Research In Motion (NASDAQ:RIMM) said it will book a pretax charge of $485 million for its fiscal third quarter related to weaker than expected sales of its PlayBook tablet, and the company said it will slightly miss its revenue forecast for the quarter. The news, which sent RIM's shares down over 8 percent in morning trading, are the latest indication that the BlackBerry maker's tablet is failing to take hold in the market.
RIM said that it remains committed to the PlayBook and to the tablet market despite the charge. The company has been cutting the price of the PlayBook by as much as $300 as part of holiday promotions, but said that additional promotional activity is needed "to drive sell-through to end customers." RIM said that this is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software, which is expected in February.
In its release, RIM said it sold 150,000 PlayBooks in the third quarter, down from 200,000 in the second quarter and 500,000 in its first quarter of availability. U.S. wireless carriers have yet to launch PlayBook tablets with cellular connectivity, which has likely contributed to the lackluster sales.
"RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy," RIM co-CEO Mike Lazaridis said in a statement. "Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise."
As part of the announcement, RIM said that it shipped around 14.1 million BlackBerry smartphones in the third quarter, in line with previous guidance of between 13.5-14.5 million. However, RIM said it expects revenue to be slightly lower than the previously expectation of $5.3-$5.6 billion, due to its product mix and price cuts to the PlayBook. Additionally, RIM said it expects unit shipments for its fiscal fourth quarter to be lower than for the third quarter due to several factors including lower than expected sell-through in the third quarter and RIM's current view of fourth quarter demand. RIM also said it no longer expects to achieve its full-year earnings guidance.
- see this release
- see this Bloomberg article
- see this Reuters article
- see this WSJ article (sub. req.)
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