BlackBerry slump to cost jobs

June 16, 2011

Research in Motion, maker of the BlackBerry smartphone, forecast second-quarter revenue and profit that missed analysts’ estimates and said it will cut jobs as a lack of new models prompts consumers to buy rival devices.

The stock fell as much as 16 percent in late trading after RIM said profit this quarter would be 75 cents to $1.05 a share. Analysts predicted $1.40, excluding some costs, according to a Bloomberg survey. Revenue will be $4.2 billion to $4.8 billion in the three months through August, RIM said, compared with the average estimate of $5.47 billion.

RIM is losing market share in the United States to Apple’s iPhone and handsets with Google’s Android software, in part because it hasn’t introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads into Latin America, Asia and Europe, threatening the popularity of less-expensive BlackBerry models such as the Curve.

The forecast “means new devices won’t make it into the second quarter,” said Tero Kuittinen, an analyst at MKM Partners in Stamford, Conn. “This is a quarter they really needed new devices to get them in there and they won’t.”

RIM, based in Waterloo, Ontario, plunged as much as $5.73 to $29.60 in late trading, after closing at $35.33 in Nasdaq Stock Market trading. The stock has lost 39 percent this year.

RIM has come under increasing scrutiny from investors after its stock slumped, the company lost phone market share and its new PlayBook tablet computer, a rival to Apple’s iPad, was criticized by technology columnists.

The company said Thursday it plans to eliminate an unspecified number of jobs and make organizational changes to accelerate product introduction.

“With the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012,” co-chief executive Jim Balsillie said in Thursday’s statement. Full-year profit will be $5.25 to $6 a share, excluding some costs, RIM said, down from a previous forecast of $7.50. Analysts predicted $6.24.

RIM’s share of U.S. smartphone subscribers dropped 4.7 percentage points to 25.7 percent in April from three months earlier, according to ComScore.

“RIM remains caught in a vacuum near-term as it is forced to discount its aging smartphone portfolio in order to move volume and clear inventory,” Ehud Gelblum, an analyst at Morgan Stanley in New York, said in a note before the results.

— Bloomberg News

Comments
Show Comments
Most Read Business