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RIM success in 4Q, but too early to declare win

Published on NewsOK Modified: March 28, 2013 at 5:48 pm •  Published: March 28, 2013
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Bill Kreyer, a tech analyst for Edward Jones, called the decline "pretty alarming."

"This is going to take a couple of quarters to really see how they are doing," Kreyer said.

The company also announced that co-founder Mike Lazaridis will leave the company. He and Jim Balsillie had stepped down as co-CEOs in January 2012 after several quarters of disappointing results, but Lazaridis said he stayed on as vice chairman and a board director to help new CEO Thorsten Heins and his team with the launch of the BlackBerry 10. With that underway, Lazaridis plans to retire May 1. He said he has no plans to sell his 5.7 percent stake in the company.

In an interview with The Associated Press, Lazaridis said the board wanted both him and Jim to stay, but Lazaridis decided "it was the right time" to leave.

Heins, formerly RIM's chief operating officer, has spent the past year cutting costs and steering the company toward the launch of new BlackBerry 10 phones. Lazaridis said Heins has done an excellent job completing the BlackBerry 10 system and launching it around the world.

"The results speak for themselves," Lazaridis said.

Sterne Agee analyst Shaw Wu said RIM returned to profitability much sooner than expected. He said it was driven by higher gross margins, cost reductions and the sale of the new BlackBerry.

In a research note, Wu wrote that RIM "is here to stay with stabilization in its business and balance sheet" but said the key question remains whether the company can maintain momentum in an industry dominated by Apple and Google's Android software.

The Z10 has received favorable reviews since its release, but the launch in the critical U.S. market was delayed until late this month as wireless carriers completed their testing.

A version with a physical keyboard, called the Q10, won't be released in the U.S. for two or three more months. The delay in selling the Q10 complicates RIM's efforts to hang on to customers tempted by the iPhone and a range of devices running Android. Even as the BlackBerry has fallen behind rivals in recent years, many users have stayed loyal because they prefer a physical keyboard over the touch screen on the iPhone and most Android devices.

RIM, which is changing is formal name to BlackBerry, said it expects to break even in the current quarter despite increasing spending on marketing by 50 percent compared with the previous quarter.

"To say it was a very challenging environment to deliver improved financial results could well be the understatement of the year," Heins said during a conference call with analysts.

Heins said more than half of the people buying the touch-screen Z10 were switching from rival systems. The company didn't provide details or specify whether those other systems were all smartphones. He said the Q10 will sell well among the existing BlackBerry user base. It's expected in some markets in April, but not in the U.S. until May or June.