Research In Motion Limited Management Discusses Q3 2013 Results - Earnings Call Transcript

Transcript by:

Research In Motion Limited (RIMM)

Q3 2013 Earnings Call

December 20, 2012 5:00 pm ET

Executives

Paul Carpino - Vice President, Investor Relations

Thorsten Gerhard Heins - Chief Executive Officer, President, Non-Independent Director, Member of Innovation Committee and Member of Strategic Planning Committee

Brian Bidulka - Chief Financial Officer

Analysts

Kevin Smithen - Macquarie Research

Kulbinder Garcha - Crédit Suisse AG, Research Division

Jim Suva - Citigroup Inc, Research Division

Todd Coupland - CIBC World Markets Inc., Research Division

Amitabh Passi - UBS Investment Bank, Research Division

Simona Jankowski - Goldman Sachs Group Inc., Research Division

Ehud A. Gelblum - Morgan Stanley, Research Division

Roderick B. Hall - JP Morgan Chase & Co, Research Division

Mark Sue - RBC Capital Markets, LLC, Research Division

Tal Liani - BofA Merrill Lynch, Research Division

Jeffrey T. Kvaal - Barclays Capital, Research Division

Richard Kramer - Arete Research Services LLP

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Research In Motion Third Quarter Fiscal 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, December 20, 2012 at 5:00 p.m. Eastern Time. And I would now like to turn the conference over to Mr. Paul Carpino, Vice President, Investor Relations. Please go ahead.

Paul Carpino

Okay. Thank you, Luke. Welcome to RIM's Fiscal 2013 Third Quarter Results Conference Call. With me on the call today are Thorsten Heins, our Chief Executive Officer; and Brian Bidulka, our Chief Financial Officer.

After I read our cautionary note regarding forward-looking statements, Thorsten will provide a business update, and Brian will then review the third quarter results and our outlook. We will then open up the call for questions.

This call is available to the general public via call-in numbers and via webcast in the Investor Relations section at rim.com. The webcast can be accessed through your personal computer or your BlackBerry PlayBook tablet. A replay of the webcast will be available on the rim.com website. We plan to wrap up the call around 6:00 p.m. Eastern this evening. [Operator Instructions]

Some of the statements we will be making today constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities Laws. These include statements about our plans, strategies and objectives and the anticipated challenges and opportunities in Q4 and fiscal 2014; our plans and expectations relating to the upcoming launch of BlackBerry 10 and its impact on our business; our expectations with respect to unit volumes, subscribers, service fees and marketing initiative, revenue, gross margin, ARPU and operating expenses; our anticipated operating loss in Q4, working capital management and our anticipated cash position; our product development and marketing initiatives and timing; plans and expectations relating to our CORE program and our strategic review; and other statements regarding our plans, objectives and expectations.

We will indicate forward-looking statements by using words such as expect, plan, anticipate, estimate, may, will, should, forecast, intend, believe, continue and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made.

Many factors could cause our actual results, performance or achievements to be materially different from those expressed or implied by our forward-looking statements, including our ability to enhance our current products and develop new products and services; risks related to delays in new product introductions; risks related to intense competition, both in North America and internationally; our reliance on carrier partners and distributors; risks related to pressure on our service fees and our ability to generate service revenue through new offerings; risks relating to network disruptions and other business interruptions; security risks and risks related to the collection, storage, transmission, use and disclosure of personal information; our ability to maintain or increase our cash balance; our ability to implement and realize the benefits of our CORE program; our ability to retain and attract key personnel; our ability to maintain and enhance the BlackBerry brand and risks associated with our international operations; intellectual property risks; difficulties in forecasting financial results given the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize our industry; and other factors set forth in the Risk Factors and MD&A sections in RIM's filings with the SEC and Canadian securities regulators.

We base our forward-looking statements on information currently available to us, and we do not assume any obligation to update them except as required by law.

I will now turn the call over to Thorsten.

Thorsten Gerhard Heins

Thank you, Paul. As we can imagine, this is a very dynamic time at Research In Motion, and Q3 was a very busy and active quarter for the company. Since becoming CEO just less than 1 year ago, we have put in place a clear roadmap to transition us into our new mobile computing platform, running a leaner and much more efficient organization. Today, we are on the verge of launching BlackBerry 10, and our core restructuring process has delivered results. This highlights the talent of the group that we have put together in RIM to run our business.

I want to start by giving you a high-level recap of Q3, which Brian will discuss in more detail later. I will also provide you an update on our 3 main initiatives: the upcoming launch of BlackBerry 10; our CORE program; and our strategic review.

Q3 result continued to reflect the successful transition the company is making as it moves towards the launch event for our BlackBerry 10 mobile computing platform on January 30. We sold just under 7 million smartphones this quarter and generated revenue of $2.7 billion. Gross margin strengthened, cash flow was strong and our cash position increased significantly. We continued to deliver a very strong cash flow from operations and maintained a very strong balance sheet at quarter end. Cash grew by more than $600 million in the quarter to $2.9 billion, even after the funding of all of our restructuring activities. The BlackBerry subscriber base at the end of Q3 was approximately 79 million. This is slightly lower than the prior quarter, but was up by approximately 2 million from the beginning of this fiscal year and up approximately 3 million from a year ago. Subscribers in North America actually showed the largest decline, while EMEA, Latin and Asia Pac were stable or showed growth. We are pleased we have been able to maintain a stable subscriber base during this transition year as we head into the launch of BlackBerry 10. Brian will provide more detail shortly, but our global teams are executing well and demonstrating that with laser focus, they can deliver the result to help us navigate through this challenging transition to BlackBerry 10.

Read the rest of this transcript for free on seekingalpha.com