Paul Carpino - Vice President, Investor Relations Thorsten Gerhard Heins - Chief Executive Officer, President, Non-Independent Director, Member of Innovation Committee and Member of Strategic Planning Committee Brian Bidulka - Chief Financial Officer

Kevin Smithen - Macquarie Research Kulbinder Garcha - Crédit Suisse AG, Research Division Jim Suva - Citigroup Inc, Research Division Todd Coupland - CIBC World Markets Inc., Research Division Amitabh Passi - UBS Investment Bank, Research Division Simona Jankowski - Goldman Sachs Group Inc., Research Division Ehud A. Gelblum - Morgan Stanley, Research Division Roderick B. Hall - JP Morgan Chase & Co, Research Division Mark Sue - RBC Capital Markets, LLC, Research Division Tal Liani - BofA Merrill Lynch, Research Division Jeffrey T. Kvaal - Barclays Capital, Research Division Richard Kramer - Arete Research Services LLP

Ladies and gentlemen, thank you for standing by. Welcome to the Research In Motion Third Quarter Fiscal 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, December 20, 2012 at 5:00 p.m. Eastern Time. And I would now like to turn the conference over to Mr. Paul Carpino, Vice President, Investor Relations. Please go ahead.

Okay. Thank you, Luke. Welcome to RIM's Fiscal 2013 Third Quarter Results Conference Call. With me on the call today are Thorsten Heins, our Chief Executive Officer; and Brian Bidulka, our Chief Financial Officer. After I read our cautionary note regarding forward-looking statements, Thorsten will provide a business update, and Brian will then review the third quarter results and our outlook. We will then open up the call for questions. This call is available to the general public via call-in numbers and via webcast in the Investor Relations section at rim.com. The webcast can be accessed through your personal computer or your BlackBerry PlayBook tablet. A replay of the webcast will be available on the rim.com website. We plan to wrap up the call around 6:00 p.m. Eastern this evening. [Operator Instructions] Some of the statements we will be making today constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities Laws. These include statements about our plans, strategies and objectives and the anticipated challenges and opportunities in Q4 and fiscal 2014; our plans and expectations relating to the upcoming launch of BlackBerry 10 and its impact on our business; our expectations with respect to unit volumes, subscribers, service fees and marketing initiative, revenue, gross margin, ARPU and operating expenses; our anticipated operating loss in Q4, working capital management and our anticipated cash position; our product development and marketing initiatives and timing; plans and expectations relating to our CORE program and our strategic review; and other statements regarding our plans, objectives and expectations. We will indicate forward-looking statements by using words such as expect, plan, anticipate, estimate, may, will, should, forecast, intend, believe, continue and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made. Many factors could cause our actual results, performance or achievements to be materially different from those expressed or implied by our forward-looking statements, including our ability to enhance our current products and develop new products and services; risks related to delays in new product introductions; risks related to intense competition, both in North America and internationally; our reliance on carrier partners and distributors; risks related to pressure on our service fees and our ability to generate service revenue through new offerings; risks relating to network disruptions and other business interruptions; security risks and risks related to the collection, storage, transmission, use and disclosure of personal information; our ability to maintain or increase our cash balance; our ability to implement and realize the benefits of our CORE program; our ability to retain and attract key personnel; our ability to maintain and enhance the BlackBerry brand and risks associated with our international operations; intellectual property risks; difficulties in forecasting financial results given the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize our industry; and other factors set forth in the Risk Factors and MD&A sections in RIM's filings with the SEC and Canadian securities regulators. We base our forward-looking statements on information currently available to us, and we do not assume any obligation to update them except as required by law. I will now turn the call over to Thorsten.

