Blackberry manufacturer Research in Motion will restate $250 million in earnings and co-CEO Jim Balsillie will step down as chairman after a seven-month investigation into a stock-options backdating scandal. RIM's financial statements for Q2 and Q3 will also be delayed. Balsillie and Mike Lazaridis, the other CEO, will pay C$5 million each to cover the costs of the probe. The restatement significantly exceeds RIM's January forecast that about $45 million in earnings would have to be restated. The investigating committee learned that all options granted before February 2002 were accounted for incorrectly, as were two-thirds of the grants between 2002 and August 2006. RIM said in a statement that "[h]indsight was used to select grant dates with favorable pricing," but also claims there is no evidence of intentional misconduct. The company also announced yesterday that it added a record one million subscribers in its most recent quarter. RIM shares shed 1% on the restatement news to reach $134.52.
Sources: MarketWatch, Bloomberg, MSNBC.com, Wall Street Journal (I, II). Conference call transcript: F3Q07 (Qtr End 12/2/06)
Commentary: Selloff Creates Buy Opportunity in Research In Motion • Apple and BlackBerry Both Beloved of Goldman • Research in Motion: New 8800 Model on the Move
Stocks/ETFs to watch: Research In Motion Limited (RIMM). Competitors: Palm, Inc. (PALM), Nokia Corp. (NYSE:NOK), Apple Inc. (NASDAQ:AAPL). ETFs: Wireless HOLDRs (NYSEARCA:WMH), iShares Goldman Sachs Networking (NYSEARCA:IGN)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.