RIM warns on weak sales and BlackBerry delays - Mobile World Live

RIM warns on weak sales and BlackBerry delays

16 DEC 2011

Shares in BlackBerry-maker RIM slipped by as much as 7 percent in extended trading last night as the struggling firm reported another disappointing quarter; provided a weak sales forecast for the current period; and pushed back the launch of its new device line.

For the quarter ended 26 November, net income came in at US$265 million, down 70 percent from a year ago, while sales came in at US$5.17 billion, down from US$5.5 billion. Although RIM had earlier warned of the poor numbers, the figures were still below most analyst forecasts.

It sold 14.1 million devices in the quarter, increasing its BlackBerry subscriber base to 75 million, up 5 million on the previous quarter. However, it shipped just 150,000 units of its PlayBook tablet.

More bad news was revealed on the earnings call by co-CEO Mike Lazaridis (pictured), who said that the first devices running the new BlackBerry 10 operating system would not now appear until late next year. The delay is apparently due to the firm having to wait on critical chipsets becoming available.

The delay could be highly damaging for the firm as it struggles to keep pace with rivals such as Apple, say analysts. “They've already got tepid developer support and then they're going to be rolling out these phones right smack in the (midst) of an iPhone 5 (launch) most likely," Colin Gillis, an analyst at BGC Partners, told Reuters. "By then the ecosystem runs the risk of being abandoned.”

The guidance for RIM’s current quarter – which includes the key holiday sales period – was also below par. The firm guided that profit will be between US$0.80-US$0.95 per share, and said that sales will be between US$4.6 billion to US$4.9 billion. Analysts had projected profit of US$1.08 a share and sales of US$4.85 billion, according to Bloomberg data.

RIM said it expects BlackBerry shipments in the quarter to be between 11 million to 12 million. Analysts had projected 12.8 million units. According to Reuters, this would mark the first quarter-to-quarter decline in BlackBerry shipments for six years during the crucial sales season.

In a statement, RIM said that it “continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalise on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance.”

Its two co-CEOs, Mike Lazaridis and Jim Balsillie, have agreed to take a pay-cut to just US$1 dollar while they work through the problems. The firm faced renewed calls from shareholders yesterday to separate the roles of chairman and chief executive, which are currently held jointly by both Lazaridis and Balsillie.