RIM writes off value of tablet inventory
NEW YORK (AP) — Research In Motion (RIM), the struggling maker of the BlackBerry phones, is writing off much of its inventory of PlayBook tablets, since it has to sell them at a deep discount.
The Canadian company on Friday said it’s taking a pre-tax charge of US$485 million in the just-ended quarter to account for the declining value of the tablets. The model originally priced at US$500 now costs US$200.
A year ago, co-CEO Jim Balsillie said pent-up interest in the PlayBook was “really overwhelming.” Companies are looking for an equivalent of the iPad of corporate use, he said.
In March, Balsillie said “The launch of the PlayBook may well be the most significant development for RIM since the launch of the first BlackBerry device back in 1999.”
But when the tablet went on sale in April, reviewers puzzled over the lack of email software, saying the device seemed half-baked. RIM now promises updated software in February.
RIM said it shipped 150,000 PlayBooks to stores and distributors in the fiscal third quarter, which ended November 26. “Sell-through,” or the number actually bought by users, was slightly higher, reflecting sales of tablets shipped earlier. It shipped 500,000 in the first quarter and 200,000 in the second.
Apple Inc, meanwhile, sold 11.1 million iPad tablets in its most recent quarter, which ended Sept 24.
RIM Co-CEO Mike Lazaridis said RIM is still committed to the PlayBook, despite its issues.
RIM also said it sold 14.1 million BlackBerrys in the third quarter, slightly better than analysts expected. It then expects sales to fall slightly in the current quarter, roughly in line with analysts’ expectations.
The company provided preliminary revenue and profit figures for the third quarter that were lower than it previously projected, but not a surprise to analysts.
RIM said it expects earnings at the “low to mid point” of the US$1.20 to US$1.40 per share it previously forecast. Analysts polled by FactSet have on average been expecting US$1.18 per share.
The company expects revenue slightly the below the US$5.3 billion to US$5.6 billion in its previous forecast. Analysts had been expecting US$5.27 billion, on average.
RIM shares fell US$1.81, or 9.7 per cent, to close Friday at US$16.77. The stock hit a seven-year low of US$15.98 last month.
