RIM Won’t Meet Earnings Targets After PlayBook Losses
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In order to boost the PlayBook’s anemic sales, RIM last month began offering the tablet at sharply marked-down prices, forcing it to book a $360 million after-tax writedown.
RIM introduced the PlayBook last April, long after Apple (NASDAQ:AAPL) had already staked its claim as market leader with the ubiquitous iPad.
Even with the discounts, consumers have been underwhelmed by RIM’s entry. The company sold about 150,000 PlayBooks in the third quarter, down from 200,000 in the second quarter. Meanwhile, Apple sold 11 million iPads in the third quarter, when it launched the iPad 2.
In recent quarters, Apple’s iPhone and Google (NASDAQ:GOOG) Android devices have gobbled up RIM’s once mighty share of the smartphone market. Product missteps, profit warnings, and a global outage for its BlackBerry network last month have plagued the company that virtually invented the smartphone category.
RIM shares fell 3.7 percent on Friday before the morning bell in New York. The stock was down 9.15% this morning as of 10:28 a.m. EST, and more than 70% for the year to date.
Today the Ontario-based company said it no longer expects to meet its forecasts for full-year adjusted earnings of $5.25 to $6.00 a share because of the PlayBook writedown and a charge related to the global service outage.
Excluding the $360 million PlayBook provision and a $50 million charge for the outage, RIM expects adjusted earnings in the third quarter to be at the low to mid-point of its previously forecast $1.20 to $1.40 per share range.
Revenue is expected to be slightly lower that the previously forecast range of $5.3 billion to $5.6 billion, in part due to the PlayBook discounting, which it plans to expand.
RIM said it shipped about 14.1 million BlackBerry phones in the third quarter, in line with its earlier forecast of between 13.5 and 14.5 million.
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