Research In Motion reported declining profits and revenue in the third quarter as it continues its downward spiral.
For its fiscal third quarter, the Canadian mobile devices maker reported (PDF) a profit of $265 million, or 51 cents a share, compared with a year-earlier profit of $911.1 million, or $1.74 a share. Excluding one-time charges, including one taken for its unsold PlayBook tablets, the company earned $667 million, or $1.27 per share.
Revenue was $5.17 billion, a modest decline from RIM's year-earlier revenue of $5.49 billion.
Wall Street analysts, on average, had forecast earnings of $1.19 a share on revenue of $5.27 billion, according to Thomson Reuters. The company earlier this month warned that it would be at the low end to the midpoint of its projected $1.20 to $1.40 per-share earnings range, and that it would miss its expectations for the year.
The continued weakness illustrates the dilemma RIM has been in for the better part of this year, and underscores the difficulties that it faces in getting back on course in a brutally competitive environment. A myriad of problems over the past few months have left few confident in its ability to mount a comeback.
"The window of opportunity for RIM to fix its product portfolio is most likely gone," Sanford Bernstein analyst Pierre Ferragu said in a note issued before the results were released.
To make matters worse, the company said it doesn't plan to release its next-generation BlackBerry phones until the latter part of next year, creating a huge void without any products. RIM said it plans to increase its promotional activity, including more marketing and special offers, to drive sales of its BlackBerry 7 devices.
Over the past year, RIM's stock has lost more than three-quarters of its market value, prompting growing shareholder criticism and calls for a change in management. The company has ceded virtually of all of the high-end market for smartphones to Apple's iPhone and to devices based on Google's Android OS, and its PlayBook tablet has been turned into a bargain-bin product.
RIM sold 14.1 million BlackBerry units in the quarter, a tick down from a year ago. In the last quarter, the company had previously struck a bullish tone when talking about its new lineup of BlackBerry devices, led by its new flagship, the Bold 9900. Analysts, however, were skeptical that RIM's other BlackBerrys were seeing the same kind of success, concerns that were borne out in today's reported results.
RIM also shipped another 150,000 PlayBook tablets in the period. After poor sales and a glut of untouched PlayBooks, the company said earlier this month that it would take an after-tax charge of $360 million to write down the value of the unsold inventory. It previously promised aggressive discounts on the device, resulting in the PlayBook falling to as low as $99 during the Thanksgiving shopping weekend (a promotion only offered to RIM employees--consumers could snag one for $199).
Co-CEO Mike Lazaridis said sales of the PlayBook picked up after the discounts, and reaffirmed his commitment to the tablet business.
The company's subscriber base, however, did grow 35 percent from a year ago to 75 million thanks primarily to expansion overseas. Executives declined to break out how much of the expansion came from outside North America.
RIM expects fourth-quarter per-share earnings of 80 cents to 95 cents a share, on revenue of $4.6 billion to $4.9 billion, with shipments of 11 million to 12 million units.
Co-CEOs Jim Balsillie and Lazaridis struck a more contrite tone on the conference call, and said they would cut their cash compensation down to $1 a year.
Updated at 3:04 p.m. PT: to include additional executive comments and background.
Correction, 1:49 p.m. PT: This story initially misstated RIM's net income for the quarter just ended. The company reported a profit of $265 million, or 51 cents a share.