WATERLOO (dpa-AFX) - Struggling Canadian smartphone maker Research In Motion Ltd. (RIMM, RIM.TO) said Thursday after the markets closed that its third quarter profit dropped 71% from last year, hurt by lower revenue and a hefty charge related to the inventory valuation of its Blackberry PlayBook tablets. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations. At the same time, the company forecast fourth quarter revenue and earnings well below analysts' current consensus estimates.
The Waterloo, Canada-based company reported net income for the third quarter of US$265 million or US$0.51 per share, compared to US$911 million or US$1.74 per share for the year-ago quarter.
The latest quarter results include the impact of pre-tax charges of US$54 million to revenue related to the service interruption experienced in the quarter, US$485 million for the PlayBook inventory provision taken in the quarter and US$7 million for the company's cost optimization program that was implemented in the previous quarter.
Excluding items, adjusted net income for the latest quarter was US$667 million or US$1.27 per share.
On average, 44 analysts polled by Thomson Reuters expected the company to earn US$1.19 per share for the third quarter. Analysts' estimates typically exclude special items.
Gross margin for the third quarter fell to 27.3% from 43.6% in the prior year quarter.
Revenue for the third quarter fell 6% to US$5.17 billion from US$5.50 billion in the same quarter last year. Excluding the charge related to service disruption, adjusted revenue for the latest quarter was US$5.22 billion. Forty-four analysts had a consensus estimate of US$5.27 billion for the third quarter.
Earlier this month, RIM disclosed about the PlayBook inventory charge and warned that it expected third quarter adjusted earnings would be at the low to mid point of its forecast range of US$1.20 to US$1.40 per share and adjusted revenue would be 'slightly lower' than its outlook of US$5.3 billion to US$5.6 billion.
During the third quarter, RIM shipped about 14.1 million BlackBerry smartphones and about 150,000 BlackBerry PlayBook tablets.
Of late, RIM is having a tough-time in the face of stiff competition from Apple Inc.'s (AAPL) iPhone and iPad, and devices powered by Google Inc.'s (GOOG) Android system.
Cupertino, California-based Apple, RIM's major rival in the smartphone and tablets market, sold 17.07 million iPhones and 11.12 million iPads during its fourth quarter ended September 24.
'Despite the challenges faced in the third quarter, the BlackBerry subscriber base grew to almost 75 million customers around the world. In addition, RIM launched a range of new BlackBerry 7 based smartphones globally and introduced holiday promotions that helped drive growth in the installed base of BlackBerry PlayBook users,' said Jim Balsillie and Mike Lazaridis, Co-CEOs at Research In Motion.
In fact, RIM witnessed a turbulent quarter. In mid-October, the longest and most extensive disruption to BlackBerry service since the launch of the device 12 years ago saw BlackBerry users unable to send and receive emails and messages in an outage that started in Europe. Web browsers also haven't been working.
Looking forward to the fourth quarter, RIM forecast revenue of US$4.6 billion to US$4.9 billion and earnings of US$0.80 to US$0.95 per share. Analysts currently expect the company to earn US$1.18 per share on revenue of US$5.12 billion for the fourth quarter.
Gross margin percentage for the third quarter is expected to be about 38% and BlackBerry smartphone shipments for the quarter are expected to be between 11 million and 12 million units, the company said.
The company said earlier this month that it expected unit shipments in the fourth quarter to be below third-quarter levels. At that time, the company said it no longer expected to meet its full-year guidance for adjusted earnings per share of US$5.25 to US$6.00.
'As part of our commitment to improving our performance to better meet the expectations of shareholders and customers, we continue to evaluate ways to improve in several areas of the Company's operations. It may take some time to realize the benefits of these efforts and the platform transition that we are undertaking, but we continue to believe that RIM has the right set of strengths and capabilities to maintain a leading role in the mobile communications industry,' Jim Balsillie and Mike Lazaridis, RIM's Co-CEOs said Thursday.
RIM shares closed Thursday's regular trading session on the Nasdaq at US$15.13, up 5 cents. The stock is currently losing 93 cents or 6.15% in after hours trading. On the TSX, the company's shares closed the day at C$15.80, up 11 cents.
Copyright RTT News/dpa-AFX
© 2011 AFX News
