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RIM Cuts Profit Forecast as BlackBerry Demand Falls Short

Research In Motion Ltd. (RIM), facing intensifying competition from Apple Inc. (AAPL) and Google Inc. (GOOG), cut its sales and profit forecasts for this quarter on slower-than- expected demand for BlackBerry smartphones. The stock plunged.

Profit this quarter will be $1.30 to $1.37 a share, Waterloo, Ontario-based RIM said today in a statement. The company last month forecast profit of $1.47 to $1.55 a share. Sales in the quarter ending May 28 will be “slightly below” the $5.2 billion to $5.6 billion the company had forecast.

RIM said BlackBerry shipments will be at the lower end of the range of 13.5 million to 14.5 million it projected last month, and the mix of devices it sells will shift toward cheaper models. The forecast shows that higher-end BlackBerrys like the Torch, designed to compete with Apple’s iPhone and devices built on Google’s Android platform, are missing estimates, said Michael Walkley, an analyst at Canaccord Genuity Ltd.

“Higher-end phones have not sold so well,” said Walkley, who has a “hold” rating on the stock. “The investment community was already skeptical about the full-year guidance of $7.50 and this gives them reason to be more skeptical.”

Analysts predicted earnings of $1.50 a share on sales of $5.44 billion for this quarter, the average estimates compiled by Bloomberg.

RIM fell $5.20, or 9.2 percent, to $51.39 in late trading, after closing at $56.59 on the Nasdaq Stock Market. It has lost 2.7 percent this year as of today’s close.

Full-Year Forecast

The company said full-year earnings will be about $7.50 a share. Last month, it projected earnings in excess of $7.50. The company said it anticipates “strong” revenue growth in the third and fourth quarters, helped by new BlackBerry models and “prudent” cost management. Analysts estimate earnings of $6.91 a share on average.

RIM’s share of worldwide smartphone sales slipped to 14 percent in the fourth quarter from 20 percent a year earlier, according to Canalys, a British research company. Apple’s share was unchanged at 16 percent, while Android’s more than tripled to 33 percent.

RIM said shipments of the PlayBook tablet, which started selling in the U.S. April 19 to challenge Apple’s iPad, are in line with its previous estimates. The device hasn’t experienced significant supply disruptions due to the Japan earthquake, RIM said.

(RIM plans to have a conference call at 5:30 p.m. New York time. Go to http://www.rim.com/investors/events/index.shtml to access the call).

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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