Research in Motion Follows Up Positive Developer's Conference by Beating Analyst Estimates on Earnings

Today, Research in Motion (RIM) reported results for its fiscal Q2 2013 quarter, which ended on September 30, 2012. As expected RIM posted a third straight quarterly loss, but the company did manage to come in with numbers that were a hair's thickness better than analysts were expecting. For a company that remains financially challenged at a significant level this was, in fact, good news. Coupled with its developer conference and details for BlackBerry 10, relatively speaking the company has had a pretty good week.

As I write this at 5:00 p.m. EDT, just as the formal earnings call is beginning, the stock has jumped to $8.78 in after hour trading, a 23 percent increase, which adds a bit to the pop the stock received on Tuesday when RIM stated that it had added two million new subscribers to its roll, bringing total subscriptions up to an unanticipated 80 million at a time when analysts were expecting a decrease in subscribers.

The net $235 million loss compares to net income of $329 million, or 63 cents a share for the same period a year earlier. On an operating basis, RIM lost 27 cents a share. Revenue fell to $2.9 billion, a substantial drop from last year's disappointing $4.2 billion. However - and it is a big "however" - revenue was up $100 million from the previous quarter's $2.8 billion. Consensus analyst revenue projections for RIM's Q2 2012 was $2.5 billion, which the company beat by $400 million. The revenue breakdown for the quarter was approximately 59 percent for hardware, 36 percent for service and five percent for software and other revenue. During the quarter, RIM shipped 7.8 million BlackBerry smartphones and approximately 260,000 BlackBerry PlayBook tablets.

Cash, cash equivalents, short-term and long-term investments increased to $2.2 billion, an improvement in overall cash position from $2.1 billion that suggests RIM will be able to stay in the game for the foreseeable future.

The numbers for the quarter do not mean, by any stretch of the imagination, that the company is out of the woods on survival. Fiscal Q3 2012 will fall just before RIM moves ahead with the release of BlackBerry 10 and RIM's new devices, which strongly suggests that next quarter's numbers will be dismal.

Although RIM demonstrated a lot of very interesting operating system insights during the developer conference, there were absolutely no hints as to what the next-generation of actual hardware will be. Hardware is what will drive RIM's future no matter how good the operating system is. Will RIM deliver an amazing device or will it fall flat as Nokia has with the Lumia 920? BlackBerry 10 will only have a chance to shine if users become excited by the actual hardware. We can only hope that RIM will deliver something amazing here.

With 80 million users in hand the company can, at the least, look forward to a substantial chorus of good words and recommendations from some percentage of those users who will be in a position to immediately upgrade. But we need to keep in mind in terms of tempering enthusiasm, that BlackBerry 10 will only run on new devices. RIM won't see a wholesale download of BlackBerry 10 (as Apple) always sees with iOS to older devices) so there has to be a new BlackBerry 10 device sale in order to ensure that BlackBerry 10 gets into the hands of any user, including any of the 80 million faithful.

That scenario puts a huge burden on the success of the devices themselves. There isn't any more to say and now the ball is in RIM's court to deliver on the devices. Given what we've seen of the new OS, it is very possible that RIM will do so. We look forward to this being the case.

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