RIM shares jump after hours following results

U.S.-traded shares Research In Motion rallied in after-hours trading on Thursday after the BlackBerry maker posted a smaller-than-expected quarterly loss excluding one-time items.
The company's Nasdaq-listed shares were last up 8 percent at $15.25, extending a 3.6-percent gain in regular trading hours. They are also on track to close with a fourth straight month of gains.
The stock has more than doubled since the start of September, including a more than 46 percent gain in November, but was still negative for the year at the close on Thursday.

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RIM posts smaller than expected loss; shares surge

Research In Motion reported a smaller-than-expected quarterly loss on Thursday and boosted its cash cushion, sending its shares soaring more than 7 percent.
But the struggling BlackBerry maker also recorded the first-ever decline in its subscriber base, barely a month before the crucial launch of the new BB10 smartphone line.
RIM reported a loss of $114 million or 22 cents a share, excluding one-time items. Analysts, on average, had forecast a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.
RIM shares, which closed 3.6 percent higher at $14.12 on Thursday, rose 7.6 percent after the closing bell in the United States to $15.20, as investors cheered the surge in RIM's cash pile ahead of next month's launch of the new BB10 devices.
RIM built its cash cushion up to $2.9 billion in the quarter, from $2.3 billion in the prior period. RIM will need the funds to manufacture and promote its new line of products ahead of the January 30 launch.
The Waterloo, Ontario-based company hopes to reinvent itself and revive its fortunes with the BlackBerry 10. It also reported a surprise net profit in its fiscal third-quarter, reflecting a one-time tax gain from restructuring of its international operations.
In the period ended December 1, RIM reported net income of $9 million, or 2 cents a share. That compared with a year-ago profit of $265 million, or 51 cents.
RIM said its subscriber base fell to about 79 million in the quarter from about 80 million in the period ended September 1.
The decline is a disconcerting marker in the history of RIM, which virtually invented the concept of on-the-go email. In recent years, RIM's user base has grown, even as the BlackBerry lost ground in North America and Europe, boosted by gains in emerging markets.
The company, whose aging line of BlackBerry devices has lost ground to the likes of Apple Inc's iPhone and a slew of devices powered by Google Inc's Android operating system, said it shipped 6.9 million smartphones in the quarter.

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This subscriber loss may haunt RIM in coming months

RIM’s (RIMM) share price popped by 8% soon after it released its earnings, buoyed by positive sales and earnings surprises. The fact that RIM managed to beat expectations on both fronts is a real achievement. The company has been able to manage the 50% annualized decline in device volume a lot more gracefully than most investors expected. The adjusted EPS loss of $0.22 was much smaller than the $0.36 loss Wall Street expected. However, there is a fly in the ointment the size of a hamster — for the first time ever, the base of BlackBerry subscribers has started shrinking globally. Wall Street expected RIM to add 300,000 new subscribers. Instead, the company lost about a million, with the number of total subscribers dipping from 80 million to 79 million in three months.
[More from BGR: RIM’s first BlackBerry 10 smartphone to be called the ‘Z10′]
The key surprise in RIM’s summer quarter was the company’s ability to expand its subscriber base even as its sales in the United States and the United Kingdom markets tanked. That was one of the factors that underpinned the strong share price rebound during the autumn. And the key surprise in RIM’s November quarter is the new trend of subscriber base decline. What has been crucially important for RIM over the past dark year is the rock solid loyalty of its emerging market customers in South Africa, Nigeria, Indonesia, Malaysia, the Philippines and Brazil. Those markets have enabled RIM to beat subscriber base estimates for four quarters running, even as American and British consumers abandoned the brand.
[More from BGR: RIM beats estimates in Q3, but subscriber base shrinks]
That loyalty may now be wobbling. Nokia (NOK) launched a broad range of very cheap Asha QWERTY models in the beginning of 2012 and has been pushing these models aggressively into Africa and Asia over the past two quarters. Samsung (005930) has moved into bargain basement level with its own Android QWERTY devices dropping to the 5,000 rupee level and below in India. This pincer move may have started to take its toll on RIM.
RIM added 2 million subscribers during the August quarter and then lost 1 million in the November quarter. It’s hard to estimate precise rates, because RIM refuses to give out detailed information but this could represent a swing from 9% annualized growth to 4% annualized decline in just three months.
In a couple of months, RIM will launch a new range of Blackberry models with a spanking new OS and appealing revamp of the Blackberry Messenger software. But the first models coming out will be expensive and aimed at business users. The low-end erosion that the autumn subscriber loss indicates may bite deep during the February and May quarters. What RIM really needs badly is a range of appealing new QWERTY devices priced well below $200 in retail. It is not clear when these devices will arrive. Much hinges now on whether RIM has an aggressive low-end strategy in place or whether the company will chase the dream of reconquering its high-end prominence.
Messaging apps like 2go and WhatsApp are growing at breakneck speed in Africa and Asia — they knit together users of various platforms from iOS to Android to S40 to Blackberry. The subscriber contraction of the November quarter indicates that RIM needs to somehow revive the emerging market interest in BBM very soon. The short squeeze that started in October is still driving RIM’s share price higher. But over the coming weeks we may well see investors begin to ponder the year 2013 subscriber trajectory.

