RIM Says Q2 Forecast Is Lower Than Expected
Research In Motion missed analysts' lowered revenue forecasts for its fiscal first quarter and said its outlook for the second quarter was lower than expected, as it reported its first-quarter results Thursday.
Revenue for the first quarter, which ended May 28, was US$4.9 billion, below the consensus forecast of $5.1 billion from analysts polled by Thomson Financial. The analysts' forecasts reflected a cut in RIM's own forecast, which was announced in late April.
Also on Thursday, the company announced a cost-cutting program that will include a headcount reduction. It expects to begin the program in the second quarter and benefit from it beginning in the third quarter.
RIM's net income for the first quarter was $695 million, or $1.33 per share, just ahead of the analysts' forecast of $1.32. However, the income figure was down from $769 million, or $1.38 per share, in the same quarter last year.
RIM said it sold about 500,000 BlackBerry PlayBook tablets in the quarter, following the device's launch on April 19.
For the current quarter, ending Aug. 27, RIM expects revenue in the range of $4.2 billion to $4.8 billion and earnings per share between $0.75 and $1.05, excluding one-time charges.
RIM has been struggling to compete with Apple's iPhone as well as devices running the Google Android OS, which in addition to being popular with consumers have begun to chip away at RIM's stronghold in the business market.
Investors are fleeing the company. RIM's shares, which closed Thursday at $35.33, are at about half their price just four months ago. Following its earnings news, RIM's shares dropped a further $5.18, or almost 15 percent, in after-hours trading at the time of this report.
On April 28, RIM warned that its first-quarter smartphone shipments would likely be lower than expected and cut its earnings guidance. It cut its earnings expectations to between $1.30 and $1.37, from its earlier forecast of $1.47 to $1.55. Likewise, it said revenue would be "slightly below" the range of $5.2 billion to $5.6 billion that it had predicted earlier.
RIM said the lower expectations were due to smartphone shipments coming in on the low end of the 13.5 million to 14.5 million units it had forecast, and slower sales of high-end models compared to lower-price devices.
RIM's PlayBook tablet, on sale since April, faces an uphill battle, even though some reviews praised the user interface, based on software acquired when RIM bought QNX, a maker of operating systems for mobile devices. However, early reviewers also cited a range of shortcomings, including the lack of a built-in e-mail program -- the main feature that drew enterprise users to the company's iconic BlackBerry smartphone in the first place.
Delays of a touchscreen Blackberry Bold have not helped the company's case. Meanwhile other phones based on QNX are not due out until 2012.