RIM surprises with cash boost and resilient sales; shares surge
By Euan Rocha
TORONTO (Reuters) - Research In Motion Ltd reported a narrower-than-expected loss on Thursday and the struggling BlackBerry maker bolstered its cash reserves, sparking optimism ahead of the launch of its make-or-break line of next-generation smartphones.
Shares of RIM surged 20 percent in after-hours trade on indications the company will have plenty of cash to ramp up production of its new BlackBerry 10 devices and mount a robust marketing campaign for the revamped line, due in early 2013.
It was the biggest jump for the stock since a 50 percent surge in December 2003, underlining the importance of the BB10 launch. The company, which has fallen far behind its rivals in a smartphone market it once dominated, has staked its future on the BB10 and its completely redesigned operating system.
RIM's second fiscal quarter brought shareholders additional glimmers of hope, a break from a succession of dreadful quarterly reports. The company not only generated more revenue than Wall Street had forecast but it topped expectations on the number of devices shipped in the period, which ended on September 1.
"It's very impressive," said Jefferies & Co analyst Peter Misek. "I didn't expect they could execute on the business given the models they have in the market, but they obviously did really well in emerging markets."
RIM was also able to bolster its cash pile by collecting on cash owed to the company, drawing down inventories and cutting costs.
A one-time smartphone pioneer, RIM has failed to keep pace with rivals such as Apple Inc and Samsung Electronics Co, and its stock price has tumbled about 70 percent over the past year while its market share shriveled. Continued...