Thank you, Paul. As we can imagine, this is a very dynamic time at Research In Motion, and Q3 was a very busy and active quarter for the company. Since becoming CEO just less than 1 year ago, we have put in place a clear roadmap to transition us into our new mobile computing platform, running a leaner and much more efficient organization. Today, we are on the verge of launching BlackBerry 10, and our core restructuring process has delivered results. This highlights the talent of the group that we have put together in RIM to run our business. I want to start by giving you a high-level recap of Q3, which Brian will discuss in more detail later. I will also provide you an update on our 3 main initiatives: the upcoming launch of BlackBerry 10; our CORE program; and our strategic review. Q3 result continued to reflect the successful transition the company is making as it moves towards the launch event for our BlackBerry 10 mobile computing platform on January 30. We sold just under 7 million smartphones this quarter and generated revenue of $2.7 billion. Gross margin strengthened, cash flow was strong and our cash position increased significantly. We continued to deliver a very strong cash flow from operations and maintained a very strong balance sheet at quarter end. Cash grew by more than $600 million in the quarter to $2.9 billion, even after the funding of all of our restructuring activities. The BlackBerry subscriber base at the end of Q3 was approximately 79 million. This is slightly lower than the prior quarter, but was up by approximately 2 million from the beginning of this fiscal year and up approximately 3 million from a year ago. Subscribers in North America actually showed the largest decline, while EMEA, Latin and Asia Pac were stable or showed growth. We are pleased we have been able to maintain a stable subscriber base during this transition year as we head into the launch of BlackBerry 10. Brian will provide more detail shortly, but our global teams are executing well and demonstrating that with laser focus, they can deliver the result to help us navigate through this challenging transition to BlackBerry 10. As we've also announced in our press release a short time ago, our Chief Information Officer, Robin Bienfait, has decided to retire from RIM after 6 years of outstanding service to the company. Robin has been an outstanding CIO and has built a world-class organization. I am deeply grateful to Robin for her contributions and services to RIM over the last 6 years, and we wish her all the best for the future. Now let me move on to our 3 main initiatives, starting with BlackBerry 10. This has been a very exciting past few months for us as my senior team and I have been on an extensive global carrier roadshow showing BlackBerry 10 with our partners. The reaction has been exceptional from carriers as they understand the need for the smartphone industry to continue to deliver innovation to their global smartphone customers. With BlackBerry 10, they see the potential to enrich the user experience using the navigation of BlackBerry Flow, integration of the BlackBerry Hub, the speed and convenience of our peek gesture, and the uniqueness of the touch BlackBerry keyboard and the elegance and security of BlackBerry Balance for enterprise users which separate all work content and apps securely from private personal content. We have many other features and more surprises that will be unveiled at launch. In October, we delivered on another commitment and achieved to start up our carrier lab entry time line and announced that 50 carriers have begun their lab entry process with BlackBerry 10. As of today, that number is now over 150, and we expect more will follow as we head towards our launch. And also this week, carriers began announcing their plans to carry BlackBerry 10, and consumers around the globe will be able to buy the new BlackBerry 10 shortly after our launch event on 30th of January. In addition to our carrier activities, our Technical Preview BlackBerry Enterprise Service 10 beta program has commenced with more than 120 companies, including 64 Fortune 500 customers who are looking at bringing security, control and a great user experience to the BYOD environment. In addition, we are also prepping the broader global enterprise environment for the launch of BlackBerry 10 to our BlackBerry 10 Ready Program launch earlier this month. This program is designed to address the needs of BlackBerry enterprise customers as they prepare their environment for the launch of BlackBerry 10 and BlackBerry Enterprise Service 10, our powerful new multi-platform enterprise mobility management solution. On the developer front, the momentum of our BlackBerry Jam and developer program has been outstanding over the past few months and throughout this year. Since starting our BlackBerry Jam developer sessions in May of this year, we have had 44 Jam sessions in 37 countries with more than 9,300 attendees. We have been actively engaged with developers from around the world for many months, and as we near the final week towards the launch of BlackBerry 10, the growing dedication and commitment we see from our developer community is truly outstanding. And we further enhance our BlackBerry Jam for developers with our enterprise Jam World Tour this fall. This tour covered 11 global cities with more than 1,000 enterprise app developers and partners registering, and it was very well received. For the BlackBerry 10 platform, both enterprise and consumer developers are able to create visually beautiful and powerful applications, with features such as easy sharing and integration with social media, corporate security and the ability to seamlessly flow between apps. Now as we move towards the launch of BlackBerry 10, leading brands across the globe want the recognition and advantage of being first to market on our exciting new platform as they see that BlackBerry 10 is designed to enable compelling customer experiences that can lead to higher adoption rates and engagement. January 30 will be an exciting day for Research In Motion and all of its customers, and our teams can't wait to share this experience with you. So now let me briefly touch on the progress of our CORE program, where we are on track to realize an excess of our original $1 billion savings target at fiscal year 2013. Our teams are executing very well and meeting their commitments during a period that have involved hard work, long hours and very difficult decisions associated with headcount reduction. Working capital performance has been very strong, resulting in significant cash flow, and these resources will be reinvested in our BlackBerry 10 launch. We are now nearing the end of our headcount reduction, and I appreciate the professionalism of those who have been affected by these very difficult decisions. Importantly, this process has helped significantly change the character at RIM in terms of driving efficiency and improving processes in everything we do as a company each and every day in our organization. Our core financial objective has been achieved 1 quarter ahead of our initial target, and we have already delivered $1 billion in cost reductions this year. And we expect to pursue more opportunities in the coming quarters as we pursue new ways to accomplish things smarter and drive greater efficiency within the company. We believe that this ability to adapt, anticipate faster and deliver better solutions in the things we do every day will serve us well as we move