Mr. Thorsten Heins reports
RESEARCH IN MOTION REPORTS YEAR-END AND FOURTH QUARTER RESULTS FOR FISCAL 2012
Research In Motion Ltd. has released fourth quarter results for the three months and fiscal year ended March 3, 2012 (all figures in U.S. dollars and U.S. generally accepted accounting principles, except where otherwise indicated).
- $2.1-billion in cash, cash equivalents, and short-term and long-term investments at the end of the quarter, which increased by approximately $610-million in the quarter;
- Cash flow from operations of approximately $1.1-billion, up from approximately $900-million in the third quarter;
- Revenue of $4.2-billion, down 19 per cent from the third quarter;
- GAAP net loss in Q4 of $125-million, or 24 cents per share diluted; adjusted net income of $418-million, or 80 cents per share diluted;
- BlackBerry smart phone shipments of 11.1 million in Q4, down 21 per cent from Q3;
- RIM to discontinue providing specific quantitative guidance;
- RIM provides update on organizational changes.
Revenue for the fourth quarter of fiscal 2012 was $4.2-billion, down 19 per cent from $5.2-billion in the previous quarter and down 25 per cent from $5.6-billion in the same quarter of fiscal 2011. The revenue breakdown for the quarter was approximately 68 per cent for hardware, 27 per cent for service, and 5 per cent for software and other revenue. During the quarter, RIM shipped approximately 11.1 million BlackBerry smart phones and over 500,000 BlackBerry PlayBook tablets.
"I have assessed many aspects of RIM's business during my first 10 weeks as chief executive officer. I have confirmed that the company has substantial strengths that can be further leveraged to improve our financial performance, including RIM's global network infrastructure, a strong enterprise offering, and a large and growing base of more than 77 million subscribers. I'm very excited about the prospects for the BlackBerry 10 platform, which is on track for the latter part of calendar 2012. Notwithstanding these strengths and opportunities, the business challenges we face over the next several quarters are significant and I am taking the necessary steps to address them," said Thorsten Heins, president and CEO of Research In Motion. "In addition to delivering the BlackBerry 10 platform and refocusing resources on RIM's key opportunities, such as BlackBerry Mobile Fusion and new integrated service offerings, we will also drive greater operational performance through a variety of initiatives including increased management accountability and process discipline. In parallel, we are undertaking a comprehensive review of strategic opportunities including partnerships and joint ventures, licensing, and other ways to leverage RIM's assets and maximize value for our stakeholders."
The company's GAAP net loss for the fourth quarter of fiscal 2012 was $125-million, or 24 cents per share diluted, compared with GAAP net income of $265-million, or 51 cents per share diluted, in the prior quarter and GAAP net income of $934-million, or $1.78 per share diluted, in the same quarter of fiscal 2011. Adjusted net income for the fourth quarter was $418-million, or 80 cents per share diluted. Adjusted net income and adjusted diluted earnings per share for the fourth quarter exclude the impact of pretax charges of $355-million which are predominantly non-cash ($346-million after tax) for the impairment of goodwill and $267-million ($197-million after tax) for an inventory provision taken primarily on certain BlackBerry7 products.
The total of cash, cash equivalents, and short-term and long-term investments was $2.1-billion as of March 3, 2012, compared with $1.5-billion at the end of the previous quarter, an increase of approximately $610-million from the prior quarter. Cash flow from operations in Q4 was approximately $1.1-billion, up from $900-million in Q3. Uses of cash included intangible asset additions of approximately $260-million and capital expenditures of approximately $190-million.
Fiscal 2012 results
Revenue for the fiscal year ended March 3, 2012, was $18.4-billion, down 7 per cent from $19.9-billion in fiscal 2011. The company's GAAP net income for fiscal 2012 was $1.2-billion, or $2.22 per share diluted, compared with GAAP net income of $3.4-billion, or $6.34 per share diluted in fiscal 2011. Adjusted net income for fiscal 2012 was $2.2-billion, or $4.20 per share diluted. Adjusted net income and adjusted diluted earnings per share for fiscal 2012 exclude the adjustments described above as well as the impact of pretax charges of $54-million ($40-million after tax) to revenue related to the service interruption experienced in the third quarter, $485-million ($356-million after tax) for the PlayBook inventory provision taken in the third quarter and $125-million ($96-million after tax) for the company's cost optimization program that was implemented in the second quarter of fiscal 2012.
Change to guidance practices and outlook
The company expects continued pressure on revenue and earnings throughout fiscal 2013. Due to a desire to focus on long-term value creation and the current business environment, RIM will no longer provide specific quantitative guidance. Some of the factors contributing to this include, continuing weakness in the company's U.S. smart phone business, an increased focus on selling BlackBerry 7 smart phones to grow the subscriber base in advance of the BlackBerry 10 launch, increasing competitive pressure in the company's international markets, and the introduction of certain new lower-tier service pricing initiatives and a higher mix of sales coming from entry-level products.
Organizational and board of directors update
Jim Balsillie, former co-CEO of the company, has resigned as a director on the company's board.
"As I complete my retirement from RIM, I'm grateful for this remarkable experience and for the opportunity to have worked with outstanding professionals who helped turn a Canadian idea into a global success," said Mr. Balsillie.
"On behalf of the board and everyone at RIM, I would like to thank Jim for his 20 years of service to RIM," said Barb Stymiest, chair of RIM's board of directors. "His energy, drive and enthusiasm helped build one of the most successful technology companies of our time."
In addition, David Yach will be retiring from his role as chief technology officer, software, after 13 years with the company, and after four years with the company and following an open dialogue on the future of global operations, Jim Rowan, chief operating officer, global operations, has decided to pursue other interests. The company is currently undertaking a search to hire a single COO with responsibilities to run the company's operations.
"RIM would like to thank David Yach and Jim Rowan for their years of service and many contributions to RIM," said Thorsten Heins, president and CEO. "We wish them well in their future pursuits."
Conference call and webcast
A conference call and live webcast will be held beginning at 5 p.m. ET, March 29, 2012, which can be accessed by dialling 1-800-814-4859 (North America) or 1-416-644-3414 (outside North America), or through your personal computer or BlackBerry PlayBook tablet at the company's website. A replay of the conference call will also be available at approximately 7 p.m. ET by dialling 1-416-640-1917 and entering passcode 4466496 followed by the pound key. A replay of the webcast will be available on your personal computer or BlackBerry PlayBook tablet at the company's website. This replay will be available until 12 a.m. ET on April 12, 2012.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of U.S. dollars, except per share)
Three months ended For the year ended
March 3, Nov. 26, Feb. 26, March 3, Feb. 26,
2012 2011 2011 2012 2011
Revenue $ 4,190 $ 5,169 $ 5,556 $ 18,435 $ 19,907
Cost of sales 2,789 3,759 3,103 11,856 11,082
Gross margin 1,401 1,410 2,453 6,579 8,825
Gross margin 33.4% 27.3% 44.2% 35.7% 44.3%
development 386 369 383 1,559 1,351
administration 650 567 705 2,604 2,400
Amortization 152 146 125 571 438
goodwill 355 - - 355 -
1,543 1,082 1,213 5,089 4,189
from operations (142) 328 1,240 1,490 4,636
income, net 5 2 3 21 8
taxes (137) 330 1,243 1,511 4,644
income taxes (12) 65 309 347 1,233
(loss) $ (125) $ 265 $ 934 $ 1,164 $ 3,411
Basic $ (0.24) $ 0.51 $ 1.79 $ 2.22 $ 6.36
Diluted $ (0.24) $ 0.51 $ 1.78 $ 2.22 $ 6.34
We seek Safe Harbor.