WATERLOO (dpa-AFX) - Research In Motion Ltd. (RIMM, RIM.TO) Thursday reported a modest third-quarter profit that plunged from last year, hurt by a sharp erosion in revenues, partly offset by improved gross margin and an income-tax benefit. Excluding items, RIM posted a loss that was smaller compared with Wall Street estimates, while revenues exceeded expectations.
Moving forward, RIM expects to report an operating loss for the fourth quarter as subscribers, margins and volumes are likely to be under pressure, even as it prepares for an imminent launch of its much awaited BlackBerry 10 smartphone.
Shares of the company gained 9 percent in after-hours session on the Nasdaq.
'RIM continued to execute on its product roadmap plans and to deliver on key financial metrics as it gets set for the global launch of BlackBerry 10,' said CEO Thorsten Heins.
RIM said its revenues for the third quarter plunged 47 percent to $2.73 billion from $5.2 billion last year. Three-three analysts on a consensus estimated revenues of $2.66 billion for the quarter.
During the quarter, RIM shipped about 6.9 million BlackBerry smartphones and 255,000 PlayBook tablets. Its BlackBerry subscriber base in the quarter dropped to 79 million global subscribers from about 80 million as of September 1.
The Canada-based company reported quarterly net income of $9 million or $0.02 per share, compared with net income of $265 million or $0. 51 per share last year.
Results for the reporting quarter included charges of $55 million and an income tax benefit of $166 million.
Excluding items, adjusted loss for the quarter totaled $114 million or $0.22 per share.
On average 36 analysts polled by Thomson Reuters expected a loss of $0. 35 per share for the quarter. Analysts' estimates typically exclude special items.
Gross margin improved to 30.4 percent from 27.2 percent last year.
At the end of the quarter, RIM had a cash flow of $2.9 billion, up $600 million from the prior quarter.
Once a leader in smartphones, RIM has been trailing Apple Inc.'s (AAPL) iPhones and iPads as well as devices run on Google Inc.'s (GOOG) Android, forcing it to post consecutive quarterly losses.
Nevertheless, there seems to be a silver lining for RIM as investors keenly await the launch of its BlackBerry 10 phone on January 30, hoping to regain lost customers. The BlackBerry 10 has won positive preview, leading to gains in its stock price.
RIM said it plans to consider using pricing initiatives on BlackBerry 7 devices and service fees in some markets to maintain subscriber base, and warned the launch of BlackBerry 10 could dampen sales of the existing model. RIM anticipates increased marketing spend for the launch of BlackBerry 10 and expects to report an operating loss for the fourth quarter.
RIMM closed Thursday at $14.12, up 3.60%, on a volume of 37.6 million shares on the Nasdaq. In after hours, the stock gained $1.26 or 8.92%. In the past year, the stock has traded in a range of $6.22 - $17.96.
In Toronto, the stock closed at C$13.95, up 3.41%, on a volume of about 6 million shares.
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