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RIM loses BlackBerry subscribers for first time

TORONTO (AP) — Research In Motion's stock plunged in after-hours trading Thursday after the BlackBerry maker said it plans to change the way it charges fees.
RIM also announced that it lost subscribers for the first time in the latest quarter, as the global number of BlackBerry users dipped to 79 million.
In a rare positive sign, the Canadian company added to its cash position during the quarter as it prepared to launch new smartphones on Jan. 30. The new devices are deemed critical to the company's survival.
RIM's stock initially jumped more than 8 percent in after-hours trading on that news, but then fell $1.48, or 10.4 percent, to $12.65 after RIM said on a conference call that it won't generate as much revenue from telecommunications carriers once it releases the new BlackBerry 10 platform.
RIM is changing the way it charges service fees, putting an important source of revenue at risk. RIM CEO Thorsten Heins said only subscribers who want enhanced security will pay fees under the new system.
"Other subscribers who do not utilize such services are expected to generate less or no service revenue," Heins said. "The mix in level of service fees revenue will change going forward and will be under pressure over the next year during this transition."
RIM's stock had been on a three-month rally that has seen the stock more than double from its lowest level since 2003.
But Mike Walkley, an analyst with Canaccord Genuity, said BlackBerry 10 will change RIM's services revenue model dramatically. He said that instead of getting about $6 per device each month from carriers and users RIM could get as little as zero.
"That's what turned the stock from being up 10 percent to being down 10 percent," Walkley said. "That's been part of our worry. How do they come back with a new platform and get carriers to continue to share the higher revenue —which sounds like they are not going to— and then subsidize the phone to make it affordable for consumers and enterprises."
"People are seeing that the services revenue has a lot of risk to it now with the BlackBerry 10 migration."
Three months ago, RIM had 80 million subscribers. Analysts said the loss of 1 million subscribers was expected. Once coveted symbols of an always-connected lifestyle, BlackBerry phones have lost their luster to Apple's iPhone and phones that run on Google's Android software.
RIM is banking its future on its much-delayed BlackBerry 10 platform, which is meant to offer the multimedia, Internet browsing and apps experience that customers now demand.
"We believe the company has stabilized and will turn the corner in the next year," Heins said. He noted that the company's cash holdings grew by $600 million in the quarter to $2.9 billion, even after the funding of all its restructuring costs. RIM previously announced 5,000 layoffs this year.
Heins said subscribers in North America showed the largest decline, but said there is growth overseas.
Colin Gillis, an analyst with BGC Financial, said before the conference call that the company bought itself more time.
"It doesn't mean (BlackBerry) 10 will gain traction. A lot of people said 10 would be DOA, but I don't think that's going to be the case," he said.
Jefferies analyst Peter Misek also earlier called the results better than expected, noting that RIM added a significant amount of cash. RIM will need the money to advertise the new BlackBerrys and operating system.
Misek also called it a positive development that RIM said there would not be another delay to BlackBerry 10.
"The success or failure of this company will be on BlackBerry 10," Misek said.
RIM posted net income of $14 million, or 3 cents per share for its fiscal third quarter, which ended Dec. 1. That compares with a profit of $265 million, or 51 cents per share, in the same quarter a year ago.
The latest figure includes a favorable tax settlement. Excluding that adjustment, RIM lost 22 cents per share. Analysts polled by FactSet were expecting a wider loss of 27 cents.
RIM reported revenue of $2.7 billion, down 47 percent from a year ago.

