Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) reported Q1 revenue of $3.1B and GAAP EPS of negative $0.16, versus analysts’ estimates of $3.1B and negative $0.06; consensus was $3.4B and negative $0.07. Excluding $26M in restructuring and a $0.15/sh tax recovery, adjusted EPS would have been negative $0.26.

BBRY Blackberry Research in Motion

The results were also impacted by Venezuelan foreign currency restrictions (i.e., outflow of USD), which reduced services revenue b $72M and earnings by $0.10. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has excluded this revenue source from its outlook (until the uncertainty is addressed). Note that subsequent to quarter-end, the company did receive some funds from its Venezuelan carrier customers. This region represents ~5% of accounts receivable.

Research In Motion Ltd (BBRY)’s Total Shipments:

Total shipments were 6.8M, including 2.7M BB10 (analysts were at 6.5M and 2.6M). Sellthrough was 6.8M. Analysts from Paradigm Capital estimate that device gross margins were 17% versus last quarter’s 18%, despite higher BB10 shipments. They believe this reflected a competitive pricing environment, along with initial ramp-up costs associated with BB10. Total gross margins were 34% (or 36% ex-Venezuela), down from 40% last quarter. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) ended the quarter with $3.1B in cash (up from $2.9B).

Research In Motion Ltd (BBRY) Net Subscribers:

Net subscribers were down q/q to 72M from 76M. Going forward, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will not provide this metric. It also shipped 100K Playbooks, although analysts have removed this figure from their forward estimates given the company’s announcement that it will not be moving Playbook to BB10. For fiscal Q2, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) expects to incur an operating loss, analysts believe partially due to the Venezuela impact and continued marketing spending.

Conclusion

Clearly Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s Q1 was a setback given the lower-than-expected earnings and forecast of negative operating results for Q2. However, analysts remain of the view that the release of the BB10 portfolio over the course of the year could be the catalyst that drives a powerful hardware refresh and returns the company to profitability (in particular, analysts believe enterprise adoption could accelerate in the current quarter). Furthermore, any resolution of the Venezuelan issue could also act as an upside catalyst. Analysts are lowering teir target price to $15.00 target (was $19.00), which is based on 3.5x FY14 EV/EBITDA. However, they are maintaining their Speculative Buy rating. Note that at current levels, the stock is trading at 56% of its cash balance of $5.84/sh.