Research In Motion shares are down 10% in after-hours trading after the company issued weaker-than-expected guidance for its May quarter.
RIM’s revenue and EPS guidance are both below consensus, despite the expected launch of RIM’s BlackBerry PlayBook tablet during the quarter.
In its press release, RIM notes that its guidance is “slightly wider than normal to reflect the risk of potential disruption in RIM’s supply chain as a result of the recent earthquake in Japan.”
For the February quarter, revenue, EPS, and device shipments were roughly in line, but below some of the higher Street estimates. As a reminder, RIM no longer reports subscriber metrics.
Revenue: $5.6 billion vs. $5.64 billion consensus
EPS: $1.78 vs. $1.76 consensus
Devices shipped: 14.9 million vs. 14.7 million consensus (via Morgan Stanley)
Guidance: $5.2-5.6 billion vs. $5.64 billion revenue consensus, $1.47-1.55 vs. $1.65 EPS consensus, 13.5-14.5 million devices vs. 14.7 million devices (consensus via Morgan Stanley)
LIVE Earnings Call notes follow. Click here to refresh for the latest.
5:00 RIM just officially announced that the BlackBerry PlayBook will support Android apps. (We’ll see how well they perform.)
5:08 Joining the earnings call late because of plugin problems. It is pathetic that it is 2011 and the only options are RealPlayer and Windows Media. How about supporting Flash, which has at least been updated this decade?
5:09 Jim Balsillie seems to be explaining why earnings will be lower than expected this year — because of PlayBook and other products. Revenue growth to resume later this year with more launches.
5:10 Balsillie: During calendar 2012 QNX-based BlackBerry “superphones” expected to hit the market.
5:10 It’s difficult to have clear vision into future quarters but expect to grow revenue and earnings again.
5:11 Support for Android and Java, game engines, etc. for QNX coming. Pleased to announce BlackBerry Tablet OS native SDK too.
5:12 Smartphone market in North America is very competitive. Do not expect to grow in N.A. during first quarter. But opportunity for improved growth with future BlackBerry phones, PlayBook, etc.
5:13 Launch of flexible payment options, gifting platform, etc.
5:15 RIM now going over results from release.
5:17 Outlook for Q1. Reiterating disclaimer for forward-looking statements! Total revenues including PlayBook $5.2-5.6 billion. 13.5-14.5 million BlackBerry smartphones expected. Will break out shipments of PlayBook next quarter. ASP expected to be lower.
5:19 Don’t expect a near-term impact for PlayBook supply. Higher risk for Q2.
5:20 Now it’s time for Q&A. Hopefully Balsillie will go on a rant as usual.
5:20 Balsillie: We have an outstanding set of new product introduction which is cutting over new architectures. It’s a major, major step up. It comes in Q2. We’re cutting over. It’s a time of enormous investment and transition. The interest in these new platforms is extraordinarily high. It’s a time of cutting over and it’s a heavy cutting over time. In the core market of North America, this is going to be a key time of growth. Expect earnings and activity to be for the year. Making major investments and cutting over in transition. We feel very good about the PlayBook and other platforms. If life was perfect I’d like to pull it in 3 months but I can’t.
5:22 This is really about making sure, we believe we have an architecture and a platform that future-proofs the company. The products, they’re phenomenal. The interest is fantastic, and it’s really an uncompromised environment. You get the product, and the tonnage of apps, enterprise greatness. It has a “hot hot” capability. And cutting over to “superphones.” It’s transition and that’s what it is. And that’s why you see the volume of units what they are. Forecasting to grow substantially this year. It’s just not a time for half measures.
5:26 Gross margin pressure — PlayBook related? Hard to be really precise. Mix shifts can have a big part of that. 41.5% in a quarter when we are at long end of lifecycle of a number of products. Also have PlayBook, elements of that. Not planning on guiding PlayBook units, but will report them.
5:29 Why would people buy BB 6.1 devices and not just wait for QNX? QNX will take a while. Demand for 6.1 is “like, amazing.” Looking at the superphone market, that’s going to open up whole aspect of future-proof performance. Interest is, scrambling for them. “It’s very strong global.” NA and rest of world. Fantastic upgrade. And yes, there’s a superphone strategy, which we talked about, and then you got the PlayBook. It’s a great portfolio.
5:32 It sounds like there is a tornado on the earnings call.
5:33 EDGE products have been good for margins. More of those in the works? How about 4G products to match up with Android? You’re going to see entry-level stuff, and the idea of having real-stripped down EDGE or 3G stuff, those are really really good questions. There are places where just having EDGE and evolved EDGE is just fine, but price is a real driver. Not going to go specific on that. I think you’ve seen how the 8520 just continues to fly. As for 4G, not going to commit on specific products for this year, but I will say we have super-intense 4G efforts. Doing it on PlayBook and stay tuned. When you see the platforms and the performance, you’ll see why we’re so bullish for this company.
5:37 QNX not coming until calendar 2012. Do you feel comfortable… what is visiblity you have to sustained uptake to 6.1 platform to transition given pace of competition going on? Well, 6.1 is a major upgrade. Why? I mean, you’ll see. You see that at BlackBerry World, I’m just not going to go into. Haven’t announced it formally yet. The power of 6.1, highly sustainable. The meetings with the carriers and the level of commitment is outstanding. Obviously the superphone cutover just puts you into a higher dimension. The risk is getting them done and certified. A lot of it going to be shown, probably BB World certain elements will be shown. The products this summer have enormous interest. Carrier engagement is extremely high. PlayBook and all the QNX stuff is wonderfully complimentary to all of that. We expect them to halo one another. I don’t see any diminished interest in the NPI. The carriers’ jaws dropped. If I could take it forward and move it two months, I would love to.
5:41 When will investors see evidence? NPI is going to come out. The time for NPI. When we’re on the call next quarter, you’ll have a very very good indication what’s going on.
5:42 Initial volume range for PlayBook? Didn’t give guidance for a reason. 20,000 retail outlets, not going to have like 1 or 2 devices. I mean, clearly, it’s a major major launch that we expect to be a growth driver for a long, long time. The interest is really high, shift in computing worldwide. Many corporate clients have approached about wanted several tens of thousands of PlayBooks. They’re looking at tablets and they like the PlayBook architecture. Want to get it out fast but stable. But it’s a winner.
5:45 RIM not giving a PlayBook gross margin. 8520 has good margin but still older. Driving it deeper into new markets. Bold still makes up a good part of the mix. As closer to new products in markets to replace, lowering ASP there which can have some margin impact. Lots of transitions until we get new products in the market. Timing for QNX on BlackBerry devices: Early calendar 2012.
5:49 Why would devs be motivated to develop for RIM anymore if they can just build for Android? This is Gingerbread, not Honeycomb. Not many Honeycomb apps. Gingerbread, lots of them. If you’re looking for tonnage of apps or some kind of long-tail stuff. Gingerbread is not what’s being used for Android tablets. Changing or forking or fragmenting designs. At end of day, people are going to want performance. Not going to get things like gaming or multimedia. Not going to get it going through a VM interface. If you want content or Flash type stuff or AIR, that’s what you’re going to do. There’s no compromise. You get the tonnage of apps. Do we believe it’s about super high performance? Full web fidelity? Yes. Etc. etc. This is about performance and enterprise greatness.
5:57 Ok, that’s about it!
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