Just because things are expected, doesn’t mean they don’t hurt. This is the case for Research In Motion (RIM), which has been steadily slashing expectations over sales and earnings for the first quarter, released its report today. And it doesn’t look good. Net income for the first quarter was a low $695 million, or $1.33 per diluted share, compared with net income of $934 million, $1.78 per diluted share in the fourth quarter of last year — down 26 percent. Revenues came in at $4.9 billion, down from $5.6 billion in the fourth quarter, or a 12.5 percent drop.
As to smartphone and tablet shipments, during the first quarter, the company says that it shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets. However, these numbers only include products that have been shipped, not products that have been sold. What’s more, it looks like shipments of 4G versions of RIM’s PlayBook have been delayed until the fall. These ongoing product delays are affecting the company’s overall growth, so we’ll have to wait and see whether PlayBook and product sales increase over the coming quarters, but clearly RIM is no longer remaining optimistic over sales — or overall forecasts.
As a result of its declining financials, RIM said that it will begin a series of layoffs beginning this quarter. This so-called “realignment” will be focused on “taking out redundancies” and a “reallocation of resources” to focus on high growth areas. Beyond the corporate jargon, this is obviously bad news for the 17K+ RIM employees.
What’s more, RIM has downgraded its expectations for the second quarter of this year, estimating that revenues will be in the $4.2 billion to $4.8 billion range, with earnings per share dropping to between $0.75 and $1.05 diluted.
This also comes on the heels of the Wall Street Journal reporting that the Canadian Company’s COO, Don Morrison, will be leaving the company for medical reasons. Obviously, speculation is swirling considering the timing of his departure, but the plummeting revenues and the COO’s departure do seem unrelated. The problem is that, as BI reported, the company’s executive ranks are already thin at best, so RIM is bringing in former executive, Larry Conlee, as a special advisor.
RIM has lost nearly a third of its market value since April, but the company is trying to maintain some semblance of optimism, even in spite of lackluster international sales and a gloomy forecast. At the company’s headquarters today Co-CEO Jim Balsillie said of RIM’s disappointing start to the year:
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.
The one bright spot? The co-CEO made mention of a “strong balance sheet” with almost $3 billion in cash and he believes that new products scheduled for launch this year (if they’re not continually delayed) will help the company realign its cost structure and see some growth in the latter part of the year. But that’s a big “if”.