Research In Motion Guides Lower, Stock Falters

Citing disappointing sales of its Playbook tablet as well as continued declines in their wireless Blackberry devices, Waterloo Ont. based Research In Motion (NASDAQ:RIMM) warned markets today that they would miss their earnings target for the year.

The stock closed today at $16.87 per share or about 9% and has fallen nearly 70% this year.  RIMM announced that they have shipped 150,000 Playbooks to retailers and they have had to discount them heavily from their original $495 price point.  Amazon’s (NASDAQ: AMZN) Kindle Fire ($199) is putting downward pressure on the whole sector.   RIMM announced they would be taking a $485 million pre-tax write-off due to inventory valuation.

The tablet is the flagship product for RIMM’s new QNX operating system of which development is progressing frighteningly slow and is to form the foundation for the next generation of the company’s smartphones.  The Playbook still lacks native e-mail functionality and the company missed an October update window which has been pushed back to 2012.

The company also said that they shipped 4.1 million smartphones in current quarter which is in-line with their original estimates but they would miss their revenue projections by $300 million due to the obvious problems with the Playbook’s roll out.

At this point RIMM’s push to compete with Apple (NASDAQ: AAPL) in vertically controlling their products from the hardware through the software has them looking more like Tandy then the Cupertino giant.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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