into the next phase of mobile computing with BlackBerry 10. The third major area I want to comment on is RIM's strategic review. While we have been receiving great feedback from our partners on the capabilities of BlackBerry 10, we also continue to meet with potential partners interested in exploring how we may be able to leverage each other's strengths. Businesses are not standing still when it comes to opportunities in mobile computing. They understand the pace of change and are interested in technology that delivers innovation, embraces openness, delivers security and unleashes entirely new capabilities to the industry. As we can appreciate, I won't provide details on any discussions at this time nor will we comment on rumors or speculation, but we will share that information when appropriate. I view our strategic review as one of the 3 key components in creating new opportunities, focusing on areas where we will be more effective partnering rather than going in alone and ultimately maximizing value for our shareholders. So before I turn the call over to Brian, let me provide a few comments on our outlook. While our customers, partners and employees are very excited about our BlackBerry 10 launch, I also want to be clear that the management team remains laser-focused on continuing to make the necessary changes to return the company back to stable profitability. We've made great progress in the past month in demonstrating our financial strength, with cash growing to $2.9 billion, and we will continue to implement plans and make decisions and changes that allow us to demonstrate steady progress as we work back towards profitability. We are committed to an amazing launch for BlackBerry 10 and we, in conjunction with our carrier partners, will be showcasing the redesigned innovation of reengineered, reinvented BlackBerry to the world. We have demonstrated how efficiently we have been able to convert working capital into cash as we become a leaner organization over the past few months, and we are now in a very strong position to reinvest into our launch and into our new platform, which I know Frank Boulben and his market team will do an amazing job with. And we have also demonstrated our ability to work effectively in revolving the patent complexities that faced our industry. In the last couple of days, you have seen our participation in the consortium to acquire patents from Kodak. And going into the fourth quarter, we will begin to leverage those partnerships into our future portfolio, and it will also become part of our core activities. Starting in the fourth quarter, we will begin seeing revenue from BlackBerry 10 devices. With the introduction of the BlackBerry 10 mobile computing platform, we will be transforming our service revenue model to reflect different usage levels of our network infrastructure and different value-added software security and service packages. So we plan to offer a range of security, mobile device and application management services in addition to communication services. We will position BlackBerry Enterprise service as the leading cross-platform enterprise mobile device management service and continue to invest in growth capabilities. Subscribers that require enhanced services, including advanced security, mobile device management and other services, are expected to continue to generate monthly service revenue. Other subscribers who do not utilize such services are expected to generate less or no service revenue. However, I want to be very clear on this. Service revenues are not going away, but our business model and service offerings is going to evolve. Our vision is to position BlackBerry as the clear leader in the enterprise mobility market. While the mix and level of service fees revenue will change going forward and will be under pressure over the next year during this transition, but we are targeting to grow service revenue in smartphones, tablets and embedded application to a new offering with new partners and across platforms other than BlackBerry 10. We're making these changes to meet the competitive dynamics of the marketplace but more importantly, to allow us to pursue the broad opportunities in mobile computing that BlackBerry 10 and our infrastructure enables us to do. We feel our strategy will have broadened the BlackBerry ecosystem over time and will allow application developers and other potential partners access to a broader subscriber market. This is an exciting time for our company. Yes, it's challenging, too, and there are many things we continue to work on in execution, but we believe the company has stabilized and will turn the corner in the next year. BlackBerry is set to launch an exceptional mobile computing platform, and in the past year has rediscovered and nourished its technology and innovation routes. We have focused on cultural change, and I'm excited for our teams and the progress we have made. New leaders are emerging, and we have seen increased engagement and accountability and morale in the company. People are what ultimately drive turnaround, and I believe the commitment and talent of our people has allowed us to turn this corner. I have seen the changes at this company first hand, and I'm very proud of the results so far. All we have achieved has been the fruit of a tremendous effort by our very dedicated teams. Our new platform is innovative and allows us to pursue the next generation of opportunities in the mobile computing industry. Our balance sheet is strong as we head into launch, including a cash position of $2.9 billion and no debt, and we will invest as necessary in both launching BlackBerry 10 and pursuing new opportunities. We are revisiting how to do -- how we do business and exploring strategic opportunities to leverage our technology and to partner with other innovative technology leaders. We have added new people at all levels of the company who are motivated and thrilled to be part of an amazing opportunity to not only turn the company around, but to participate in next-generation technology and growth curve. We have an unbelievable fan base that is supportive and excited about being BlackBerry by choice. We are realistic about our competitors and the great advisers in our industry, but we know that customers in this industry demand and respond to innovation. And we believe BlackBerry 10 truly delivers on this request. And we are investing and reinvigorating our enterprise heritage with BlackBerry Enterprise Service 10, where we plan to bring control to IT managers with strong, secure, multi-device management solutions. There's a great opportunity in BYOD multi-device management, and BlackBerry expects to play an important role in this environment going forward. Excitement for BlackBerry 10 is high throughout the entire organization. Our employees are working incredibly hard and are extremely committed to our launch. I describe the environment as one where employees are wearing the badge of honor right now and that despite the many critics who have forecast our demise, we are strong, we are excited and we are in a position to demonstrate the next stage of mobile computing. It's a great time to be with BlackBerry. That concludes my remarks, and I want to sincerely thank all of our customers, corporate and consumer, our shareholders and all supporters that have been committed to both the people and future of organization. I will now turn the call over to Brian, who will take you through the quarter in more detail. Brian, over to you.

