Deep discounts on Research In Motion’s tablet computer, the BlackBerry PlayBook, led the company to again restate its earnings expectations on Friday.
Costs related to a worldwide shutdown of BlackBerry service during October and sluggish sales of phones also led RIM to warn that its third-quarter revenue would be “slightly lower” than the $5.3 billion to $5.6 billion it earlier forecast.
The announcement also said that the company does not expect to meet its earnings target for the year.
RIM has repeatedly struggled to meet targets this year as it worked to stem a loss of market share for BlackBerry phones in North America. Friday’s restatement immediately had an impact on its already beleaguered shares, sending them down 11 percent. Its stock was down 68 percent for the year as of Thursday.
One of the few pieces of good news in the statement — that PlayBooks are finally selling — was not without a down side. The base model, once priced at $499, is now being offered for $199, an amount analysts say is well below RIM’s production costs for the device.
The PlayBook has been hobbled by the lack of fundamental features, such as an ability to send or receive BlackBerry’s signature e-mail service without the use of a BlackBerry phone. Software that is supposed to reverse those omissions was expected to be released this autumn. But the company was unable to meet that deadline and will not make it available until late this winter.
RIM said that it shipped 150,000 PlayBooks to stores during the quarter. While it did not offer specific numbers for actual sales to users, the company said that they were higher than its shipments, suggesting that the discount pricing was having some effect.
The company said that it would post a $485 million charge related to the PlayBook price reductions. RIM expects to report official results for the third quarter on Dec. 15.
Despite the device’s dismal record since its release in April, Mike Lazaridis, the co-chief executive of RIM, said that the company has no intention of abandoning the tablet computer maker like Hewlett-Packard.
“RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy,” he said in the statement. “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.”
The statement also highlighted the continuing drop in demand in RIM’s core smartphone business. The company warned in the statement that it may have to cut its expectations for fourth-quarter phone sales because phones shipped during the current quarter are piling up in retailers’ warehouses rather than going into consumers’ hands.
The company said that a problem in its network that left some customers without BlackBerry services for up to three days would add an additional $50 million cost to the quarter.
Article source: http://feeds.nytimes.com/click.phdo?i=950482a8d05aa4f6018099f798b05fd8
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