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RIM results, outlook stun investors even after warning

Sep 15, 2011, 2:28 p.m.
A person uses the new Blackberry Bold 9900 at a release party to promote the BlackBerry OS 7 devices in Toronto August 3, 2011. REUTERS/Mark Blinch

By Alastair Sharp

(Reuters) - Research In Motion reported a steep drop in quarterly profit on limp sales of its Blackberry smartphones and Playbook tablets, and offered investors little hope of a turnaround anytime soon, sending its shares tumbling.

The Canadian company painted a less-than-rosy picture for its current quarter and pointed toward the lower end of an already reduced full-year outlook in a quarterly financial report issued late Thursday.

The flagging performance by the one-time smartphone technology leader came during a quarter in which it launched four touchscreen phones that it hopes would at least slow a flood of lost sales to Apple's iPhone and devices using Google's Android software.

"This report is another nail in the coffin of management," said Edward Snyder, an analyst at Charter Equity Research. "Even though they guided down for this quarter, they still fell short of that."

RIM shipped 10.6 million smartphones and 200,000 PlayBook tablet computers in the three months to August 27, sharply below analysts' average estimate of almost 12 million phones and 600,000 tablets. RIM's own outlook was for BlackBerry shipments of between 11 million and 12.5 million.

"I was stunned that the device number was below their guidance," said Peter Misek from Jefferies & Co.

RIM is now working to move its smartphones across to the QNX software that powers its PlayBook tablet, with the first QNX-based phones promised for early in 2012.

"It's pretty clear the BlackBerry platform is now in decline, said analyst Tavis McCourt at Morgan Keegan. "They really need QNX to reinvigorate the business."

"If QNX is a bust that's when RIM needs to make strategic decisions as to whether it can go it alone," he said.

BLACKBERRY REBOUND EXPECTED

The Waterloo, Ontario-based company's adjusted net profit fell 47 percent to $419 million, or 80 cents per diluted share, on revenue of $4.2 billion.

Analysts had on average expected RIM to earn 88 cents a share on revenue of $4.47 billion, according to Thomson Reuters I/B/E/S.

The company, which issued a profit warning in June, earned $1.46 a share on sales of $4.62 billion in the year-earlier period.

RIM expects profit and BlackBerry shipments to rebound in the current quarter as upgraded, touchscreen versions of its Bold, Torch and Curve smartphones, plus a Torch-branded touchscreen-only device, start selling in volume across the world. But its outlook did not go beyond what analysts had anticipated.

RIM's Nasdaq-listed shares fell as much as 18 percent to $24.20 in after-hours trade following the results.

RIM expects to earn between $1.20 and $1.40 a share on sales between $5.3 billion and $5.6 billion in the three months to late November.

(Reporting by Alastair Sharp in Toronto; editing by Peter Galloway and Janet Guttsman)

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