Thank you, Thorsten. Before I discuss our GAAP and adjusted results this afternoon, I would like to note the comments I make today related to our third quarter results and their comparisons to prior quarters are primarily focused on continuing operations. I will discuss discontinued operations shortly. Please also note that a reconciliation of our adjusted results to our GAAP results was included in the press release today. Revenue for the third quarter of fiscal 2013 was $2.7 billion compared to $2.9 billion in the second quarter. The decline was primarily -- driven primarily by lower volumes in handsets where we shipped 6.9 million smartphones compared to 7.4 million in the second quarter. Sales outside the U.S., U.K. and Canada grew 7% this quarter, and made up approximately 65% of total revenue compared to 58% in Q2. Some of the larger markets comprising the other segment in the quarter included Indonesia, South Africa and Venezuela. In the U.S., sales were 19% of consolidated revenue compared to 22% in the second quarter. Sales in Canada and the U.K. this quarter represented 5% and 11% of revenue, respectively, compared to 8% and 12%, respectively, last quarter. Estimated sell-through in the quarter was approximately 8.4 million units, including phone-only sales, and channel inventory declined slightly. Shipments of PlayBook were approximately 255,000 units compared to approximately 130,000 last quarter. Strong promotional activity with our retail partners on our Wi-Fi tablet continues through the holiday season, particularly in North America and the U.K. Our overall inventory position in PlayBook is significantly improved over the prior quarters, and we're continuing to sell our 4G PlayBook in North America and Europe with a focus on enterprise users. Looking at our revenue mix, hardware revenue was approximately $1.6 billion or 60% of revenue, similar to 60% in the second quarter. Service revenue was $974 million and represented approximately 36% of revenue. On a dollar basis, this was down $19 million from Q2, reflecting the pricing pressures and fee reduction activities we have discussed throughout the year. Subscribers were approximately 79 million compared to 80 million in the second quarter. The declines in the U.S. were the predominant factor for the reduction in the base, offset by more stable and slightly growing subscribers in non-U.S. regions. Software and other revenue represented 4% of consolidated revenue in the third quarter compared to 5% in Q2. As part of the CORE program and our strategic review process, the company has been reviewing all aspects of its operations, including the sale of certain assets. In the second quarter, we classified some assets as held for sale, which will now be reflected in our statements as discontinued operations until we dispose of them. Assets held for sale include businesses, property, plant and equipment, as well as certain intangible assets, which are expected to be sold within the next 12 months. Revenue from discontinued operations in the third quarter was $11 million and operating losses were $7 million. This compared to revenue of $12 million and operating losses of $5 million from discontinued operations in Q2. GAAP gross margin was approximately 30% in the quarter compared to gross margin of approximately 26% in Q2. Excluding pretax core restructuring charges of approximately $32 million included in cost of sales, adjusted gross margin was approximately 32%. This was driven by 3 key items: a favorable mix in hardware sold; service revenue being a larger percentage of sales; and benefits associated with cost reductions generated by our CORE program. GAAP operating expenses were just under $1.1 billion, down slightly from Q2. R&D spending increased by approximately $27 million associated with our ongoing investment of BlackBerry 10 and related development activities, while SG&A decreased by $69 million from Q2. Operating expenses included approximately $23 million of core-related charges in selling, marketing and administration and research and development. Operating expenses also included foreign exchange gains of approximately $11 million associated with the tax benefits. Excluding core charges and the foreign exchange gain, adjusted operating expenses were just over $1.05 billion, up slightly from the second quarter as a result of R&D investment on BlackBerry 10 development, as well as cost for retention programs. Our GAAP operating loss in the third quarter was $212 million. Excluding restructuring charges and other items, the adjusted operating loss for Q3 was $176 million compared to an adjusted operating loss in the second quarter of $222 million. Effective tax rate recovery on adjusted earnings was 35% compared to 39% in Q2. Higher effective tax rate recovery on GAAP earnings in the third quarter reflects the favorable impact from the tax benefit from RIM's international operations. GAAP net income for the third quarter was $14 million or $0.03 per share diluted versus a GAAP net loss of $229 million or $0.44 per share in Q2. Excluding the impacts of restructuring charges and the income tax benefit, we reported an adjusted net loss from continuing operations of $114 million or $0.22 per share compared to an adjusted net loss of $136 million or $0.26 per share in the second quarter. Now moving to our balance sheet and working capital performance, the company continued to deliver strong results. We generated approximately $950 million in cash flow from operations in the quarter, driven by strong working capital management. Inventory was $457 million compared to $785 million in the second quarter. The decline reflected reductions of smartphone inventory on hand to improve supply chain efficiency and continued reduction of PlayBook inventory. Since the fourth quarter of last year, inventory turns have improved 50% from their lows, and working capital has declined significantly. This strong performance reflects the company's ability to effectively convert working capital into cash as it manages the transition to BlackBerry 10. CapEx in the quarter was $85 million, unchanged from the second quarter. Intangible asset purchases, which consist primarily of prepaid license agreements were $233 million compared to $253 million in the second quarter. Cash and investments in the third quarter increased by approximately $600 million from the second quarter to $2.94 billion. The increase reflects strong cash from operations, including favorable working capital management, as well as a tax benefit received in the quarter. The company moves into the fourth quarter. We will redeploy cash into working capital and marketing activities for the BlackBerry 10 launch. However, we anticipate that we will still end the fiscal year with a cash position substantially higher from the $2.1 billion when we started the year, including the funding of all restructuring costs. We've demonstrated our ability to maintain a strong financial position throughout our transition to BlackBerry 10, and we will continue to work towards a return to profitability. Let me now provide some additional updates on our core initiatives. As previously committed, the financial objectives for the CORE program were targeted to drive $1 billion in savings by the end of fiscal 2013 based on our Q4 2012 run rate. We are pleased to announce that we have achieved approximately $1 billion in savings as of the end of Q3, 1 quarter ahead of target. Benefits have been achieved in lower material costs, working capital improvements, greater efficiencies in manufacturing and supply chain costs, overall headcount reductions and leveraging third-party providers to assist in reducing indirect spending. This quarter, we spent $55 million in pretax restructuring costs associated with CORE, bringing the total cost to date to approximately $190 million. In terms of headcount reduction, the total previously announced net workforce reduction, including exits, attrition and net of new hires, is approximately 75% complete. We ended the quarter with a total workforce of approximately 13,400 full-time employees, and we expect the majority of the remaining reductions to occur by the end of the fiscal year. Based on the success of the program, we now expect the total cash cost of the CORE activities to be approximately $250 million by the end of fiscal 2013, compared to the initial estimated cost of $350 million, both estimates being before tax. We expect to see incremental benefits from this program in the fourth quarter, but we will continue to aggressively target additional cost reduction activities throughout fiscal 2014. Let me provide some color on near term dynamics as we move into the next quarter. As we get set to launch BlackBerry 10, we expect competitive market dynamics to continue into the fourth quarter, which will impact unit volumes, subscribers and service fees. As we have been discussing throughout the year, we will continue to consider using pricing initiatives on BlackBerry 7 devices and service fees in some markets as a way to maintain our subscriber base and drive more BlackBerry users, which will continue to put increasing pressure on service fees in the coming year. The timing of the BlackBerry 10 launch event for January 30, 2013 could also impact sales of current BlackBerry 7 products as some customers may wait for BlackBerry 10 devices. In addition, we will be significantly increasing our marketing spending this quarter as expected as we get set for the global launch of BlackBerry 10. All these factors are likely to have an impact on revenue, unit volumes, gross margins, ARPU and operating expenses, and we expect to report an operating loss in the fourth quarter. The next quarter, we expect our CapEx to continue to run below $100 million. As I mentioned, we will start using cash in the fourth quarter for both working capital and marketing activities for BlackBerry 10. However, we anticipate that we will still end the fiscal year with a cash position substantially higher than the $2.1 billion when we started the year, including the funding of all restructuring costs. As demonstrated this quarter, maintaining the company's financial strength continues to be a strategic imperative for the company through the transition of BlackBerry 10 and into fiscal 2014. That concludes our call. I will now ask the operator to start taking questions.

