RIM cuts profit forecast

By Geoff Duncan April 29, 2011

BlackBerry PlayBook — Image used with permission by copyright holder

BlackBerry maker Research in Motion has seen its stock price take a pummeling in the wake of announcing it was reducing its profit forecast for the current fiscal quarter. In March, RIM had said it expected to ship between 13.5 and 14.5 million smartphones during the current quarter; RIM now says smartphone shipments are going to be at the lower end of that range, and the mix of devices it sells will be further skewed towards devices with lower sales prices—which means less money for RIM.

RIM says shipments of its BlackBerry PlayBook tablet for the quarter “continue to be in line” with previous expectations, and that the company has not seen any significant supply disruptions as a result of the recent Japan earthquake. RIM says it expects its third and fourth quarter earnings for the fiscal year will be strong, powered by new BlackBerry smartphones, some of which the company is planning to unveil next week.

In RIM’s accounting calendar, the current quarter is the first fiscal quarter of 2012, and ends May 28, 2011.

However, while RIM tried to put a positive face on the guidance change, brokers and analysts reacted negatively, with several brokerages taking “buy” ratings off RIM stock, pointing to both the profit warning and ongoing concerns about RIM’s ability to sustain its BlackBerry franchise in the face of competition from iSO and Android. In general, the investment community has not been thrilled with RIM’s execution in the smartphone market: although RIM continues to tout their strong product roadmap, many industry watchers note that consumers and business are not waiting for RIM’s roadmap to play out: instead, they are adopting other platforms and technologies.

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