RIM Dives on Fee Changes, Subscriber Loss

by Tom Taulli | December 21, 2012 10:39 am

Over the past three months, the stock of Research In Motion (NASDAQ:RIMM[1]) has staged a stunning comeback, with a return of nearly 80%. But with RIM’s latest earnings report, investors have lost their confidence again. In early Friday trading, the shares are off 18% to $11.58.

True, there was some good news in the report. RIM’s adjusted loss of 22 cents was better than the Street forecast of 35 cents[2], and its cash position came to $2.9 billion, up from $2.3 billion in the prior quarter.

But all this wasn’t enough. In the quarter, RIM lost 1 million subscribers, bringing the total down now to 79 million. All in all, the competition from Apple‘s (NASDAQ:AAPL[3]) iOS and Google’s (NASDAQ:GOOG[4]) Android remains intense.

What’s more, RIM will make major changes to the pricing of its services business, which accounts for a third of overall revenues. If there’s a material drop, it could be trouble for the cash flows.

Essentially, RIM is placing a mega-bet on its launch of its BlackBerry 10[5] smartphone operating system and devices, which hit the market on Jan. 30. If it’s not a hit, the stock will likely see further deterioration.

Tom Taulli runs the InvestorPlace blog IPO Playbook[6], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook[7]” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders[8].”  Follow him on Twitter at @ttaulli[9]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  2. adjusted loss of 22 cents was better than the Street forecast of 35 cents: http://online.wsj.com/article/SB10001424127887323277504578191773225452126.html
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. launch of its BlackBerry 10: http://investorplace.com/2012/11/is-rimm-still-a-buying-opportunity/
  6. IPO Playbook: http://investorplace.com/ipo-playbook/
  7. How to Create the Next Facebook: http://www.amazon.com/gp/product/1430246472/ref=s9_simh_gw_p14_d0_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=0GRB6ZMCTYDZVNG7Q7NV&pf_rd_t=101&pf_rd_p=470938811&pf_rd_i=507846
  8. High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders: http://goo.gl/pR2F3
  9. @ttaulli: https://twitter.com/ttaulli

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