The beleaguered BlackBerry handset manufacturer
Research In Motion Ltd.
) remains in dire strait as the company reported highly
disappointing first quarter of fiscal 2013 financial results, which
were no where near the Zacks Consensus Estimates. The company's
future financial outlook looks grimand it continuously delaying the
launch of its much-hyped BlackBerry 10 software based handsets.
Consequently, in the after market trade on NASDAQ, the stock price
of Research In Motion dropped $1.27 (13.91%) to $7.86, a new
52-week low end price.
GAAP net loss in the first quarter of fiscal 2013 was $518
million or a loss of 99 cents per share compared with a net income
of $695 million or $1.33 per share in the year-ago quarter. In the
previous quarter, Research In Motion incurred a huge one-time
after-tax charge of $326 million for goodwill impairment.
First Quarter adjusted earnings per share of a loss of 37 cents
were far worse than the Zacks Consensus Estimate of a loss of 5
cents. The market sentiment before the earnings release was clearly
on the negative side as depicted by the Zacks Consensus earnings
Estimate, which fell by an enormous 46 cents in the last 30 days.
As many as 31 analysts reduced their respective estimates. Despite
this, the actual figure was even below the consensus figure.
Total revenue in the first quarter of fiscal 2013 was $2,814
million, down by a whopping 42.7% year over year and also missing
the Zacks Consensus Estimate of $3,081 million. Segment wise,
Hardware revenue was approximately 59%, Services revenue was 36%
and the remaining 5% came from Software and other sources.
In the previous quarter, Research In Motion sold 7.8 million
BlackBerry devices, down 40.9% year over year and 29.7%
sequentially. The company sold around 260,000 BlackBerry Playbook
tablets, down 48% sequentially. For more than a year, Research In
Motion is delaying the launch of its BlackBerry 10 OS based
handsets. Yesterday, management announced that these products will
not hit the market before the first quarter of CY 2013.
Quarterly gross margin was 28% well below the prior-year quarter
gross margin of 43.9%. Quarterly operating loss was $643 million
compared with an operating income of $897 million in the year-ago
During the first quarter of fiscal 2013, Research In Motion
generated $711 million of cash from operation compared with $1,020
million in the prior-year quarter. Free cash flow in the reported
quarter was $558 million compared with $798 million in the year-ago
quarter. Cash and marketable securities, at the end of the first
quarter of fiscal 2013, was $2,247 million compared with $2,111
million at the end of fiscal 2012. The balance sheet of Research In
Motion remains debt free.
Yesterday, Research In Motion announced that the company will
reduce its headcount by approximately 5,000 (about 30% of its
present workforce) by the end of fiscal 2013. The headcount
reduction will result into $1 billion of yearly cost savings.
Earlier this month, the company hired investment banks, JPMorgan
Chase & Co. and RBC Capital Markets, to evaluate various
strategic options including the sale of the company as management
is unsure about its future prospects.
Future Financial Outlook
Management expects to report an operating loss in the second
quarter of fiscal 2013, which is likely to continue in the rest of
the current fiscal. So far the company failed to provide any
specific time frame when its free fall will ultimately end. For the
first time since December 2003, the stock price of the company
tumbled below $10 per share in June 5, 2012 and is still moving
The nightmare of Research In Motion continues ever since
) iPhone hit the market. The situation aggravated once
) launched its Android software and several handset manufacturers
adopted that operating system.The stock price plummeted nearly 73%
in the last year. We, therefore, maintain our long-term Neutral
recommendation on Research In Motion. Currently, it holds a
short-term Zacks Rank #3 (Hold) on the stock.
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