasn’t set a specific timeframe for the end of the review. Heins has said in the past that he hasn’t ruled out a sale of the company, though that’s not his focus.
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