TORONTO (AP) — Research In Motion Ltd., once written off as dead amid fierce competition from more modern mobile devices such as the iPhone, surprised Wall Street Thursday by returning to profitability and shipping more BlackBerry 10 phones than expected in the most recent quarter.
It will take several quarters, though, to know whether RIM is on a path toward a successful turnaround. RIM just entered the crucial U.S. market with the new phone last week. And despite selling a million BlackBerry 10 phones in other countries, RIM lost subscribers for the second consecutive quarter.
Thursday's earnings report provided a first glimpse of how the BlackBerry 10 system, widely seen as crucial to the company's future, is selling internationally and in Canada since its debut Jan. 31. The 1 million new touch-screen BlackBerry Z10 phones were above the 915,000 that analysts had been expecting for the quarter that ended March 2. Details on U.S. sales are not part of the fiscal fourth quarter's financial results because the Z10 wasn't available there after the quarter ended.
Investors appeared mostly happy with the financial results. RIM's stock rose as high as $15.55 as trading opened Thursday after the release of results, though it saw a sharp drop in the final hour of trading and closed at $14.45, down 12 cents.
Many analysts had written RIM off last year, but now believe the Canadian company has a future.
"I thought they were dead. This is a huge turnaround," Jefferies analyst Peter Misek said from New York.
Misek said the Canadian company "demolished" the numbers, especially its gross margins. RIM reported gross margins of 40 percent, up from 34 percent a year earlier. The company credited higher average selling prices and higher margins for devices.
"This is a really, really good result," Misek said. "It's off to a good start."
The new BlackBerry 10 phones are redesigned for the new multimedia, Internet browsing and apps experience that customers are now demanding.
The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before the iPhone debuted in 2007 and showed that phones can handle much more than email and phone calls. RIM faced numerous delays modernizing its operating system with the BlackBerry 10. During that time, it had to cut more than 5,000 jobs and saw shareholder wealth decline by more than $70 billion.
In the most recent quarter, RIM earned $98 million, or 19 cents a share, compared with a loss of $125 million, or 24 cents a share, a year earlier. After adjusting for restructuring and other one-time items, RIM earned 22 cents a share. Analysts surveyed by FactSet had been expecting a loss of 31 cents.
Revenue fell 36 percent to $2.7 billion, from $4.2 billion. Analysts had expected $2.82 billion.
RIM shipped 6 million BlackBerry devices, including 1 million on the new system. But RIM lost about 3 million subscribers to end the quarter with 76 million. It's the second consecutive quarterly decline for RIM, whose subscriber based peaked at 80 million last summer.