[Operator Instructions] Your first question today comes from the line of Kevin Smithen of Macquarie. Kevin Smithen - Macquarie Research: Can you discuss pricing trends for the tiering of services going forward? You mentioned there'll be some premium service tiers and there'll be some basic tiers. And how quickly will that impact service revenue over the coming quarters?

So what we see, Kevin, in the market is that instead of 1 service kind of fits all, that security mobile device management is basically segmenting across various sizes of enterprise and various businesses, be it regulated or not. So there's not just one entity or question of what other pricing tiers, it depends on the interest industry, it depends on the set of services that are being subscribed. But it's kind of a variable addition of services. It's a little bit of a menu thing that you can choose and pick and that then will basically govern the pricing. But clearly, the service offering in those enterprises are going to be segmented and specific to those segments. Kevin Smithen - Macquarie Research: How quickly will that impact your service revenue? I mean adverse impact over the -- in the short term? Or is this more of a longer-term mix issue?

As we transition to BlackBerry 10 and the mobile computing platform, we do the same transition basically in our service environment moving from the BB OS services to BES 10 services. So we're working on that transition. We're trying and working hard to make this as easy as possible in terms of the financial impact. However, right now, it is too early to say how that will evolve really in concrete numbers. But we are absolutely confident that we can manage that transition competently and also achieve the objective that we want to achieve in BES 10.

Your next question comes from the line of Kulbinder Garcha of Crédit Suisse. Kulbinder Garcha - Crédit Suisse AG, Research Division: Thorsten, it's the same question, kind of, I'm afraid. I guess what I really want to understand is this, in terms of the service fees that you guys will collect, so you go to an enterprise or a customer, you give them BB10, this menu service. At that point, they can start -- just to be clear, they can start deciding which service menu offerings they want, and they can stop paying you altogether or can you please explain the dynamics? Because that's going to really impact the rate at which your service revenue starts declining over the next 12 months.

So again, it is a segment of service packages that we're going to offer and we have to realize that some of the smaller enterprises -- they're actually good enough with just some e-mail exchange protocol connectivity to their main server or their exchange server that they're running. So there's very little value add in this. And then as we invest into BES 10, you think about cross-platform mobile device management. You think about security that you can offer and you think about the platinum package that is basically the all-in package that I would describe today as being the full BlackBerry package as you know it today, right, all in. So how that is going to be priced, what is the penetration rate into the market, that depends also on what is the BB10 penetration rate into those enterprises. So these things are dependent on each other and we will provide more insight into this once we have a clear view on those launch numbers and those launch plans.

