Analysts expressed concern about RIM’s ongoing performance, after the company said it will miss its third-quarter revenue forecast, and its full year earnings per share target.
While the company noted heavy costs related to its PlayBook tablet, the fact that it published poor shipment forecasts for the fourth quarter sparked concern. Mike Abramsky, an analyst with RBC capital, told the Wall Street Journal that “this is more about the declining [BlackBerry] momentum in the midst of what was supposed to be a strong product cycle.”
According to Bloomberg, Matt McCormick of Bahl & Gaynor Investment Counsel argued: “the next question from a management perspective is do they need someone different? They cannot keep going on the same course forever.” RIM has already come under pressure to review its management, as its share price slid.
On Friday, RIM said that its adjusted revenue for the third quarter of fiscal 2012 will be “slightly lower” than the previously announced range of US$5.3 billion–US$5.6 billion, due to product mix issues and the impact of PlayBook tablet sales initiatives. It also said it no longer expects to meet its full year earnings per share guidance.
The company will record a pre-tax charge of around US$485 million related to the inventory valuation of the PlayBook, acknowledging that there is a “high level” of its tablets in the channel. It is also set to record a charge of US$50 million related to the service outage that occurred during the period.
While it is still in the process of finalising its fourth quarter outlook, RIM said that it expects its total shipments to fall sequentially, due to “several factors including lower than expected sell-through in the third quarter and RIM’s current view of fourth quarter demand.” For the quarter to 26 November 2011, it shipped approximately 14.1 million BlackBerry smartphones, in line with previous guidance.
In order to drive sales of the PlayBook, RIM said that it believes “an increase in promotional activity is required.” It attributed this to “recent shifts in the competitive dynamics of the tablet market,” as well as a delay in the release of the PlayBook OS 2.0 software. It now does not expect the software release to be available until February 2012 – and this release is intended to provide some significant improvements over the current version.
RIM said that in the third quarter of 2011 it sold “approximately 150,000” tablets into its channels and that, based on its internal data, sales to customers were “higher than this amount.”
Since the launch of new promotions across consumer and enterprise channels in the US and Canada, the company said it has seen “a significant increase in demand for the PlayBook.”