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RIM Announces Another Profit Warning

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Research In Motion RIMCanadian smartphone manufacturer, Research In Motion (NASDAQ:RIMM) closed off an already disappointing year with another steep profit warning.

The announcement made on Friday is the result of a large charge taken in order t write down inventories of its PlayBook tablet. The Blackberry smartphone manufacturer also announced that it will no longer be able to meet its projected full year earnings of $5.2 to $6 per share.

The Canadian smartphone maker is taking a $360 million after tax write down on the iPad competitor, Playbook’s inventors. The company is also taking a $50 million charge related to the international service outage that occurred in the month of October.


The company’s flagship tablet failed to garner the sales figures expected by RIM, largely because of unfavorable reviews, few applications and a huge price tag. The dominance of the tablet market by Apple’s iPad left no room for the Playbook to grow. Last month RIM decided to drastically cut down the price of the tablet in order to attract holiday customers, a move which might have proved effective, since a lot of tablets have been told to have sold.

In the third quarter RIM managed to sell only around 150,000 tablets, against its projected target of 200,000 tablets. The third quarter sales are lower than the second quarter sales by 12.5 percent. These are however just a tiny fraction of the total number of tablets sold by Apple, which currently stands at 11 million iPad in just the last quarter.

The tablet and the smartphone sector has continued to suffer and have proved to be a market in which RIM has not been able to get a hold of. There are no future plans to release an updated version of the now outdated tablet into the market, which could spur new life into the sales of tablets.

The manufacturer of the first smartphone has failed to impress investors with its inability to keep pace with Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and other smartphone and tablet manufacturers. Apple, Google and Samsung have taken over the market share of RIM around the world and are continuing to prove hard to compete with.

There have been further series of profit warnings and missteps in product launches that have proved to be detrimental to the progress of the company. In October, RIM was hit with a major network outage, which left its customers without the Blackberry messaging service and ability to receive email. This led to a serious dent in the image of the company, which touts as being meant for businessmen.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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