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RIM shares slump as service revenue, subscriber concerns weigh

Research In Motion shares tumbled more than 10 percent on Thursday after the company reported the first ever decline in its subscriber numbers and outlined plans to transform the way it charges for its BlackBerry services.
RIM, which hopes to revive its fortunes and reinvent itself via the launch of a brand new line of BlackBerry 10 devices next month, caught investors off-guard on its quarterly conference call, when it said it plans to alter its service revenue model - a move that will pressure the high-margin business that accounts for about a third of RIM's sales.
"RIM provided few details regarding the economics of these changes, thus adding a large cloud of uncertainty to the primary driver of its profitability, which we view as especially worrisome given risks already surrounding the firm's massive BlackBerry 10 transition," said Morningstar analyst Brian Colello.
Those subscribers who need enhanced services like advanced security will pay for these services, while those who do not use such services will generate much lower to no service revenue, RIM Chief Executive Thorsten Heins told analysts and investors on a conference call on Thursday.
"I want to be very clear on this. Service revenues are not going away, but our business model and service offerings are going to evolve ... The mix in level of service fees revenue will change going forward and will be under pressure over the next year," cautioned Heins.
The news startled investors, who had earlier in the evening pushed RIM's stock more than 7 percent higher in post-market trading, after the company reported a narrower-than-expected quarterly loss and said it boosted its cash cushion ahead of next month's crucial launch of the BlackBerry 10 smartphone.
RIM's shares have for weeks been on a tear as optimism around BB10 has grown. Following RIM's surprise announcement on service revenues, however, the stock ended 9 percent lower at $12.85 in trading after the closing bell.
Analysts also expressed concern about the decline in RIM's subscriber base.
"The early reaction was probably just 'Hey, numbers looked OK, better loss, the cash flow was good' but if you know the company, you're looking at the subscriber base falling off," said Mark McKechnie at Evercore Partners in San Francisco.
CASH BALANCE
One reason the shares rose earlier was RIM managed to build up its cash cushion to $2.9 billion from $2.3 billion in the previous quarter.
Analysts have been keeping a sharp eye on the size of RIM's cash pile, as RIM will need the funds to manufacture and effectively promote BlackBerry 10 in a crowded market.
RIM is counting on the new line to claw back market share lost in recent years to the likes of Apple Inc's iPhone and a slew of devices powered by Google Inc's Android operating system.
"They've done a great job at generating cash," said Raymond James analyst Tavis McCourt in Nashville. "They're certainly in a much better position than they were three or four quarters ago."
The Waterloo, Ontario-based company said it is now testing its BB10 devices with more than 150 carriers - up from about 50 carriers as of the end of October. RIM expects more carriers to come on board ahead of the formal launch of BB10 on January 30.
Positive feedback from developers and carriers around RIM's new BlackBerry 10 devices has buoyed the stock in the last three months. Despite the plunge in RIM's share price on Thursday, the stock has more than doubled in value the last three months.
SMALLER-THAN-EXPECTED LOSS
On an operating basis, RIM fared a little better than Wall Street had expected. It reported a loss of $114 million or 22 cents a share, excluding one-time items. Analysts, on average, had forecast a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.
RIM also reported a surprise net profit of $9 million, or 2 cents a share, for its fiscal third quarter ended December 1, on the back of a one-time income tax related gain. That compared with a year-ago profit of $265 million, or 51 cents.
RIM said it shipped 6.9 million smartphones in the quarter, even as its subscriber base fell to about 79 million in the quarter from about 80 million in the period ended September 1.
In recent years, RIM's user base has grown, even as the BlackBerry lost ground in North America and Europe, boosted by gains in emerging markets. While eye opening, the shrinkage was not as bad as some observers expected during the last quarter before the BB10 launch.
"We're encouraged that the subscriber base only declined slightly during a very public transition, and BlackBerry sales were about what we expected," said Morningstar's Colello, who is based in Chicago.

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White House defends offer as 'good faith effort'

WASHINGTON (AP) — The White House is defending President Barack Obama's proposal to set a higher threshold for tax increases than what he vowed to do during his presidential campaign. The White House says Obama has moved halfway to meet House Speaker John Boehner on a "fiscal cliff" deal that raises $1.2 trillion in tax revenue, down from the $1.6 trillion Obama had initially requested.
White House spokesman Jay Carney says that offering to raise taxes on taxpayers earning more than $400,000 rather than the $200,000 he ran on demonstrates, in Carney's words, Obama's good faith effort to reach a compromise.
The new tax proposal is contained in a broader plan that Obama gave Boehner Monday that would cut spending further and lower cost-of-living increases for most Social Security beneficiaries.

