RIM’s Latest Numbers A Mixed Bag

So, RIM’s numbers for the quarter are out. Some appear to think this is a “big deal”, and the stock has risen a substantial amount in after hours trading. There is only one number that is really giving rise to this bullish trading: the fact that they made a profit (0.27/share) rather than the loss the street was predicting (0.47/share was the consensus predicted loss apparently). I’m not surprised. I’ve worked in financial markets for nearly 2 decades, and it really doesn’t take much good news to drive share prices up in the short term. In particular, a “magic number”, like earnings per share, can have this effect. But the other numbers should give people pause as to the long-term viability.

I’ve spoken at length about RIM’s issues with marketshare, slowing growth and the dismal prospects of Blackberry 10. There is no need to revisit those. All I can say as that this quarter’s numbers for units shipped does nothing to change any of that. Sure, they added 2 million new users. Statistically, that’s noise when viewed in the context of the expanding smartphone market. Yes, they managed to make a profit while shipments were essentially flat, but those are shipments and not sales. The two are not the same thing, and all manufacturers like to play with these numbers to deliver the appropriate message.

Driving up RIM’s share price makes zero sense. Yes, one “magic number” that Wall Street traders and analysts like was positive instead of negative. RIM managed to increase their available cash, and that’s good. But their units shipped in smartphones was disappointing, the tablet has become a sad  joke. The fundamentals of what is wrong for RIM have not changed. I could go on and on, with a ton of analysis, showing why these numbers aren’t great. But I don’t see the point. A small profit is good, but it is about holding station, not moving forward. A bigger pile of cash means they can hang on a little longer. Neither should be cause for bullish exuberance on price.

At least the RIM executives sound like they are being realistic. RIM has not turned a corner. They are not back on the upswing. They’ve managed to slow the descent. But the ground is still coming closer.