Home / Channel / RIM shares drop 9% after company call

RIM shares drop 9% after company call

Research In Motion CEO Thorsten Heins has shocked investors yesterday after he said that RIM planned to make major changes in its highly profitable services  business.

Forbes said he brought this up on the company post earnings conference call. This caused company shares to drop 9%.

Forbes published “As the earnings call progressed it became clear that RIMM is going to receive much lower rates on its highly profitable services (on the new BB10 products) causing the stock to drop [as much as] 12% after hours,” Citigroup analyst Jim Suva wrote in a research note this evening. “While this was a major focus for the Q&A during the call, RIMM was unable to quantify the risk.”

Suva added that the company provided “minimal details” on its shifting services strategy, but he advised investors not to threat this development lightly, given that services were about 35% of total sales and about 75% of gross profits in the latest quarter. He also notes that the BlackBerry subscriber based slipped to 79 million from 80 million in the quarter, the first sequential decline in the past decade.”

Peter Minsk, Jefferies analyst fears that RIM will not receive monthly services revenue for consumer BB10 subscribers. He said “RIM will offer tiered services, with enterprises who only need basic email connectivity paying a lower monthly ARPU. Enterprises who need security and device management capability will pay RIM’s traditional ARPU rates. Management would not comment on the consumer side, but we believe their statement refers to some BB10 consumer subscribers no longer generating service revenues.”

Kitguru says: 2013 is the make or break year for RIM

Become a Patron!

Check Also

Samsung starts mass production of LPDDR5 Multichip Package memory

Samsung has begun to mass-produce LPDDR5 uMCP (UFS-based Multichip Package) memory. Aimed at mid to …