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Factbox: U.S. House "Plan B" tax bill likely to have short shelf life

The U.S. House of Representatives is likely to vote this week on what is being called "Plan B" on avoiding the "fiscal cliff."
The Republican-sponsored legislation aims to extend current low tax rates for most families. Without such action by Congress, across-the-board income tax rates will rise on January 1.
The combination of $500 billion in tax hikes and $100 billion in spending cuts, which are scheduled to start in the new year, could push the U.S. economy into recession, according to experts.
House Speaker John Boehner, the top Republican in Congress, and Democratic President Barack Obama have been trying for weeks to avoid the fiscal cliff with an alternative tax and spending-cut deal. Boehner says he is offering this very limited alternative in case negotiations with Obama fail.
Here are key elements of Boehner's Plan B:
* A House vote is expected on Thursday.
* Boehner expressed confidence on Wednesday that the measure would pass but some House Republican aides were not yet predicting that.
* The White House has said Obama would veto the Boehner Plan B in the unlikely event it made it to his desk.
* Democrats are viewing Plan B as nothing more than a diversion from attempts to reach a broad deficit-reduction deal to avoid the fiscal cliff. They see it as a way for Boehner to give his conservatives a vote on a measure that they can tout as a tax-cut bill for all but the wealthiest and inoculate them against Democratic accusations of obstruction.
* Republicans argue that they are acting responsibly by providing a backstop against massive tax increases in case the Obama-Boehner negotiations fail.
* Once Plan B is dealt with, all attention will shift to whether Obama and Boehner can work out a broad agreement by December 31 or whether the country will go off the cliff. If that happens, there is speculation that some sort of deal might be worked out in the early weeks of January to avoid the full brunt of the tax hikes and spending cuts.
* Under Boehner's Plan B, current low tax rates would be made permanent for families with net annual incomes of up to $1 million. The measure would let tax rates rise on income above $1 million. Without action by Congress, all income tax rates are set to rise on January 1 with the expiration of tax cuts enacted a decade ago by then-President George W. Bush.
* Plan B includes a grab bag of other expiring tax provisions. It would permanently fix the alternative minimum tax so that middle-class taxpayers do not creep into a tax bracket intended for the wealthiest. Annual AMT fixes have prevented tens of millions of households from paying a higher tax rate.
Also included are moves to maintain estate taxes at their current 35 percent rate per individual after a $5 million exemption. The White House backs reverting to the 2009 estate tax levels of 45 percent tax after a $3.5 million exemption per individual, though some moderate Democrats back keeping the current law.
Plan B legislation would raise dividend and capital gains tax rates for those earning $1 million and over to 20 percent, from its current 15 percent for most who pay such taxes. Most Democrats back raising the current 15 percent tax rate on investment income to 20 percent for households earning more than $250,000.
* The Joint Committee on Taxation estimates the plan would reduce U.S. revenues by around $4 trillion over 10 years.
* The plan does not address spending issues, including automatic across-the-board spending cuts also looming at year's end.
* The bill does not address how to resolve a looming stand-off over the government's borrowing authority. The government will need to raise the "debt ceiling" in the next few months to avoid default, and Obama wants higher borrowing authority approved promptly. House Republicans continue to want to hold back and use it as leverage in ongoing fiscal cliff talks, according to aides.
* Senate Majority Leader Harry Reid already has warned there are not the votes in his chamber to pass Boehner's plan. But if the House sent the Senate such a bill, Reid could respond in one of a few ways. He could declare that the Senate in July passed its version of this legislation, but with a $250,000 threshold, and take no further action. Or, he could offer a variation of the Senate-passed bill. Obama has proposed a $400,000 cut-off for maintaining low income tax rates. Reid could embrace that level or another one.
* The legislation is being inserted into an existing bill that originally had to do with Burma trade policy. A House Rules Committee spokesman said this was being done to avoid some potential procedural delays.

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U.S. charges three Swiss bankers in offshore account case

Three Swiss bankers accused of conspiring with American clients to hide more than $420 million from the tax-collecting U.S. Internal Revenue Service were indicted, the U.S. Attorney's Office in Manhattan said on Wednesday.
The indictment named Stephan Fellmann, Otto Huppi and Christof Reist, all former client advisers with an unnamed Swiss bank. None of the bankers have been arrested, authorities said.
Their attorneys were not immediately known.
The indictment said the unnamed bank did not have offices in the United States.
Banking secrecy is enshrined in Swiss law and tradition, but it has recently come under pressure as the United States and other nations have moved aggressively to tighten tax law enforcement and demanded more openness and cooperation.
In April, two Swiss financial advisers were indicted on U.S. charges of conspiring to help Americans hide $267 million in secret bank accounts.
In January, prosecutors charged three Swiss bankers with conspiring with wealthy taxpayers to hide more than $1.2 billion in assets from tax authorities.
UBS AG, the largest Swiss bank, in 2009 paid a $780 million fine as part of a settlement with U.S. authorities who charged the bank helped thousands of wealthy Americans hide billions of dollars in assets in secret Swiss accounts.

