MONTREAL - Research in Motion, the former darling of the smartphone industry, pleaded for understanding from investors as it reported lacklustre financial results and a delay on the product touted as the salvation of the troubled company.
The new generation of BlackBerrys expected to boost flagging revenues won't be in consumers' hands until late next year, RIM's chief executives said on Thursday, after the company's quarterly profit fell short of expectations.
"We ask for your patience and confidence," co-CEO and co-chairman Mike Lazaridis said after RIM reported a third-quarter net profit of only US$256 million, compared to $911 million for the same period last year.
"We wanted to make sure the product we launch in the U.S. has the performance and battery life expectations that consumers are going to be expecting," he said.
RIM has only a 10-per cent share of the lucrative American market, and both Lazaridis and co-CEO Jim Balsillie said the Waterloo, Ont., company will focus on regaining ground south of the border.
"We are not satisfied with the performance of the business in the United States," Balsillie told analysts.
The delay in launching the company's new smartphone is caused by the chipset that will power the new BlackBerry 10, Lazaridis said. The product won't be available until mid-2012.
The company's financial results signalled a continuation of the Icarus-like return to reality for RIM, which has been plagued by a spate of setbacks throughout 2011.
The company sold millions more BlackBerrys in the last year and now has 75 million subscribers around the world, a 35 per cent increase from a year ago. But its net profits have still suffered.
RIM has also been forced to cut 2,000 jobs, has watched as its tablet landed on the market with a thud and had to navigate a worldwide BlackBerry outage that cost it more than $50 million in revenues and tarnished its reputation.
It has come under fire from investors, shares have tanked on the markets and calls are mounting for RIM to be sold or restructured.
Balsillie said he and Lazaridis, two of the company's biggest shareholders, have asked to have their salaries cut to $1 each immediately as they work to turn the company around.
"The last few quarters have been some of the most trying in the recent history of the company," Balsillie said.
RIM's financial forecasts projected continued erosion of its business.
The company shipped more than 14 million BlackBerrys in the just completed third quarter, but expects to sell between 11 million and 12 million in the current fourth quarter.
That weak outlook pushed its shares down nearly seven per cent in after-market trading. RIM was down $1, or 6.6 per cent, to US$14.13.
Yet the company appears to be selling more lower-priced devices globally, which is eroding profitability and revenues.
While a leader in a number of overseas markets, RIM has seen its marketshare go steadily down in the U.S. in the last few years as consumers have shunned its devices for Internet and app-friendly iPhone and Android smartphones.
RIM said its next-generation BlackBerry phones will be ready to run on Long-Term Evolution networks in the United States that are geared for streaming video and other data services that consumers increasingly want.
Balsillie also said some of RIM's decisions, such as the delay in launching the new BlackBerrys, may impact its financial results in the short term.
On Thursday, Jaguar Financial Corp. (TSX: JFC), a minority shareholder of the company, repeated earlier calls for a change in management structure and for RIM to be sold -- either as it is or in separate parts.
"At this point we believe investors have lost faith in the ability of the RIM management team to carry out a proper game plan to restore value," said Vic Alboini, chairman and CEO of Jaguar.
Edward Jones technology analyst Bill Kreher said it will be difficult next year for RIM to catch up with Apple and Android smartphones.
"Investors were hoping to hear the phones would be out sooner rather than later and it appears that RIM has yet again misexecuted and missed the expected window," Kreher said from St. Louis, Mo.
The delay will affect RIM's revenues and "push them into the back half of the year."
"We have serious concerns about their long-term growth prospects."
He called the $1 salaries that Balsillie and Lazaridis will now earn a "nice gesture," but added it's going to take more than that to turn around the company.
In its financial report, the smartphone maker, which keeps its books in U.S. dollars, said its net profit amounted to 51 cents per share.
Excluding one time items, including a writedown to the value of its inventory of PlayBook tablets, the company said it earned $667 million or $1.27 per share in the quarter.
Revenue for what was the company's third quarter totalled $5.17 billion, down from $5.5 billion.
The average analyst estimates compiled by Thomson Reuters had projected earnings of $1.15 per share and $5.26 billion in revenue.
RIM had warned investors that it will book a US$485-million charge on the cost of discounting the price of PlayBooks by more than half to help boost sales.
Other than the PlayBook tablet, RIM has few new products in the marketplace. It launched new versions of the BlackBerry Bold and Curve in late summer.
