RIM to write down value of poor-selling BlackBerry PlayBook

Sluggish sales and excess inventory of the BlackBerry tablet prompt Research In Motion to take a big charge in the third quarter.

RIM

Research In Motion will write down the value of its BlackBerry PlayBook in the third quarter, spurred by weak demand and excess inventory for the tablet.

Writing down the value will entail a significant after-tax charge of $360 million for the quarter. Further, RIM said it no longer expects to hit its estimate of adjusted diluted earnings of $5.25 to $6.00 a share for the full fiscal year.

Acknowledging a high number of PlayBooks still stuck in its inventory, RIM said it believes that more promotional activity is needed to sell the tablet to consumers. The company cited a couple of reason for the PlayBook's weak demand, including the competitive tablet market and the delay in releasing version 2.0 of its PlayBook operating system. The new PlayBook OS is expected to reach BlackBerry customers in February 2012.

RIM added that the $360 million charge will let it continue its recent efforts to more heavily promote the PlayBook. The company recently slashed the price of the 16GB version to $199 and also cut prices on the 32GB and 64GB models, hoping for brighter sales during the holiday season.

Launched amost two weeks ago, the price drop had been advertised as a "limited time only" deal.

A quick check of Best Buy and Staples showed the 16GB version's $199 price standing firm, though Best Buy has sold out of all three PlayBook models.

Other vendors, such as Radio Shack and Office Depot, are still listing the 16GB model for $499. But some retailers, including Office Depot and Newegg, are offering deals on the 32GB and 64GB editions, selling them for $299 and $399, respectively.

Newegg sold out of the 16GB version the first weekend of the $199 promotion, while RIM said it's seen a healthy jump in demand following the price drop.

"RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy," Co-CEO Mike Lazaridis said in a statement. "Early results from recent PlayBook promotions indicate a significant increase in demand across most channels."

 

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