Mike Lazaridis, former co-CEO of Research In Motion
Research In Motion Ltd. is about to embark on a new chapter, but it's off to a rocky start.
The Waterloo-based wireless device maker released its fiscal fourth-quarter results on Thursday, slightly beating analyst expectations.
But RIM also posted a poor outlook for the current quarter. Investors responded badly, sending RIM's stock down as much as 12 per cent during after-hours trading.
Part of the reason for the gloomier outlook is the company's continuing switch to new operating software for its phones and tablet.
"We have just really an outstanding set" of new products, said RIM Co-CEO Jim Balsillie, adding those will start to hit store shelves in RIM's fiscal second quarter. "This is a time of transition."
RIM's first new-generation product - the PlayBook tablet - goes on sale April 19. The device will be the first to run a new operating system developed by industrial software maker QNX, which RIM purchased last year.
RIM also announced Thursday that the PlayBook will run Android applications, which were originally created for tablets and smart phones that are powered by Google's Android operating system.
That gives PlayBook users access to 200,000 more apps, and addresses a crucial area in which RIM has lagged.
Over the next year, the QNX software will replace the traditional BlackBerry operating system, ushering in what Mr. Balsillie describes as a new class of "super phone" (although QNX-powered phones likely won't hit the market until early 2012).
But in the near term, RIM blamed its lower first-quarter outlook on increased marketing and research and development related to the PlayBook, as well as an overall sales shift toward lower-margin handsets.
"We feel very good about the PlayBook," Mr. Balsillie said, saying "many" major corporate clients have contacted RIM about purchasing tens of thousands of units.
RIM also said its outlook suffered because of uncertainty surrounding the disaster in Japan, although the company does not expect that supplies of the PlayBook will be affected in the near term.
For the fiscal fourth quarter, RIM posted profit of $934-million (U.S.) or $1.78 a share, and revenue of $5.6-billion. According to Reuters, analysts expected earnings of $1.76 a share and revenue of $5.64-billion. Although RIM's guidance of between $1.47 and $1.55 in per-share earnings for the coming quarter missed the street's expectations, its full-year outlook was higher than expected.
Even as RIM struggles against Apple's iPad and Android-powered phones at the high end of the smart-phone market, the company has found more success in lower-cost phones and international markets.
But the company faces potential longer-term challenges as it migrates to a new operating system. RIM will release the latest version of its traditional BlackBerry operating system later this year. But if carriers and customers are expecting the higher-powered QNX operating system to also migrate from the PlayBook to BlackBerrys in the future, there is a chance consumers may want to wait for the new devices to hit market, hurting short-term sales.
Mr. Balsillie sought to play down those concerns, saying the new version of the BlackBerry operating system is a major upgrade, and that RIM expects it to support, rather than hinder the company's QNX-based strategy.