Your next question comes from the line of Jim Suva of Citi. Jim Suva - Citigroup Inc, Research Division: Can you comment on -- you talked about going into mobile device management. There's a lot of companies in there, a lot of them are very ingrained, very big, rooted in it and already have had a lot of traction and history. How will you be able to do that? What type of services and how will you basically unseat those people that are MDM? They already are embracing MDM and rolling out with Android, iPhone, BlackBerry, lots of MDM management today.

So the very first step here is, Jim, that we have a pretty large installed base out there, right, of customers that use BlackBerrys and that manage BlackBerrys overall. So that's the first starting point. Then second, there is the BYOD trend out there but I think that it's fair to say that BlackBerry, the BlackBerry mobile device management is a leading edge solution that we will even enhance further with BES 10. And then on top of that, we will provide additional services that go beyond just the pure mobile device management. And I think that there's an area of innovation. You're right. It's an area of competition. You're also right with that. But I feel that the company is very well positioned based on its install base, based on BB10 platform and BES 10 capabilities to compete successfully in that domain.

Your next question comes from the line of Todd Coupland of CIBC. Todd Coupland - CIBC World Markets Inc., Research Division: Two quick questions. Firstly, some carriers are already opening up for pre-orders of BB10. Would you expect to make public comment on that, firstly? And secondly, when will the QWERTY BB10 device be available?

So it is with the carriers that they basically decide along their marketing and promotional windows when they're really going to launch. But what I can see is, we see them placing orders with us way ahead of time, and that is a very good thing. As I said in my earnings call, there's quite an excitement around the BlackBerry 10 out there and I wouldn't go so far to say there's a rush to be the first, but there's certainly quite a dynamic in all that. The partners that we have want to be really fast and early to market. From that perspective, we will announce those dates collectively with our carriers on the 30th of January. But I think there's a very good dynamic at play here, and I'm looking forward to fulfill those requirements and request and purchase orders from our customers.

Your next question comes from the line of Amitabh Passi of UBS. Amitabh Passi - UBS Investment Bank, Research Division: I just wanted to understand the OpEx gyrations for the fourth fiscal quarter R&D, I think was at probably the second highest level we've seen in the last 12 quarters. Just wanted to understand, do you expect R&D to stay at these high 300s level? And with respect to sales and marketing, should we look at your prior history the incremental spend 3Q to 4Q and assume it'll be something similar?

In terms of the R&D, it's dependent upon some of the timing of the BlackBerry 10 initiatives that we're undertaking. But I think what we're certainly trying to do is maintain some efficiency within our R&D group, and that's part of our ongoing CORE -- CORE program. I did mention that part of the "increase" to quarter on quarter is really some of the retention packages and just incentive plans that we've got in place, and that was impacting the Q3 numbers as well. And in terms of the sales and marketing, we're certainly looking to, as Frank is rolling out his marketing program, that number is going to increase quarter-on-quarter and into Q1 as well. So in terms of just benchmarking it to prior, I don't necessarily think that, that to a prior quarter can really articulate it right now. I think that just -- we're going to continue to look at efficient ways to spend marketing dollars. Frank's team is obviously working on that. And but also looking at it on a country-by-country basis and the timing of the rollouts.

Your next question will come from the line of Simona Jankowski of Goldman Sachs. Simona Jankowski - Goldman Sachs Group Inc., Research Division: It's a two-part question. Just the first part is back on the services side. So you commented on the enterprise piece of that. But is it fair to assume that by and large on the consumer side is where you no longer would expect to get meaningful services revenues going forward, whereas on the enterprise side you'll have more of this steering approach? And then the second question was, as you look at the timing of when either consumers or enterprises will move to BB10, is it fair to assume that most of the enterprise upgrade opportunities in the second half of the calendar year, given that it sounds like the full functionality of BES 10 does not become available until May?

Those transitions, Simona, don't happen overnight, right? Specifically in enterprise, there is budget cycles, there is planning cycles. And we know from our experience in corporations that actually product lifetimes is longer than in the consumer domain. So I think the time line is very well aligned to what our customers can do and want to. And as I said, we have those Beta tests going on in another 20 [ph] of our enterprise installations, which is actually quite exciting and allows us to really prove the process of introducing BB10, BES 10 and the additional new services into the enterprise market. So from that perspective, I feel that the process of introducing this and getting this into the market is actually pretty well-aligned from a timing perspective. Now on the consumer services, there is -- we discussed that in prior earnings call, there is a strong trend that is the Bring Your Own Device to work trend. So you have to be attractive to consumers first, the device which BB10 will absolutely cover. And then when these devices get connected to whatever corporate infrastructure and the selection of services that then is being done by the corporation, then that creates additional service revenue for us, an additional channel, an additional go-to-market that we're going to go after. And then as you can imagine, we have a very, very strong installed BBM base out there. BBM is a fantastic social network that is really distinct from other messaging applications because of its intermediacy, because of its richness of services, and we're going to evolve that. So the point is that what we're working on is how do we evolve BBM, BBM services to a stage where we can actually also create additional service revenues out of BBM.

