Call it in, RIM posts profit
Dec 20, 2012 / 4:12 pm
Quarterly results at Research In Motion managed to beat the expectations of the market, but investors showed Thursday that they're still not convinced the BlackBerry maker's business model is going to be a smashing success.
After the third-quarter report was issued, RIM's shares surged more than eight per cent in after hours trading. But the stock began a dramatic retracement once executives laid out details of some service fees associated with the make-or-break launch next year of the BlackBerry 10 smartphones and operating system.
RIM shares (Nasdaq:RIMM) fell more than 10 per cent, or $1.41, to $12.71 as of 6:40 p.m. ET in New York.
The sticking point for investors appeared to be comments from chief executive Thorsten Heins which suggested the lucrative service fees charged to BlackBerry subscribers to use its secure network won't necessarily be a priority for the company anymore.
"We will be transforming our service revenue platform to reflect different usage levels of our network infrastructure, and different value-added software, security and service packages," he said.
RIM (TSX:RIM) plans to launch an a la carte menu of services where both enterprise customers and casual smartphone users can pick their packages, ranging from a "platinum package" that offers all of the security that BlackBerrys offer today, to a more stripped back offering that could focus less on security and more basic email services.
Heins said some smaller business, for example, are just looking for the basics rather than the encrypted technology that RIM has built its name on.
"Subscribers that require enhanced services ... are expected to continue to generate monthly service revenue," he said on the conference call.
"Other subscribers who do not utilize such services are expected to generate less or no service revenue."
Those comments about the future of RIM overshadowed an otherwise surprisingly stable third-quarter earnings report, which showed that the company was riding out the countdown to the BlackBerry 10 launch relatively well, especially considering it's currently selling products that are seen as ancient in the ever-changing technology world.
The company reported a $9-million profit, or two cents per share, for the three months ended Dec. 1, compared with a profit of $265 million or 51 cents per share a year ago.
Revenue totalled $2.73 billion, down from $5.17 billion.
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