RIM's Surprise Profit Undercut By New Data Pricing Plan

After shares of the Waterloo, Ontario-based smartphone and tablet developer doubled in the the past three months, they plunged 23 percent in Friday trading, erasing $1.7 billion in shareholder value. By the close, RIM shares fell $3.21 to $10.91.

As well, after the earnings announcement, RIM agreed to pay its ailing Finnish rival Nokia Oyj (NYSE:NOK) an unspecified amount to resolve patent disputes, as part of a new licensing agreement.

Both Nokia and RIM may disclose the amounts later in regulatory filings, but the deal also raised concerns about RIM's financial position. Still, the Canadian company reported its cash and investments rose $600 million to $2.9 billion in the period ended Dec. 1.

Before special tax charges, RIM reported net income of $9 million, or 2 cents a share, on revenue of $2.78 billion. Including the charges for firings and plant shutdowns, there was a net loss of 22 cents a share, about 14 cents below expectations.

During a Thursday night conference call, RIM CEO Thorsten Heins discussed proposed changes in the method the company's 79 million subscribers are charged for data usage.

Heins spoke about possible “tiered pricing” that would change the way the company books fees from its customers. He didn't provide details.

As a result, analysts such as UBS's Amitabh Passi said he was “very concerned” how that would affect future revenue. Making deals to cut data usage raises concerns overall software and service revenue “could come under increasing pressure,” lowering the company's earnings.

Meanwhile, Passi said, RIM still has to manage the rollout of the BlackBerry 10 device, scheduled in five weeks, as well as provide new pricing details.

“We will see pressure on BlackBerry OS-related services,” Heins said on the call. His lack of specifics, though, raised eyebrows.

Later, a RIM executive said the new pricing details should be announced when BlackBerry 10 is formally introduced.

“Management was ill-prepared to provide satisfactory answers,” said Kris Thompson, analyst with National Bank of Canada. He slashed his rating on RIM shares to the equivalent of “sell.”

At UBS, Passi maintained a “neutral” rating, with a price target of $9.50.