RIM pleads for more patience as transition takes its toll

Research In Motion (s RIMM), already struggling to keep up with nimble competitors like Apple (s AAPL) and Google (s GOOG), signaled that its attempts to catch up are falling behind. The company reported first quarter fiscal 2012 earnings, coming in below expectations for both handsets sold and revenue while painting a challenging outlook for the year ahead. RIM said it will cut headcount as it looks to focus on improving its transition to a new operating system that it hopes will get it back on track.

RIM reported revenue of $4.9 billion in the first quarter, up 16 percent from the same period a year ago but down 12 percent from the previous quarter and well below analysts’ estimates of $5.15 billion. Income for the quarter was $695 million, or $1.33 per share, compared to $769 million, or $1.38 per share in the same quarter last year. Handset sales came in at 13.2 million units in the quarter, up from 11.2 million a year ago but below analysts already pessimistic estimates of 13.5 million.

The news wasn’t completely unexpected after RIM slashed forecasts for the quarter. But it still came in below the lowered expectations of Wall Street and showed just how tough things are for RIM. The company said the rest of the year was also expected to be trying with second quarter revenue expected to come in at $4.4 to $4.6 billion, compared to a consensus of $5.46 billion. For fiscal 2012, RIM expects earnings of $5.25 to $6 a share, below Wall Street’s expectation of $6.29 a share and well below previous estimates of $7.50 a share. 

There is a bright spot in the mix with the new PlayBook tablet shipping 500,000 units, a respectable number for a launch marred by missing software. But RIM said the PlayBook 4G, which was expected to have a summer launch, is now slated for this fall. This follows on earlier delays of upcoming BlackBerry 7 phones that won’t ship until this fall.

Co-CEO Jim Balsillie said he expects things to pick up in the second half of fiscal 2012 as the cost-cutting measures kick in and RIM starts pushing out new phones. But for now, the delays continue to dog the company and make it hard to be optimistic about RIM’s fading performance.

“Fiscal 2012 has gotten off to a challenging start.  The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter,” Balsillie said in a statement.

RIM, Nokia (s NOK) and Microsoft (s MSFT) used to be powers in the smartphone market but they’ve struggled to adapt to the challenges brought by Apple and Google. The move to QNX is an important step for RIM to migrate away from its legacy operating system. But like Nokia and Microsoft, RIM doesn’t seem to be able to move with the right amount of urgency. Having to wait out yet another quarter is going to be tough on shareholders, who have to hold on and hope that the promised transition will eventually materialize.

There’s still hope, but it’s fading as more and more consumers consider iOS and Android their main two options for smartphones. According to Gartner (s it), RIM’s global market share plunged in the first quarter to 12.8 percent down from 19.7 a year earlier. With the next wave of hardware still slow to come out, expect RIM’s share to drop some more. Co-CEOs Balsillie and Mike Laziridis downplayed the need for a change at the top during a conference call so it appears neither is prepared to go anywhere. Now, the pair will have to weather even more scrutiny about their performance as they plead for a little more patience.