RIM PlayBook Sales Reportedly Low, as RIM Is Sued for Misleading Investors
RIM isn't having the quarter it hoped for. After betting big on its BlackBerry PlayBook tablet, sales are reportedly low, and the company's being sued for misleading investors.BlackBerry maker Research In Motion isn't yet having the quarter it hoped for. After putting arguably too many of its eggs in its PlayBook's basket, sales of the late-launching tablet aren't meeting forecasts, according to analysts. Wedbush Securities analyst Scott Sutherland wrote in a research note May 25 that according to his "checks," RIM may only sell 450,000 units in its quarter ending this month, Barron's reported. As a result, Sutherland cut his revenue estimate for the company from $5.2 billion to $5.1 billion and lowered his full fiscal year estimate for PlayBook sales from 3 million units to 2.3 million.
He reportedly also called the BlackBerry handsets currently on shelves a bit "long in the tooth"-a situation not likely to change soon, according to analysts with investment banking group Jefferies.
The suit claims that RIM knew that product delays and lukewarm launches would hurt earnings, but kept this from investors. "Specifically, the company failed to inform investors that its aging product line and inability to introduce new products to the market was negatively impacting the company's business and margins," the suit states, according to the report. The claims cover a period from December 2010 through April, when the company lowered forecasts for its upcoming quarter. "Earnings per share for the first quarter are expected to be in the range of $1.47-$1.55 per share diluted," RIM announced March 24. "This guidance reflects a mix shift in handset towards lower ASP products in the first quarter and an increased level of investment in Research & Development and Sales and Marketing related to our tablet and platform initiatives." During an earnings call that same day, to share the results of the company's fiscal 2011 fourth quarter, RIM co-CEO Jim Balsillie justified-to stick with the analogy-all the eggs in the PlayBook basket. "We're investing in opening up a new category, bringing in a new platform. This is no time for half measures," he said on the call. "This is a time of enormous investment and transition." While RIM wouldn't offer guidance on its PlayBook shipment expectations, RIM Vice President of Investor Relations Adele Ebbs told an analyst who pressed, "We said, like, 20,000 retail outlets. They're not going to have like one or two devices. So I think you can kind of see it's not going to be in the tens of thousands." Balsillie quickly added, "Many of our corporate clients have approached us about each wanting tens of thousands of PlayBooks." RIM's wanting handset lineup also isn't doing it any favors with U.S. carriers, who according to the Jefferies note want to support three main ecosystems-Apple's iOS, Android and a third that's still to be determined. "Unfortunately for RIM," said the Jefferies note, "Windows is now being considered."