Research In Motion Slammed After Mixed Report
Analysts had forecast the company would earn 68 cents a share sans expenses in both the first and second quarters, on $454.52 million and $495.24 million in sales in the first and second quarters, respectively.
The company announced last month that it had agreed to pay $450 million
The tax gain recorded is related to tax credits the company received for losses in past quarters. Accounting rules had prevented the company from fully recognizing those credits in the past because of its history of losses and the uncertainty surrounding its litigation with NTP, according to company CFO Dennis Kavelman.
Because the company has resolved the NTP matter and projects ongoing profits, RIM was able to recognize those tax credits as a gain on its income statement and believes that it will be able to use them in the future.In the quarter, RIM saw better-than-expected sales of its software, but weaker-than-expected sales of its hardware, Kavelman said. Indeed, hardware sales constituted 69% of the company's total revenue, down from 71% in the previous quarter. The shift was a result of several factors, Kavelman said. On the hardware side, RIM's carrier partners moved to reduce their inventory of devices. As a result, RIM shipped 242,000 phones and pagers in the quarter, down from 313,000 in its third quarter. Carriers are running their businesses conservatively, Kavelman said. After having trouble with backlogs of companies' products, they are cutting back their entire inventory of smartphones and pagers, he said. "We're getting tarred with a broad brush," he said, adding that he thinks "this is a short-term thing."
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