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RIM shares take a hit on weak outlook

BlackBerry maker reports solid fourth-quarter results but warns that the current quarter may suffer as it shifts to lower-end devices and spends on its PlayBook launch.

RIM's upcoming BlackBerry PlayBook
RIM's upcoming BlackBerry PlayBook RIM

Shares of Research In Motion are taking a tumble after the company warned of lower results for the current quarter as it contends with competition for its BlackBerry devices and gets ready to launch its PlayBook tablet.

In its earnings conference call yesterday afternoon, RIM warned of lower results for the current quarter.

The company said that it's looking for earnings for the quarter ending May to drop to between $1.47 and $1.55 a share and for revenue of $5.2 billion to $5.6 billion. Shipments of the BlackBerry phone are expected to edge down to between 13.5 million and 14.5 million.

The financial numbers compared with analysts' estimates of earnings of $1.65 on revenue of $5.64 billion, according to The Wall Street Journal.

In early morning trading today, RIM's shares have been hovering around $57.70, down about 10 percent from yesterday's closing price.

RIM blamed the weak outlook on a number of factors.

As sales of the BlackBerry have been hit by higher competition from the iPhone and Android phones, especially in the U.S., RIM has been moving toward lower-cost devices, which don't generate as great a profit margin. The lower outlook also reflects some uncertainty over supplies in light of the Japanese earthquake, although the company did say it has enough inventory in stock.

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Also, RIM expects to spend a bit of change this quarter to market and sell its upcoming BlackBerry PlayBook tablet. The new iPad rival is set to hit stores in the U.S. and Canada on April 19, though preorders started earlier this week.

For its just-concluded fourth fiscal quarter, the BlackBerry maker had some healthier returns to crow about.

During the quarter that ended February 28, RIM took home a net profit of $934 million, up 32 percent from the $710 million earned in the year-earlier quarter. On a per-share basis, earnings reached $1.78. Sales jumped 36 percent to $5.56 billion from $4.1 billion a year ago.

Analysts had been expecting a profit of only $1.75 a share but were looking for revenue to hit $5.65 billion, according to the Associated Press.

Devices such as the BlackBerry smartphone accounted for 81 percent of all sales, with services and software making up the rest. For the quarter, the company shipped around 14.9 million BlackBerry phones compared with 10.5 million a year ago.

RIM's upcoming Wi-Fi-enabled PlayBook, mimicking the Apple iPad's versions and prices, will come in 16GB, 32GB, and 64GB editions, selling for $499, $599, and $699, respectively. The PlayBook is using RIM's own propriety QNX operating system, however, the company yesterday confirmed that the tablet will be able to run Android mobile apps as well as BlackBerry apps.

Moving beyond the current quarter, RIM is looking for stronger results as the year progresses.

"These are investments in the future," RIM co-CEO Jim Balsillie said on the conference call. "The decline in earnings isn't a trend."

Though the PlayBook will be going up against market leader iPad as well as the Motorola Xoom and other Android tablets, Balsillie is eyeing strong demand for the company's first tablet.

"I have many corporate clients that have approached us about, you know, each wanting tens of thousands, several tens of thousands of PlayBooks," Balsillie said.

For the full fiscal 2012 year ending next February, RIM is expecting earnings of more than $7.50 a share, compared with fiscal 2011's earnings of $6.34 per share.