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.
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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].
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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
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vigorously defend
”
itself.The suit claims that RIM knew that product delays and lukewarm launches would hurt earnings, but kept this from investors.
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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,
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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.
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Earnings per share for the first quarter are expected to be in the range of $1.47-$1.55 per share diluted,
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RIM announced March 24.
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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.
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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.
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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,
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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,
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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.
”