RIM Fee Change Makes BlackBerry 10 Do or Die
NEW YORK ( TheStreet) - Research In Motion's (RIMM) third quarter earnings were expected to be of secondary importance to management commentary and the company's forecasts headed into a pivotal quarter that will see the launch of the much-anticipated BlackBerry 10.
Still, Research In Motion was able to throw a big curveball to investors and analysts on Thursday after beating third quarter earnings forecasts.
The Waterloo, Ontario-based BlackBerry maker announced a change in the way it will charge users service fees, putting a putting a key source of revenue - that drove over 36% of the company's $2.7 billion in sales -- at risk. The announcement and a lack of specifics on how the change will impact earnings precipitated a 20% reversal in RIM's shares in after-hours trading.
Initial Thursday aftermarket share gains in excess of 10% now stand as 20%-plus losses in Friday afternoon trading.Analysts reacted negatively to the policy change and raised new risks for the struggling mobile handset maker, as it tries to compete against Apple (AAPL), GOOG (GOOG) and Microsoft (MSFT)-powered smartphone and tablet devices. "RIMM reported better revenue and a smaller than expected operating loss amid low expectations. Its cash balance again grew through smart working capital management," wrote Sterne Agee analyst Shaw Wu, in reaction to RIM's earnings figures. Still, the numbers were overshadowed by the pricing strategy shift, which CEO Thorstein Heins unveiled on the company's earnings call. "
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV