Research in Motion (RIMM) slashed its guidance on Thursday after quarterly profit dropped, saying that it would slash jobs as rivals mount pressure on the smartphone maker.
Shares tumbled 15 percent to $30 in after-hours trading, after closing at $35.33 on the Nasdaq Stock market Thursday.
In the first quarter, RIM earned $695 million, or $1.33 a share, in line with the Thomson Reuters mean estimate of $1.32 and at the midpoint of RIM's latest guidance for earnings of $1.30 to $1.37 a share.
The challenges of the first quarter are continuing into the August quarter. The existing portfolio of BlackBerry products has been in market for close to a year and delivering new products has proven more challenging than anticipated, said co-CEO Jim Balsillie.
The Canadian company, facing rising competition for its smartphones and under pressure after a botched launch of its PlayBook tablet computer, shipped 13.2 million BlackBerrys in the three months to May 28.
It shipped 500,000 PlayBook tablets in the six weeks after the launch, exceeding the average analyst forecast of 366,000, but admitted its approach to introducing the device into the market was not as smoothed as planned.
RIM said it expects earnings in the current quarter of between 75 cents and $1.05, sharply lower than the already pessimistic average view of $1.40, on revenue between $4.2 billion and $4.8 billion.
A planned round of job cuts and organizational restructuring will allow the company to be more nimble, said Balsillie.
Some of the organizational structures that were crucial to our success over the past several years no longer make sense, given the evolution of the industry, and we need the flexibility to hire new talent and invest in areas that reflect the opportunities and strategic objectives of the company, he said. The reduction of our headcount is an incredibly difficult decision, and Mike and I appreciate the impact of this on our employees, their families and the community.
It slashed its earnings outlook for the fiscal year to late March to between $4.25 and $6 a share, from $7.50 previously.
Shares of RIM -- which reported after the bell -- hit an almost five-year low in the session after the company said a senior executive had taken medical leave.