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The beleaguered BlackBerry handset manufacturer Research In Motion Ltd. reported better-than-expected second quarter of fiscal 2013 financial results. Both the top and bottom line significantly outpaced the Zacks Consensus Estimates. Contrary to the general consensus of a subscriber loss, Research In Motion added net subscribers in the previous quarter and total device sold was also impressive.
Furthermore, the company’s cash position improves sequentially as it maintains the previous guideline that the next-generation BlackBerry 10 software-based smartphones will hit the market in the first calendar quarter of 2013. Management has high expectations on BlackBerry 10-based devices. Spurred by several positive factors, in the after market trade on NASDAQ, the stock price of Research In Motion jumped up $1.46 (20.45%) to $8.60, highest ever stock price surge since December 2003.
GAAP net loss in the second quarter of fiscal 2013 was $235 million or a loss of 45 cents per share compared to a net income of $329 million or 63 cents per share in the year-ago quarter. In the previous quarter, Research In Motion incurred a huge one-time after-tax charge of $93 million for restructuring charges. Excluding this item, quarterly adjusted loss per share of 27 cents was significantly better than the Zacks Consensus Estimate of a loss of 46 cents per share.
Total revenue in the second quarter of fiscal 2013 was $2,873 million, down by a whopping 31% year over year but way head of the Zacks Consensus Estimate of $2,478 million. Segment wise, Hardware revenue was approximately 60%, Services revenue was 35% and the remaining 5% came from Software and other sources.
In the previous quarter, Research In Motion sold 7.4 million BlackBerry devices. The company sold around 130,000 BlackBerry Playbook tablets. At the end of the previous quarter, the global subscriber base of BlackBerry devices increased almost 2 million to a total of approximately 80 million. Quarterly gross margin was 26% well below the prior-year quarter gross margin of 38.7%. Quarterly operating loss was $363 million compared to an operating income of $407 million in the year-ago quarter.
During the first half of fiscal 2013, Research In Motion generated $1,135 million of cash from operation compared with $971 million in the prior-year period. Free cash flow in the first half of fiscal 2013 was $895 million compared with $462 million in the year-ago period. Cash and marketable securities, at the end of the reported quarter, was $2,343 million compared with $2,111 million at the end of fiscal 2012. The balance sheet of Research In Motion remains debt free.
Future Financial Outlook
Management expects to report an operating loss in the third quarter of fiscal 2013, which is likely to continue in the rest of the current fiscal. This was primarily due to increasing competitive landscape, a drop in sales of existing handsets, and growing marketing expenditures for the upcoming BlackBerry 10-based devices.
The nightmare of Research In Motion continues ever since Apple Inc.’s (AAPL - Analyst Report) iPhone hit the market. The situation further aggravated once Google Inc. launched its Android software and several handset manufacturers adopted that operating system.However, the just concluded second-quarter of fiscal 2013 ushered some rays of hope as the market is eagerly waiting for the company’s much-hyped BlackBerry 10-based devices. 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.