Research In Motion reports Q1 2011 results

Share price drops 21.5% as RIM misses earnings estimates, announces job cuts

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Research In Motion reports Q1 2011 results Research in Motion has reported lower than expected revenues for Q1 2011.
By  Georgina Enzer Published  June 20, 2011

Research In Motion has posted weaker than expected revenues for Q1 2011, with revenue down from $5.6bn in Q4 2010, to $4.9bn in the first quarter, a 12% decrease that missed analyst predictions.

The company reported 16% growth over the same period last year, as well as a 67% increase in international revenue year-over-year, but net profit was down to $695m for the quarter, against $769m in the same period last year.

RIM shares had dropped 21.5% in value by the end of trading on Friday.

The company blamed weak sales of its BlackBerry smartphones, and delays in bringing new models to market.

"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." said Jim Balsillie, Co-CEO at Research In Motion in a statement.

"RIM's business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012," he added.

Seventy-eight percent of revenue for RIM in Q1 2011 came from hardware revenue, 20% for service and 2% for software and other revenue.

In Q1 2011, RIM also launched the BlackBerry PlayBook tablet in North America and has shipped approximately 500,000 of the tablets in the first quarter; RIM also shipped approximately 13.2 million BlackBerry handheld devices.

Net income for Q1 2011 was $695 million, or $1.33 per share diluted, compared with net income of $934 million, or $1.78 per share diluted, in the prior quarter and net income of $769 million, or $1.38 per share diluted, in the same quarter last year.  

RIM has announced that it is beginning to streamline operations across the organisation and this will mean that employee numbers will be reduced.

"This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities

and align with RIM strategic objectives, such as accelerating new product introductions," the RIM statement said.

The streamlining programme will begin in Q2 2011 and the company expects to see improvements from this in the results in Q3 and beyond.

RIM expects revenue in Q2 2011 to be in the range of $4.2-$4.8 bn, below analyst estimates that averaged $5.47bn.

2705 days ago
Vinod Mehra Edited by ITP.net

RIM missing its profit expectations. Is it the Apple effect? I believe RIM has the gas to catch up and turn over surprising results.

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