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In the news: RIMM's shocking new fee plan, a GE deal and earnings

In the news this morning, Research in Motion reported better-than-expected earnings, but the company's plans for service fees startled investors, General Electric is buying an Italian aviation business, Merck's new cholesterol drug failed a trial in the U.S. and is now being reexamined by EU regulators and earnings from Walgreen, Nike and Red Hat.

Research in Motion
Blackberry-maker Research in Motion (RIMM) a loss of 22 cents per share for the most-recent quarter, narrower than the 35 cents per share analysts had expected. On a GAAP basis, the company reported a profit of 2 cents per share on a one-time income tax gain. The company's subscribers fell to 79 million from 80 million in the prior quarter. Analysts were startled by the company's announcement that the company will change its fee structure. Fees accounted for about $982 million of last quarter's $2.73 billion in sales. Under the new fee regime, users who want the enhanced services Research in Motion offers will continue to pay for them, while other Blackberry users who do not want those services “are expected to generate less or no service revenue,” CEO Thorsten Heins said.

General Electric
General Electric (GE) said Friday that it plans to buy the aviation business of Italy's Avio for about $4.3 billion. GE's global supply chain capabilities will get a boost from the deal. The company's engine production business has been growing to meet increasing demand.

Tredaptive, a cholesterol drug, failed a drug trial in the U.S. and is now being investigated vy the European Medicines Agency. Merck's new cholesterol drug is supposed to raise HDL or “good” cholesterol levels, but a study of 25,000 patients found the drug didn't do anything to reduce heart attacks, deaths or strokes any more than traditional drugs that lower LDL or “bad” cholesterol. Sales of the drug in Europe and other non-U.S. markets have been about $50 million per year.

Walgreen (WAG) said Friday that it earned 58 cents per share on an adjusted basis for the quarter that ended Nov. 30. Revenue during the period was $17.34 billion. Analysts had been expecting earnings of 70 cents per share.

Nike (NKE) reported net income of $1.14 per share on slaes of $5.96 billion, compared to analysts' estimates for $1 per share on sales of $6.01 billion. Sales in China and Western Europe were lower, but that was offset by higher sales in North America.

Red Hat
Red Hat (RHT) reported adjusted earnings of 29 cents per share on sales of $344 million. Analysts had expected EPS of 29 cents on sales of $338 million. For the fourth quarter, the company said it expects to earn between 29 and 30 cents per share on sales of $347 million to $351 million. Analysts had been forecasting earnings of 30 cents per share on revenue of $350.9 million.


Bobby Raines

Bobby Raines is the Managing Editor of the Market Intelligence Center. He has degrees in Mass Communications and History from Emory & Henry College. Bobby worked at a mid-sized daily newspaper before making a switch to covering the financial industry full time in the years leading up to the financial crisis. He has been a member of the Fresh Brewed Media team since 2011 and has served as a writer and analyst. You can write to him at braines@marketintelligencecenter.com or follow him on Twitter: @BRatMICenter.