Research In Motion posted a 27 percent drop in quarterly profit on Thursday and provided a dismal outlook for BlackBerry shipments in its historically strong Christmas period, sending its shares tumbling.
RIM's shares shed more than 6 percent in after-hours trade as investors fretted about the weak performance of a line of improved BlackBerry 7 smartphones in the holiday season and the high cost RIM is paying to stick with its poor-selling PlayBook tablet .
Later on a conference call, RIM said it did not expect to release its QNX-based BlackBerry 10 smartphones until the latter part of 2012, long after its initial promise of a first-quarter delivery. The BlackBerry 7 line is designed as a bridge to the QNX smartphones.
It's really not about the quarter, it's about the guidance, said Sterne Agee analyst Shaw Wu. They're expecting a pretty steep decline into the holiday period, and that's not a good sign, obviously.
The Waterloo, Ontario-based company has been banking on the QNX operating system to enable its products to match the popularity of Apple's iPhone and iPad or the slew of devices that make use of Google's Android software. RIM's market share has steadily eroded and its share price, down about 73 percent this year, has followed suit.
The dismal holiday outlook for between 11 million and 12 million smartphones - compared to 14.1 million in the previous quarter and 14.8 million in the Christmas quarter last year - suggests the BlackBerry 7 bridge is proving unsteady at best. The delay in the QNX smartphones is likely to make matters worse.
Is this the start of a downward trend in terms of units shipped? If consumer demand slows for their product the stuff is going to sit there and we could start seeing the ratcheting-down of units shipped and that's the big concern, said Colin Gillis, an analyst at BGC Partners in New York.
Even if RIM hits the high-end of its Christmas quarter shipment target it will ship fewer BlackBerrys in this fiscal year than the previous one, the first ever such decline.
RIM's co-CEOs Mike Lazaridis and Jim Balsillie, in an apparent bid to see off investor anger at their handling of the company's fading fortunes, agreed to take an immediate pay cut to $1.
BY THE NUMBERS
RIM turned in a sharp drop in adjusted profit at $667 million (429.85 million pounds), or $1.27 a share, in its third quarter ended on November 26. That does not include a massive writedown on unsold PlayBooks or a charge associated with October's global service outage.
It generated revenue of $5. 17 billion, compared with $5.5 billion a year earlier.
Analysts on average had expected RIM to earn $1.19 a share on sales of $5.265 billion after the struggling Canadian company warned on profit, revenue and shipments on December 2.
In the third quarter a year earlier, RIM made $911.1 million, or $1.74 a share.
The intervening year has been mostly downhill for RIM, which made its name with secure, reliable communications for the world's business and government elites before branching out into a now-crowded consumer market.
For the current quarter, RIM expects to turn a profit of between 80 and 95 cents a share on revenue of between $4.6 billion and $4.9 billion.
Including the $485 million pre-tax writedown on discounted PlayBook inventory and a $54 million charge related to the outage, RIM made a third-quarter profit of $265 million, or 51 cents a share.
It said it now has almost 75 million subscribers, up from the more than 70 million it reported at the end of its second quarter.
They're still adding a lot of subscribers, but they're not selling enough phones, said Tavis McCourt, an analyst at Morgan Keegan. Are customers just going to upgrade to the iPhone and Android or are they really that loyal where they're going to wait for a better BlackBerry?
(Reporting by Alastair Sharp)