Research in Motion Ltd. (BBRY): Did the Tax Man Contribute to Profit?

Published on April 3, 2013 at 5:07 pm by David Woodburn in News

Research in Motion Ltd. (NASDAQ:BBRY) – also known now as BlackBerry – surprised people in its mos recent quarterly earnings report when it posted a $98 million profit and shattered analyst expectations by turning in a positive EPS number compared to estimates of a loss of more than 25 cents per share. However, was that profit genuine? Bloomberg TV took quick look deeper into the earnings report and at least brought up a question in that profit number.

Perhaps the tax man could have had something to do with the number. At the end of a recent Bloomberg program, the “number of the day was brought up – $112 million. That was reportedly the amount of a tax reversal that Research in Motion Ltd. (NASDAQ:BBRY) claimed in its quarterly earnings. That number was added to the bottom line – which means that without that reversal, the company would have lost $14 million during the quarter. Granted, with a market cap for more than $7 billion, $14 million is losses over three months is not the end of the world, but it would have continued a recent losing streak fo the company.

Why the reversal in taxes for Research in Motion Ltd. (NASDAQ:BBRY) seemed to have alluded to some research and development tax credits that the company claimed in the last quarter, but Bloomberg focused on the statics of the bottom line – take that tax credit out and consider the company operationally, and it still has not made a profit. However, $14 million in loss could be considered break-even in a sense for a company like BlckBerry, where at least it has stopped its bleeding over the last several years and may be in a position to turn the corner – depending on this quarter’s Z10 and Q10 sales figures. But if it wants to be the No. 3 choice in operating system behind iOS and Android – beating out Windows Phone by Microsoft Corporation (NASDAQ:MSFT), it will need to get back into the black operationally sooner rather than later.

Would you buy the linear logic that the company would have lost money in the quarter without the ta reversal, or do you think that is one incidental part of the entire earnings report for Research in Motion Ltd (NASDAQ:BBRY)? Do you see the company turning the corner and becoming viable once again in the mobile marketplace? Let us know your thoughts in the comments section below.