To say that the optimism surrounding Research in Motion going into the company's second quarter earnings, reported just moments ago, was thick, is an understatement.
Metric after metric, analyst after analyst, was high and mighty about this company.
But the truth is in the numbers, and the devil is in the details. And it looks as if Wall Street may have gotten ahead of itself when it comes to this company and its expectations.
RIM reported 86 cents a share, a penny below consensus, and a nickel below Global Crown Capital's expectations. The company's revenue was also lighter than consensus, coming in at $2.58 billion against the $2.6 billion expected. Again, Global Crown was at $2.66 billion. New subscriptions came in right in line, at 2.6 million, but new devices sold only reached 6.1 million, against the 6.3 million the Street was looking for.
So the question begs, did device sales slow because customers were waiting for the new Bold to be released? Or were they jumping ship all together and buying iPhones instead? I guess we'll have to wait for Apple earnings to be sure. Gross margins were right in line at 50.7 percent.
Meantime, the bigger problem for RIM comes with its third quarter guidance. The company is offering an EPS range of 89 cents to 97 cents, well below the Street's 98 cents, and way behind Global Crown's $1.07. RBC Capital offered a range this morning of $1.00 to $1.03. Revenue of $2.95 billion to $3.1 billion is essentially in line with Street expectations. But new subscriptions will be smaller than expected. RIM expects 2.9 million; the Street projected 3 million. But look at the company's gross margin expectation: 47 percent. That's far below this quarter's performance and way below what many analysts anticipated.