MONTREAL - The Icarus-like return to reality for Research in Motion, once the high-flying darling of Canada's high-tech sector, showed no signs of slowing Thursday as the troubled smartphone maker reported another quarter of dramatically lower profits.
The company sold millions more BlackBerrys in the last year and now has 75 million subscribers around the world, a 35 per cent increase from a year ago. But net profits plunged to US$265 million, a far cry from $911 million for the same period last year.
The company has had a difficult 2011, cutting 2,000 jobs, seeing its tablet land on the market with a thud and suffering a worldwide BlackBerry outage that tarnished its reputation.
It has come under fire from investors, shares have tanked on the markets and calls are mounting for RIM to be sold or restructured.
Jim Balsillie said he and co-CEO Mike Lazaridis, the company's two largest shareholders, told investors they have asked the board to reset their salaries to $1 immediately as they work to turn the company around.
"The last few quarters have been some of the most trying in the recent history of the company," Balsillie told a conference call after markets closed.
RIM has called for patience, but its financial forecasts Thursday projected continued erosion of its business. The company shipped more than 14 million BlackBerrys in the just completed third quarter but expect to sell between 11 million and 12 million in the current fourth quarter.
That weak outlook pushed its shares down nearly seven per cent in after-market trading. RIM was down $1, or 6.6 per cent, to US$14.13.
RIM has grown rapidly by expanding in emerging economies -- India, China and especially Indonesia, a country of nearly 250 million where BlackBerrys hold a dominant market share.
Yet the company appears to be selling more lower-prices devices, which is eroding profitability and revenues.
In RIM's earnings report, Balsillie and Lazaridis acknowledged the company's disappointing financial results and asked investors to be patient.
"RIM continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance," they said after stock markets closed.
In its financial report, the smartphone maker, which keeps its books in U.S. dollars, said its net profit amounted to 51 cents per share.
That was down from $911 million or $1.74 per share a year ago.
Excluding one time items, including a writedown to the value of its inventory of PlayBook tablets, the company says it earned $667 million or $1.27 per share in the quarter.
Revenue for what was the company's third quarter totalled $5.17 billion, down from $5.5 billion.
Balsille and Lazaridis said the company continues to asses its operations to improve efficiency and performance.
"It may take some time to realize the benefits of these efforts and the platform transition that we are undertaking, but we continue to believe that RIM has the right set of strengths and capabilities to maintain a leading role in the mobile communications industry."
The average analyst estimates compiled by Thomson Reuters had expected earnings of $1.15 per share and $5.26 billion in revenue.
RIM had warned investors that it will book a US$485-million charge on the cost of discounting the price of PlayBooks by more than half to help boost sales.
As well, the company had warned that it expected about US$50 million in lost revenues from the massive outage in October that affected millions of BlackBerry email and text users around the world.
Other than the PlayBook tablet, RIM has few new products in the marketplace. It launched new versions of the BlackBerry Bold and Curve in late summer but won't have the new generation of BlackBerrys with a new, updated operating system out until early next year
On Thursday, Jaguar Financial Corp. (TSX: JFC), a minority shareholder of the company, repeated earlier calls for a change in management structure and for RIM to be sold -- either as it is or in separate parts.
"At this point we believe investors have lost faith in the ability of the RIM management team to carry out a proper game plan to restore value," said Vic Alboini, chairman and CEO of Jaguar.
"Unless the independent directors push to replace management or change RIM's strategic focus, Jaguar believes that the road map to value restoration lies in a sale of RIM whether as a whole or in separate parts," he said.
RIM cut about 2,000 jobs, or 11 per cent of its workforce, earlier this year to trim costs.