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"Fiscal cliff" turmoil could hit 100 million taxpayers: U.S. IRS

WASHINGTON (Reuters) - U.S. tax authorities warned on Wednesday that as many as 100 million taxpayers - far more than previously estimated - could face refund delays if lawmakers' "fiscal cliff" negotiations fail to fix the alternative minimum tax (AMT) before year-end.
The Internal Revenue Service said in a letter to lawmakers that it was raising its estimate on AMT impact from 60 million.
"It is becoming apparent that an even larger number of taxpayers - 80 to 100 million of the 150 million total returns expected to be filed - may be unable to file," IRS Acting Commissioner Steven Miller wrote.
The AMT is a levy designed to ensure that high-income taxpayers pay a minimum tax. Democrats and Republican typically agree to adjust the tax for inflation to prevent unintended taxpayers from being hit by it.
This year, however, its fate is tied to heated negotiations - primarily between President Barack Obama and House Speaker John Boehner - over future taxes and federal spending as they try to avoid the automatic tax increases and spending cuts known as the fiscal cliff.
The AMT fix for calculating 2012 income tax has broad bipartisan support, but so far been drowned out by the larger federal budget questions.
Without action soon to fix the AMT, there could be "lengthy delays of tax refunds and unexpectedly higher taxes for many taxpayers," Miller said.
The IRS needs congressional authority to update tax-filing software and forms so that Americans can start their tax returns next year. Inaction by Congress on the AMT has left IRS unsure which taxpayers will need to pay the AMT tax.
An IRS spokesman declined to comment on the agency's AMT preparations to date.
"Failure to act on the fiscal cliff will throw the 2013 tax filing season into chaos," Representative Sander Levin, a Michigan Democrat, said in a statement.
About 4 million taxpayers pay the AMT now because Congress routinely "patches" it for inflation to keep it from reaching down into middle-income tax brackets.
Without a patch for 2012, up to 33 million taxpayers will have to pay the AMT, according to IRS.
Obama's most recent offer to Republicans included a permanent AMT patch.
House Republicans plan to vote Thursday on a bill to address the fiscal cliff that also includes an AMT patch.

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What's on the table now in 'fiscal cliff' talks

An update on the latest offers on the table in negotiations to avert a year-end avalanche of federal tax increases and spending cuts known as the "fiscal cliff":
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INCOME TAXES
House Speaker John Boehner would allow income tax rates to rise for people making more than $1 million per year and would hold rates where they are for everyone making less. The top rate on income exceeding $1 million would go from 35 percent to 39.6 percent.
President Barack Obama would freeze income tax rates for taxpayers making $400,000 or less and raise them for people making more.
The two sides are moving closer together. Previously, the Republican House leader opposed allowing any tax rates to go up; Obama wanted higher taxes for individual income above $200,000, or $250,000 for couples.
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PAYROLL TAX
Obama has dropped his proposal to extend a temporary cut in Social Security payroll taxes paid by 163 million workers. Republicans want that tax to go back up.
Raising the payroll tax by 2 percentage points to its old level would cost a worker making $50,000 a year another $1,000 — or a little more than $19 per week — during 2013.
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SOCIAL SECURITY
Obama is offering to reduce cost-of-living increases for Social Security recipients. Republicans have been seeking this as a key to long-term deficit reduction. But many congressional Democrats oppose it.
Government pensions and veterans' benefits would also get smaller cost-of-living increases.
In addition, taxpayers, especially low- and middle-income families, would pay more because of changes in the way that tax brackets are adjusted for inflation.
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MEDICARE
Obama continues to reject Republicans' plan to raise the eligibility age for Medicare from 65 to 67. Boehner now says raising the eligibility age is not essential to a deal.
Obama wants to limit cuts in Medicare and other health care programs to about $400 billion over 10 years; Republicans want to overhaul Medicare to save even more money.
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DEBT LIMIT
Obama wants a deal that would raise the amount the government is allowed to borrow to cover the next two years, to avoid another debt showdown with Congress until after the 2014 midterm elections.
Previously, Obama had demanded permanent authority to increase the debt ceiling without congressional approval. Republicans want Congress to be part of the decision-making process so they can demand budget-cutting in exchange for additional borrowing.

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