Your next question will come from the line of Ehud Gelblum. Ehud A. Gelblum - Morgan Stanley, Research Division: I just want to clarify a bunch of things around the structure of the service contract and the service ARPUs. So just to rattle off a couple of points, just to make sure I understand, the current service fees that you collect on BB7 and below, are those contracts in any long-term contracts? And when you're talking about moving to a new fee structure, does that impact any current BB7 subscribers or as long as they stay with their current BlackBerry, nothing changes for them? And then if they upgrade or if someone comes in to a BlackBerry 7 device, putting aside BlackBerry 10, does the new fee structure impact them, or are they still under the old -- the current structure right now of $4, $5, $6, $7? And then the other thing is that for people who are under the new fee structure and hopefully in answer to the first question we'll know if it's only BB10 device holders going forward or of it's existing BB7 or future BB7. But for anyone under the new subscription service, are we to understand that all services fees, whatever they may be, are going to be paid by the user and no longer paid by the carrier, as in the user will pay a fee, it will flow through the carrier to you but the carrier will no longer pay anything out of its own pocket?

Hey, that's a lot of questions in there. Generally right now, the company is sort of starting to roll out these plans on the service plans as we get into launching services and we'll provide more details around some of the activities that we'll be offering to the enterprises. We just aren't providing the detail on it that at this time, Ehud. I just -- you'll have to wait until we start to launch some of these services to get more detail.

Your next question will come from the line of Rod Hall of JPMorgan. Roderick B. Hall - JP Morgan Chase & Co, Research Division: I just wanted to ask you guys, you've been reducing channel inventory over the last few quarters, which is commendable. And I'm just wondering what you're thinking about channel inventory as you head into BlackBerry 10. Are you happy with current levels of channel inventory? Do you think channel inventory needs to go up quite a bit, because it sounds like you've got quite a bit of demand and you need to have availability. And I wanted, Brian, if he could just clarify his commentary on the gross margin. He mentioned 3 drivers. Brian, could you -- can you rank order those at all as -- where cost reduction is the #1 driver or if you can put those in rank order, that would be helpful.

Ron, this as Thorsten. So to the channel inventory question, I think at this moment we're doing a really, really good job at managing our channel inventory on the BlackBerry 7 devices, which I think is really, really important in the transition phase. We're very comfortable where we are today in inventory at hand. And also what Brian was alluding to on the CORE, we have changed our manufacturing and our delivery logistics process quite substantially, so we're able to weigh quicker and faster than we probably were in the past. So we're in a pretty good position to fulfill demand on BlackBerry 7. Now naturally, as we're heading into the launch and into building BB10 devices, you will see an increase in inventory first in our factories and our warehouses and then loading the channels on BB10. That is expected, and that is part of our reinvestment of cash into inventory. Brian, I'll let you comment on the share point of the gross margin.

Sure, Rod. I don't have the details on how to rank order those. But I would say -- I mean, 2 of them are mix related in that favorable mix and hardware, but also higher service revenue. But I would stress the benefits that we've achieved through the CORE program in helping to drive that favorable gross margin.

Your next question will come from the line of then Ben Bolan [ph] of Cleveland Research.

Two-part question. When you look at CapEx, can you talk about how you're thinking about that into fiscal '14 and how it might change as you start to support this new menu-driven service approach? And then the second part, does the implied margin of the service revenue look different with BB10 than it does with the current service revenue?

In terms of the CapEx question, I think we're certainly -- and we're working this through our CORE program as well and looking at prioritizing different programs. So we're obviously doing with the eye of how do we get our overall cost structure competitive. And so as we've rolled out in that '14, we'll continue on that track. You could see in our last few quarters the amount of our CapEx has come down to around $87 million, $85 million mark. And we're going to continue to try and drive efficiencies in how we're spending CapEx and making sure that we're doing it on a thoughtful program-by-program basis. And I'd say that if we're looking at expanding in any particular markets, we may see some need to do some type of investing as well, and we'll look at that on a pragmatic basis.

Your next question comes from your next question comes from the line of Mark Sue of RBC. Mark Sue - RBC Capital Markets, LLC, Research Division: Maybe just additional thoughts on just the early feedback of BlackBerry 10. You spoke about the positive order trends. Is that concentrated in North America, or is that more broad-based? And also some thoughts on just the marketing dollars. We understand that you had to spend quite a bit to drive the success of the product. Wondering if the carriers are also committing meaningful advertising dollars for the initial launch?

