Research In Motion Limited (RIM), which was renamed Blackberry in 2013, reported on September 27, 2012, a net loss of $ 238 million for the second quarter of its 2013 fiscal year, compared to net earnings of $ 329 million for the same quarter of 2012. Its revenues dropped from $ 4.2 billion in the second quarter of 2012 to $ 2.9 billion in the second quarter of 2013 due to increased competition from makers of smartphones and the streamlining of the company’s operations. The company’s share price closed at $ 7.50 on September 28 compared to $ 7.14 on September 27, prior to the announcement of its quarterly results.
Required:
1. Identify the direction and amount of the change in net earnings for the second quarter of 2013 compared with the same quarter of 2012.
2. Identify the direction and amount of the change in RIM’s share price after the release of the second- quarter results.
3. Explain why RIM’s share price changed in the opposite direction from the change in its earnings.