Research In Motion's quarterly profit dropped and revenue missed its own limp forecast, forcing the BlackBerry maker to slash its outlook and sending its shares down 15 percent on Thursday.
Facing intense pressure from Apple and Google in the smartphone market, RIM also warned that its latest models would not hit U.S. stores until well into the valuable back-to-school shopping season. The delay will likely add to the disappointment felt by investors after RIM's botched launch of its PlayBook tablet computer this spring.
The company is going into the abyss of a transition, and even if they get a new model, it's a new model on the old platform, said BGC Partners analyst Colin Gillis, one of many who has criticized RIM's product development pipeline.
RIM has promised smartphones next year running on its new QNX platform, now featured in the PlayBook, but only after it releases a series of devices with an upgraded version of the current operating system. But even those upgrades to its Bold business workhorse, new Torch and Storm models won't go on sale until late August, RIM said on Thursday.
That delay pushed RIM to forecast shipments of between 11 million and 12.5 million smartphones in the current quarter, sharply lower than the more than 14 million eyed by analysts.
RIM shipped 13.2 million BlackBerrys in the three months to May 28, missing its own estimate.
It shipped 500,000 PlayBook tablets in the six weeks after its April launch, exceeding the average analyst forecast of 366,000. Even so, the number represents a small fraction of Apple's iPad sales.
RIM, once a byword for corporate mobile communications, has lost allure as Apple's iPhone and later Google's Android operating system changed the rules of the game.
Up against that competition, analysts had thought it was only a matter of time before RIM abandoned a $7.50 a share earnings outlook for the year to late March 2012. On Thursday, it did just that, recalibrating expectations to between $5.25 and $6 a share.
In a tacit acknowledgment that it needs to do more to play catch-up, the company said it plans to cut jobs and focus its resources on accelerating its product pipeline. The company did not disclose the number of job cuts, but indicated that it intends to begin this reorganization immediately.
RIM is in this situation because its phones aren't competitive and they're not competitive because they've fallen behind on development and product cycle, said Charter Equity analyst Edward Snyder. Now they need to accelerate the models to market, but at the same time they are cutting staff.
To help boost its sagging share price, RIM intends to buy back up to 5 percent of its outstanding shares and said the board did not expect that the spending would have a negative impact its growth plan. Its full year forecast for earnings per share did not calculate any impact of the share buyback.
BY THE NUMBERS
RIM expects earnings in the current quarter of between 75 cents and $1.05, sharply lower than the already pessimistic average view of $1.40. It sees revenue of between $4.2 billion and $4.8 billion.
The Waterloo, Ontario-based company's net profit dropped to $695 million, or $1.33 a share, on revenue of $4.9 billion. Analysts had expected profit of $1.32 a share on revenue of $5.1 billion.
A year ago RIM earned $1.38 a share on revenue of $4.24 billion.
The company said its gross margins, among the highest in the smartphone industry, will likely slip around 5 percentage points to some 39 percent in the current quarter.
Shares of RIM -- which reported its results after the close -- fell to nearly a five-year low during the regular session after the company said a senior executive had taken medical leave.
RIM shares fell more than 15 percent further to $29.84 in trade after the closing bell in the United States.
(Additional reporting by Euan Rocha, Allison Martell and Trish Nixon in Toronto and Sinead Carew in New York)
(Corrects RIM's full year earnings forecast to $5.25-$6 a share, from $4.25-$6 a share)