So on the early feedback, I referenced to the global roadshow that we were doing, Mark, and we basically hit all continents. I think we hit something like 120 carriers. We also met with CIO and CRO roundtables now. It's absolutely global feedback because BlackBerry today is a globally used device and service. So we were actually really kind of getting into the aspect [ph] with that wherever we went and all those various regions that sometimes have different drivers for being attracted to BlackBerry and all of them were very, very positive. And what really struck me as being really -- the excitement was not around that much specifications, although BlackBerry 10 has great hardware specs, it was really, really around the next-generation user interface, the innovation around peak, hub and flow that just caught their attention, right? And we will talk about this on June -- on January 30th. And you will see that there -- it is just -- that was really the core. That is at the core beside the new architecture for mobile computing at the feedback of the carriers, absolutely global and good feedback. Marketing base, yes, absolutely. We, as Brian said, we are ready to invest in some very, very exciting marketing activities that you will see coming. We have an upfront leadership. I think we have developed and you'll see that already today happening. We have developed a pretty subtle way of getting into the marketing domain. And absolutely. And part of talking to our carrier partners, they want to launch this product as one of their forefront products. So yes, they're absolutely ready and they're committed to spending marketing dollars on BB10 as well.

Your next question will come from the line of Tal Liani of Bank of America. Tal Liani - BofA Merrill Lynch, Research Division: My question, hold on, let me just pick up the phone. Can you hear me? My question is about the migration to BB10. For an average corporate user, what do they have to do in order to migrate to BB10? Do they have -- is there a new server that needs to be installed, and do they need to go through new specification processes given that the system is so different? What have you done on your side to shorten the migration to BB10?

So there is, as you can imagine, when we do those tests with those 120 corporate customers, there is a BES 10-ready program where we lead them through the process together with them, training, education, actually really installing -- how do we move to BES 10. And BES 10 will be a fully integrated capability to manage BlackBerrys, but also manage other manufacturer brand devices. And this is a detailed process we're going through with our customers, and that's going way into detail, way too much into detail to take spending [ph] on the earnings call. But happy to share that and get you into touch with our experts on the BES 10 side if you want more detailed information.

Yes, Tal, Paul, there are programs that we've announced and stuff that is on the web talking about some of the certification and some the stuff that's going on now. But more detail will follow as well.

It's a very well program-managed and executed process, Tal.

Your next question will come from the line of Jeff Kvaal of Barclays. Jeffrey T. Kvaal - Barclays Capital, Research Division: I was wondering if we could focus in specifically on the non-enterprise service fees and the fee structure there. It's been many years, but in the past you talked about $3 a month in that particular segment, and this is like emerging market consumer-ish segment. Could you talk about, obviously not an absolute sense, but just in general sense what the trends are there? Are the same pressures that are hitting the enterprise portion of that service fee also applicable to the consumer side as well? And then on top of that, I think towards then, you might have said you expect service revenues to grow next year. I just wanted to clarify that.

Hey, Jeff, it's Brian. So just on the service revenue as it relates to the consumer side. When we -- I don't think I mentioned in my comments, our ARPU was down slightly quarter-on-quarter, and that reflects some of the initiatives that we're doing with some of the carriers on -- like we said, on how we're trying to use pricing initiatives in certain instances in order to drive and maintain our subscriber base. So as it relates to the -- our current view, we've seen that ARPU coming down slightly quarter-on-quarter.

Yes, and on your discussion about the question about our service revenue is going to grow next year. So as Brian just said, we will see pressure on pricing for BB OS-based services in order to make sure we stay relevant in our markets and we manage through the transition phase. So that was not my statement, just to really clarify this. What I was talking about is we are in a transition. We have to manage that transition not just from BB10, from BB OS to BB10, we have to manage the same transition in Service business, and that's what we're doing.

Your next question will come from the line of Richard Kramer of Arete. Richard Kramer - Arete Research Services LLP: Thorsten, I'd like to ask a little bit more about your software strategy. When Nokia announced that they were going to end-of-life Symbian, the platform and sales fell off very quickly. And given the need to support both BB7 and BB10, can you talk about what steps you might take to support -- to avoid that problem? And equally, if you're considering licensing BB10, have you set up a group within your organization to support licensees, which obviously will need a lot of handholding and a new platform to get anything, any products to market? Thanks.

So just to be very clear, we will not just kind of stop BB7 from being supported. We have a significant R&D team working and continuing to work on BB7. And you just saw us innovating on BB7 as well when we announced the BBM voice capability. So we will maintain BB7. There is a strong success with BB7 devices in the Asia Pac markets. And as you can see on the devices that we're launching with BB10, you can probably get an idea of in which price points they fit. So no, we will support those on-boarding, entry-level smartphone markets. We will continue to support them with BlackBerry 7, and you might expect us to even build one of the other new products based on BlackBerry 7. Because for those messaging-oriented markets, it's an exciting platform and it’s a really perfect platform. Licensing BB10 -- I think what is important here is that we prove and we are ready to do this, the capability to have BlackBerry 10 once we launch it on January 30. And then to your question, do we have the tools, the people, the processes, you're absolutely right. That requires a certain business set-up. However, we have, as you know, QNX is the company that runs our OS business, and they're already in it. I mean, the QNX business model is exactly licensing, the OS licensing the toolkits into embedded systems. So yes, the company has knowledge about how to do this. Would we have to expand this and grow this and build on this? Yes, certainly.

Thanks, Richard. That concludes the call for tonight. Hope everyone has a happy holidays season, and all the best in 2013 as well. Thank you.

And thank you. Ladies and gentlemen, that does conclude the conference call for today. We do thank you for your participation, and you may now disconnect your lines.