TORONTO — When Research In Motion Ltd. co-chief executive Jim Balsillie sits down for his regular quarterly call with investors Thursday afternoon, he’s likely to point out how the BlackBerry maker is on the verge of a turnaround and remains “super excited” about its future prospects.
Which is good, because from the outside, observers are openly wondering if things can get much worse for RIM.
With the release of its first quarter earnings Thursday, the company will have a chance to close out what may turn out to be a disappointing quarter and put one of the ugliest periods in its storied history in the rear view mirror.
First there was the embarrassing video of co-chief executive Mike Lazaridis indignantly walking out of a BBC interview in early April, followed by the underwhelming launch of the company’s new BlackBerry PlayBook tablet.
Then on April 28, RIM revealed it was slashing its outlook for the current quarter because of product delays and slower-than-expected sales of its BlackBerry smartphones.
Wall Street investors responded by downgrading RIM’s stock, while some longtime RIM backers began to publicly question the future of the BlackBerry maker and others speculated if perhaps it might be time for a change in leadership at the Waterloo, Ont. company.
Shares of RIM have remained locked in a tailspin since the company announced disappointing fourth quarter results March 24 — the slide accelerating with the updated guidance in April — shedding 43% of their value, erasing billions from the company’s market capitalization and hammering its price-to-earnings ratio to less than six times earnings, down from eight times this year’s earnings earlier this quarter.
Wall Street analysts are anxiously awaiting the company’s earnings call to see if RIM has indeed hit rock bottom and is on the road to recovery, or if product delays and sluggish PlayBook sales may send investors running for the exits.
RIM is also expected to reveal for the first time how many PlayBook tablets it sold in the first six weeks of sales between the launch of the device on April 18 and the end of the quarter on May 28.
RIM hasn’t released sales numbers or projections for the PlayBook, but analysts estimate the company sold anywhere from 250,000 to more than 500,000 of the seven-inch touchscreen tablets in the quarter, adding as much as US$300-million to US$400-million to the company’s top line.
While many analysts believe RIM will meet its renewed guidance of $1.30 to $1.37 per share on the sales of between 13.5 million and 14.5 million BlackBerry smartphones, investors will be watching closely to see if RIM comes in at the high end of its target range, or struggles to make the low end.
Wall Street analysts are, on average, expecting RIM to report revenue of about US$5.5-billion with earnings of $1.40 per share.
Still, it’s clear that RIM is rapidly running out of time to deliver on the promises of a brighter tomorrow it has heaped upon shareholders. The company has yet to issue a firm release date for its new flagship business device, the BlackBerry Bold 9900, while several other possible devices remain nothing more than Internet rumours.
Of course, the question RIM shareholders want answered is whether RIM’s earnings call on Thursday will represent the beginning of a turnaround or simply the beginning of the end of Canada’s technology champion?
Research In Motion Ltd.
Ticker: RIM/TSX
Close: $34.46, down 27¢
Total volume: 3,523,673
Avg. 6-month vol.: 3,191,241
Rank in FP500: 17
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