Even though it posted another round of losses and weakened revenue, BlackBerry maker Research In Motion delivered a surprisingly positive second-quarter earnings report on Thursday that wasn't as bad as many analysts expected.
The technology company, which is based in Waterloo, Ont., and reports in U.S. dollars, posted a quarterly loss of $235 million or 45 cents per diluted share.
The results compare with a profit of $329 million or 63 cents per share a year ago.
For many companies these results would be dismal, but for RIM - which has been struggling with countless obstacles including the delay of its new smartphones to massive layoffs - the fact that its bad news wasn't worse proved encouraging to some.
Much of the optimism was gleaned from adjusted earnings per share, which filter out one-time costs like expenses related to job reductions and cost cuts.
RIM's adjusted loss was $142 million or 27 cents per share, far less dismal that analyst expectations of a loss of 47 cents per share, according to a poll from Bloomberg. Despite impressing investors, RIM still has many challenges ahead. Its revenues were notably weaker, down 31 per cent to $2.87 billion from $4.17 billion a year ago.
RIM said it shipped about 7.4 million BlackBerrys during the quarter, down from 7.8 million in the first quarter, showing that interest in its existing models is starting to wane.
However, Jeffries analyst Peter Misek was surprised that RIM managed to keep so many customers interested.
"Management sold more Blackberries than we thought," he noted.
RIM shipped more PlayBook tablets in the quarter, at 260,000 units compared with 130,000 in the first quarter.
The results show that RIM is making progress as it transitions to its next generation of BlackBerry smartphones and completes its cost reduction plan, said chief executive Thorsten Heins.
"While this transition is challenging and the competitive environment tough, we have made steady progress in these areas in this quarter," Heins said.
"Our teams are very focused on maintaining a strong financial position as we go through this transition."
Shares in RIM were up 19 per cent to $8.54 in after-hours trading in New York. The company's shares rose eight cents to close at $6.96 at the Toronto Stock Exchange on Thursday.
Other encouraging signs came from the company's subscriber count, which grew to 80 million at the end of the quarter, an increase of about two million subscribers from the previous three months.
Cash reserves increased by $100 million to $2.3 billion as of Sept. 1. Analysts had been concerned that the company would have to dive into its savings to survive during this period before its new product launch.
"Against low expectations, management did an excellent job in protecting and actually growing its two key strategic assets: its cash pile and its subscriber base," said analyst Kevin Smithen of Macquarie Capital.
RIM still faces pressure in its cash flow from operations, which was down significantly to about $432 million in the quarter, compared with $710 million in the first quarter.
What was missing from RIM's earnings report was any further detail on when the company would launch its new BlackBerry phones and operating system, expected sometime early next year.
So far consumers haven't seen the new BlackBerry devices, but on Thursday footage purported to be of the touchscreen and keyboard devices briefly appeared on video-sharing website Vimeo before quickly being pulled down. RIM would not immediately comment on the video.
In its outlook, RIM said it expects there will be continued pressure on operating results for the remainder of its financial year.
