© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
April 29, 2011 12:46 am
Research in Motion’s shares plunged as much as 11 per cent in after-hours trading after the BlackBerry maker issued a surprise profit warning due to increasing competition from Apple and Google as well as delays in the launch of an updated generation of smartphones.
RIM said on Thursday that it had cut its sales and profit forecasts for the current quarter because of slower-than-expected demand for its ageing smartphones, which have begun to look increasingly dated alongside the iPhone and other touchscreen-based handsets.
The Canadian company said it expected profits this quarter of $1.30-$1.37 a share, down sharply from the $1.47-$1.55 a share it was forecasting last month. Sales in the quarter will be “slightly below” the $5.2bn-$5.6bn it had previously forecast.
RIM’s stock fell $6.17, or 11 per cent, to $50.43 in late trading on Thursday, after earlier closing at $56.59 on Nasdaq.
Underscoring its problems, RIM said BlackBerry shipments would be at the lower end of the range of 13.5m-14.5m units it had projected last month and the mix of devices it sells would shift towards cheaper models.
In a tense call with analysts after the profit warning was announced, Jim Balsillie, RIM’s co-chief executive, insisted the company’s current problems were transitory rather than the start of a longer-term decline. “We all wish we could have got the new products out quicker,” he said, “but that just hasn’t happened”.
Nevertheless, the profit warning will fuel concerns among some analysts and investors that RIM’s glory days are over and that, like Nokia, the company has been outflanked in the rapidly expanding market for smartphones by faster competitors such as Apple, HTC, Samsung and Motorola Mobility.
RIM’s share of worldwide smartphone sales slipped to 14 per cent in the fourth quarter from 20 per cent a year earlier, according to Canalys, the UK-based research company. Apple’s share was unchanged at 16 per cent, while Google’s Android-based smartphones more than tripled to 33 per cent.
RIM has also been stung by many of the reviews of its new PlayBook tablet device, which launched in the US this month and is designed to compete against the Apple iPad and other tablets.
While the Playbook’s design, hardware and new operating system have been well received, many reviewers have complained that RIM rushed the device out before the software needed to run key functions such as e-mail were ready.
RIM is expected to address these and other concerns at a software developer’s conference next week, where the company is also expected to unveil the first of its next generation BlackBerrys running an updated operating system and new software.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in