What To Expect From Research In Motion's Earnings Report

| About: BlackBerry Ltd. (BBRY)

Research In Motion Limited (RIMM) will remain in focus today as the maker of BlackBerry smartphones prepares to release its third-quarter results after market close.

Research In Motion once dominated the smartphone market, however, the company has struggled in the last two years due to product delays and increasing competition from Apple Inc.'s (NASDAQ:AAPL) iPhone and smartphones operating on Google Inc.'s (NASDAQ:GOOG) Android operating system. As Research In Motion has continued to lose market share in the smartphone space, the company's shares have plummeted. Research In Motion shares, which traded over $50 in April 2011, are now trading around $13.60.

However, in recent weeks, the stock has been rebounding amid hopes that the launch of a new operating system and two phones will help the company's turnaround efforts. Meanwhile, investors will also be looking for any signs of improvement in the company's third-quarter results, which will be released later today.

What to Expect from Q3 Results

At the time of the release of its second-quarter financial results in September, Research In Motion said that it expects continued pressure on operating results for the remainder of the fiscal year based on the increasing competitive environment, lower handset volumes, increased marketing expenses associated with the launch of BlackBerry 10 and some impact from pressure by customers to lower monthly infrastructure access fees.

Research In Motion forecast an operating loss for the third quarter of fiscal 2013. Research In Motion had surprised markets in September when it said that it grew its subscriber base in the second quarter. The company's BlackBerry subscriber base increased to approximately 80 million global subscribers in the second quarter, which ended on September 1, 2012.

Colin Gillis, analyst at BGC Financial, doesn't expect the company to report any such positive surprises for the third quarter. Gillis expects subscriber base growth to be flat for the third quarter.

Analysts surveyed by FactSet expect the Canada-based company to report a loss of $0.35 per share for the third quarter. Revenue for the third quarter is expected to come in at $2.65 billion. For the previous quarter, Research In Motion had reported a loss of $235 million, or $0.45 per share and revenue of $2.9 billion. For the third quarter of fiscal 2012, Research In Motion had reported revenue of $5.2 billion and GAAP net income of $265 million, or $0.51 per diluted share.

The most important thing to look for in Research In Motion's results later today will be subscriber base. It will be interesting to see whether Research In Motion maintained its subscriber base in the third quarter.

While Research In Motion Struggles, iPhone and Android Continue to Dominate Smartphone Market

While product delays have hurt Research In Motion in the past couple of years, the company has also struggled due to increasing competition from Google's Android operating system and Apple's iPhone.

Apple recently reported that it sold more than 2 million units of its new iPhone 5 in its first weekend on sale in China. Apple CEO Tim Cook said that customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China.

However, Apple's iPhone is nowhere close to Google's Android operating system in China. A recent study from London-based Informa Telecoms & Media, which is a unit of research firm Informa U.K. Ltd., showed that two-thirds of the cell phones sold in China in 2012 run on an Android operating system.

Globally, Apple's iOS and Google's Android are the dominant players in the smartphone market and are expected to remain so, according to a report from GII Research.

Can Research In Motion Make a Comeback?

Given the iOS's and Android's dominance, the big question is whether Research In Motion can ever make a comeback in the smartphone market?

Research In Motion is pinning all its hopes on the launch of the BlackBerry 10 operating system and two new phones operating on the new system. Back in November, Research In Motion announced that it will hold its BlackBerry 10 launch event on January 30, 2013. The launch of the new operating system comes after a number of delays. However, the launch could help the company's turnaround efforts.

Thorsten Heins, President and CEO of Research In Motion, last month said that thanks to the company's strong partnerships with global carriers and growing ecosystem of developers, he believes the company's customers will have the best experience possible with BlackBerry 10.

What Should You do with the Stock?

Research In Motion shares have gained more than 74% since November 1, 2012. The gains have been driven by expectations that the launch of a new operating system in January 2013 will help revive the company.

Indeed, Research In Motion's future depends entirely on how well BlackBerry 10 is received. If the new platform is a success, Research In Motion shares could continue to recover. However, the stock could remain volatile ahead of the launch of BlackBerry 10.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.