RIM PlayBook Sales Reportedly Low, as RIM Is Sued for Misleading Investors

 
 
By Michelle Maisto  |  Posted 2011-05-27 Email Print this article Print
 
 
 
 
 
 
 

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.

"We believe the majority of OS 7 devices have been delayed from August to October as integration, polishing, and carrier certification are taking longer than expected (e.g., in a recent interview FT's CEO noted regular bugs with RIM devices and quality problems with RIM's next-gen devices)," states a multi-author May 27 research note. "We believe this is causing delays in other product launches, notably the 3G/4G PlayBook and QNX based handsets, which are now more likely in the [second half of 2012] vs. guidance of early [2012]."

The Jefferies analysts added that RIM management will have to either "accept lower margins or lower unit sales."

Allegedly unrealistic expectations from RIM management are also the source of a new lawsuit against the company, Reuters reported May 27, adding that RIM officials believe the case is without merit and it plans to "vigorously defend" itself.

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."

 
 
 
 
 
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
 
 
 
 
 
 
 

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