RIM knows it’s in a difficult situation. Following years of unparalleled expansion, it is, for the first time, facing the prospect of culling jobs and cutting profit predictions for the rest of this year.
At an earnings call for the first quarter of this year, RIM executives announced profits below even the predictions they revised downwards only seven weeks ago. While it made profits of $695 million on revenue of $4.9 billion, this was down on profits in the same period last year of $769 million on revenue of $4.2 billion. During the period it sold 13.2 million BlackBerry handsets and shipped 500,000 PlayBooks. Adding to the gloom, the company reduced its outlook for the rest of the year, which sent its stock plummeting by 14 percent in after-hours trading. Co-CEO, Jim Balsillie announced that the firm was now predicting earnings of $5.25 to $6-a-share down from $7.50 during the current fiscal year. Balsillie confirmed that job cuts would be necessary in a bid to cut costs.
While the financial results will be disappointing for RIM, the sale of half a million PlayBooks will surely be good news for the company considering the less-than-favourable reviews the QNX-based tablet has received. The PlayBook shipped without any native apps for email, calendar or contacts and the number of apps available was only around 1,000 which, compared to the number available for the iPad or Android tablets, is tiny. The 500,000 was well above the analysts predictions of around 350,000. RIM would not expand on how many PlayBooks were purchased by retail customers compared to business clients. The PlayBook only went on sale here in the UK yesterday and retailers reported a lot of interest – but they’re hardly likely to be saying anything else. There were some calls from investors for Balsillie and fellow CEO Mike Lazaridis to step down, but both rejected the idea with Lazaridis saying what the company needed now was “strong, consistent leadership.” Balsillie tried to put on a brave face saying better times were just around the corner: “We have a strong business. We have made major platform upgrade. We are almost through this transition."
With no date yet set for the launch of the QNX-platform on BlackBerry handsets, investors are going to be a little sceptical about the quick return to good times, but at least for RIM the PlayBook numbers offer a silver-lining on otherwise gloomy results.
Source: New York Times