CEO Thorsten Heins has been up-front for months about the challenges his company faces, and investors have had just as much time to absorb the news that things would get worse before any improvement in 2013. So when the company announced smaller-than-expected losses during yesterday's analyst call, investors responded by sending the stock shooting up more than 20 per cent in after hours trading — its biggest jump in nine years.
While no one would ever openly cheer a US$235 million loss ($142 million excluding one-time restructuring charges), the fact that it was smaller than last quarter's $518 million shortfall served as a sign to many that the company is effectively managing itself through its current turbulence and positioning itself for its Hail Mary release early next year of handhelds based on the all-new BlackBerry 10 operating system.
Other positive signs: global subscriber numbers hit 80 million, up from 78 million in June, and cash on hand inched up by $100 million, to $2.3 billion. The subscriber figures are crucial, as they provide ongoing subscription revenue, and growth here mitigates sentiment that the company is in an irreversible death spiral. Growing cash reserves give RIM additional runway as it tries to simultaneously squeeze as much life out of its fading BlackBerry 7 platform at the same time as it waits for BlackBerry 10 to hit the market and turn the revenue picture around.
RIM pulled in $2.9 billion in revenue, down 31 per cent year-over-year but well ahead of the Wall Street consensus of $2.5 billion. The company sold 7.4 million BlackBerrys, well ahead of the expected 6.9 million. This may pale in a market where Apple sold five million iPhone 5 devices in their first weekend on the market, but keeping up with Apple and its surging competitor, Google, is no longer RIM's goal. Building a foundation for its next-generation platform is. Heins continues to insist that the growing market for handhelds — barely half of global customers have yet to dump their old feature phones — leaves plenty of room for additional players beyond the Apple/Google duopoly.
Hopes aside, the road ahead is a bumpy one, as RIM has to get through at least one more fiscal quarter before BlackBerry 10-based products go on sale, and possibly another six months or more from that point before the new devices begin to materially benefit the bottom line.
"We understand that we have much more work to do," Heins said in a statement. Between stiffening competition from increasingly capable higher-end iOS and Android-powered devices, the impending launch of Microsoft's Windows Phone 8 mobile OS, and margin pressure from thinning infrastructure access fees and the upcoming BlackBerry 10 marketing push, next quarter's results will remain challenging.
But under a CEO whose visibility and openness extend far beyond what we had once come to expect from RIM, the company can no longer be blamed for running from its problems or ignoring its critics. To his credit, Heins has managed to begin the process of exorcising the company's somewhat disconnected past and reorient it toward a very different, but still extant, future.
Heins and his company remain firmly in the middle of a long, dark tunnel. But the light at the end just got noticeably brighter thanks to the kind of leadership activists had been calling for long before he took office in January. That they've been strangely quiet in recent months as Heins and his new leadership team dug into their transition plan suggests they're starting to like what they see. The market, for now at least, seems to agree.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. email@example.com