Today marked Research in Motion’s (News - Alert) (RIM) new CEO and President Thorsten Heins’ first earnings call since taking the helm in January. And, he had a lot on his mind as well as a lot to discuss. Performance continued to be depressing, especially as its share in the crucial U.S. market continues to slide. In addition, RIM stated that because of its uncertain circumstances, it will not be providing quarterly guidance on earnings or phone shipments, and a number of long-time hands were shown the door or got enough of the back of the hand to leave under their own power.  All of this saw the stock slide a bit in afterhours trading. 

The numbers

First to the numbers.  The highlights as described in the press release accompanying the call with the analysts were: 

• RIM announced a net loss of $125 million, or 24 cents a share, in the fiscal fourth quarter.
• The company booked writedowns on its BlackBerry (News - Alert) 7 phones and goodwill in the period, ended March 3.
• On an adjusted basis, profit dropped to $418 million, or 80 cents a share, from $934 million, or $1.78, a year earlier. Revenue slumped to $4.19 billion from $5.56 billion.
• Analysts, on average, had expected RIM to earn 81 cents a share on revenue of $4.54 million, according to Thomson (News - Alert) Reuters I/B/E/S.

A bit more granularly, revenue for the fourth quarter of fiscal 2012 was $4.2 billion, down 19 percent from $5.2 billion in the previous quarter and down 25 percent from $5.6 billion in the same quarter of fiscal 2011. The revenue breakdown for the quarter was approximately 68 percent for hardware, 27 percent for service and five percent for software and other revenue. During the quarter, RIM shipped approximately 11.1 million BlackBerry smartphones and over 500,000 BlackBerry PlayBook tablets.

Actually the footnotes in the financials tell the story. While maintaining a still relatively healthy cash position, it was noted for instance that:

• During fiscal 2012, RIM recorded a pre-tax provision of approximately $485 million, $356 million after tax, related to its inventory valuation of BlackBerry PlayBook tablets.  
• During FY 2012, RIM experienced a service interruption which resulted in the loss of service revenue and the payment of service credits totally approximately $54 million.  
• In the fourth quarter of fiscal 2012, RIM recorded a pre-tax provision of approximately $267 million, $197 million after tax, primarily related to its inventory valuation of certain BlackBerry 7 products.

In other words, no matter where one looked, the company was hemorrhaging from a lack of interest in their products as opposed to Apple and Android (News - Alert) devices, a network with issues and as new CEO Heins pointed out, “accountability and responsibility issues.”

What to do?

A few weeks back Heins had stated that he did not think RIM needed a drastic overhaul, which he walked back a bit saying it meant that he was not interested in doing things analysts would like to see, e.g. get out of the hardware business.

In the press release he stated:

“Notwithstanding these strengths and opportunities, the business challenges we face over the next several quarters are significant and I am taking the necessary steps to address them… In addition to delivering the BlackBerry 10 platform and refocusing resources on RIM’s key opportunities, such as BlackBerry Mobile Fusion and new integrated service offerings, we will also drive greater operational performance through a variety of initiatives including increased management accountability and process discipline. In parallel, we are undertaking a comprehensive review of strategic opportunities including partnerships and joint ventures, licensing, and other ways to leverage RIM’s assets and maximize value for our stakeholders.”

He did say he was committed to: a refocus on enterprise; RIM was late to BYOD and it hurt and will be rectified; RIM intends to leverage its BBM;  security and manageability services; lack of LTE (News - Alert) is hurting; and Blackberry 10 is supposed to address all of this. In fact, Heins stated that Blackberry 10 is “on track… prototypes will be in developers’ hands by May, in carrier labs by June and ready for release later in the year. He is working on four areas of focus: 

Leverage the platform:   Astrategic review to drive stakeholder value. 

Metrics and operating excellence: An efficiency push, with critical examination production process and the supply change. He and team understand they must be price competitive, particularly in the low-end where they have good global market share.

Accountability and responsibility: Changing the culture

Realignment of organization: Creating and environment where talented people  feel good about what they do and have a chance to grow

As probably an omen of things to come, the company also announced the following personnel changes: Jim Balsillie, former Co-CEO of the company, has resigned as a director on the company’s board; David Yach will be retiring from his role as CTO, software after 13 years with the company, and Jim Rowan, COO, global operations, has decided to pursue other interests. The new broom is sweeping clean. 

Where RIM will end up as a result of its “transformation” is anybody’s guess. Indeed, how long it can hang onto its base of 77 million customers, especially as contracts come up and others go after their enterprise business, is very problematic. Heins certainly has his work cut out for him.  It is understandable that the company, given all of this uncertainty, does not want to provide guidance.  However, citing troubles in all of its businesses and the way it does business, predicting declining market share and a profits squeeze for the rest of the year, and dismissing key people is an auspicious debut for this team on its first presentation to the financial analysts. The early returns are food for thought.  

Analysts seem to be lloking for an indication of very bold moves.  Many have mentioned getting out of the hardware business entirely, for instance, or selling themselves to one of the big network security companies like McAffee who could leverage the enterprise space which is wedded to RIM for the moment because IT managers love its security.  Heins gave no indication that those kinds of moves are part of the plan, or necessarily even part of his strategic review.  Let's just say that this did not moilify analysts.  In fact, the quarterly performance as well as the call seems like a case where they bounced one off the RIM at a time when investors were looking for a three point shot.