BlackBerry maker's shares tumble 20 per cent
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Toronto, 16/09/2011
BlackBerry-maker Research in Motion took a beating in the markets Friday, losing 23 per cent of its stock value, as the company struggles to stay relevant in the wake of Apple's iPhone and Google's Android system.
Investors wiped out $3 billion in RIM's stock value, sending the share price plummeting by $5.90 to $23.60 from the previous day.
While RIM says it expects better times ahead, analysts remain concerned about the company's aging lineup of smartphones and its ability to succeed in a hyper-competitive marketplace.
On Thursday, RIM announced second-quarter profits were down 58 per cent to US$329 million, well below expectations from analysts.
RIM also said it's paying out $118 million to cover the cost of slashing 2,000 jobs, or about 11 per cent, of its workforce, based on disappointing sales of BlackBerry smart phones as well as the PlayBook tablet.
Mike Lazaridis, co-CEO with Jim Balsillie, said the numbers didn't truly reflect the company's sales, as updated versions of the Bold, Torch and Curve smart phones were on the market for only a couple of weeks of the second quarter, which ended in August.
He pledged the company expects to return to positive sales in the months ahead -- a prediction that some analysts have suggested is overly rosy.
Troy Crandall, vice president and equities analyst with Macdougall, Macdougall and Mactier, notes that with Google's Android, Apple's iPhone and even Microsoft planning to launch new phones, the competition is not abating for RIM: it's intensifying.
"The big question is: is RIM going to continuously play catch-up or is it actually going to get ahead and start selling these and pull itself back in," Crandall told Friday afternoon.
David Haigh, founder and CEO of Brand Finance, said RIM simply hasn't been able to compete with Apple's popular iPhone and iPad.
He said Apple has learned how to anticipate consumers' needs and to respond with products which match their desires. RIM hasn't done that, he said.
"I think in the end you've got to listen to your consumers and I think one of the problems is a company like RIM is a classic example of a product-push company driven by engineers who come up with new products and send them out there," Haigh told Friday.
"They don't necessarily think about the needs and desires of the end consumers."
Kris Thompson, an analyst with National Bank Financial, said RIM missed a wide range of targets.
"We believe RIM is losing (market) share so much faster than expected," Thompson wrote in a research note.
"The short synopsis is the company missed on most everything: handset and PlayBook shipments, revenue, gross margin and EPS (earnings per share)."
RIM's 2,000 job cuts is also an insufficient measure, he wrote, noting that the company is now struggling to retain its top talent as the company's future becomes uncertain.
However, Tim Long at BMO Capital Markets suggested the lower share price could represent a good buy for bargain-hunting investors.
"Our view on the stock is unchanged, particularly as we believe the negative effects of the missed product cycle are behind the company," Long said in a note.
"We believe the stock will rebound as evidence grows that the
Worldwide reaction: BlackBerry maker's stock price plunges after earnings report
Research In Motion, struggling to compete in the smartphone and tablet computer markets, plunged 19 percent in Nasdaq trading after its earnings report disappointed investors for the third consecutive quarter.
The maker of the BlackBerry smartphone is losing ground in that market to Apple's (AAPL) iPhone and devices that use Google's (GOOG) Android software. RIM has made little progress with its PlayBook in the tablet computer market, shipping just one device for every 46 iPads that Apple sold in the latest quarter.
"RIM is on a path to becoming a niche player," said Ted Schadler, an analyst for Forrester Research. "RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products."
RIM fell $5.61 to $23.93 Friday, its largest one-day drop in three months. The stock has lost 59 percent this year.
Profit for the fiscal second quarter, excluding some costs, fell to 80 cents a share, RIM said Thursday in a statement. Analysts predicted 88 cents, according to a Bloomberg survey. Revenue fell to $4.17 billion in the three months through Aug. 27, compared with the average estimate of $4.47 billion.
"RIM's earning misses over the past few quarters has tainted investors' confidence," said Blaine Carroll, an analyst with Rodman & Renshaw. He has an "outperform" rating on the stock. At least three analysts downgraded their ratings on the stock.
The company shipped about 200,000 PlayBooks, compared with the average estimate of 490,000 units. Analysts have cut estimates for full-year PlayBook sales to an average of 2.2 million. In its last quarter Apple shipped 9.25 million iPads.
RIM shipped 10.6 million BlackBerrys last quarter. Analysts predicted 11.9 million, according to the average of 10 estimates compiled by Bloomberg.
Co-Chief Executive Officer Jim Balsillie attributed the sluggish shipments to lower-than-expected demand for older devices that have struggled to compete with the iPhone and Android devices such as the Samsung Galaxy. He also said on a conference call Thursday that RIM's latest handsets, which run on a new BlackBerry 7 operating system, are "having an excellent reception."
Co-CEO Mike Lazaridis said RIM will issue a software upgrade for the PlayBook next month that will include dedicated email, contacts and calendar programs, as well as software to allow the PlayBook to run Android applications. RIM drew criticism for introducing the PlayBook in April without email and a shortage of apps like Netflix (NFLX) movies.
Lazaridis also said prototypes of phones built on a new QNX operating system that already underpins the PlayBook will be available "in the not-too-distant future" and that he will give more details at a conference in San Francisco next month.
"RIM is still going to have a challenging next few months until the QNX products are out and the Android app products are available," said Alkesh Shah, an analyst at Evercore Partners. "The transition probably doesn't finish until sometime mid to late 2012."
RIM forecast third-quarter revenue of $5.3 billion to $5.6 billion and shipments of between 13.5 million and 14.5 million BlackBerrys. Earnings excluding charges related to job cuts will be in the range of $1.20 to $1.40.
Analysts estimated sales of $5.3 billion, 13.8 million units shipped and earnings per share of $1.38. RIM also said that earnings for the year, excluding some costs, would be at the low end of its previous forecast of $5.25 to $6 a share.
"We don't trust those numbers," said Jeff Fidacaro, an analyst at Susquehanna International Group.
RIM's share of the global smartphone market dropped to 12 percent in the second quarter from 19 percent a year earlier, according to Gartner. In the same period, Apple climbed to 18 percent from 14 percent, and Google's Android, used in phones from Samsung Electronics and Motorola Mobility, rose to 43 percent.
Net income fell 59 percent to $329 million, or 63 cents a share, from $797 million, or $1.46, a year earlier.
"Remain skeptical of guidance," said Phillip Huang, an analyst at UBS, who kept his "neutral" rating unchanged. "RIM needs fundamental change in vision and strategy, and its transition to QNX must be near flawless to garner support from developers."
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BlackBerry-maker Research in Motion took a beating in the markets Friday, losing 23 per cent of its stock value, as the company struggles to stay relevant in the wake of Apple's iPhone and Google's Android system.
Investors wiped out $3 billion in RIM's stock value, sending the share price plummeting by $5.90 to $23.60 from the previous day.
While RIM says it expects better times ahead, analysts remain concerned about the company's aging lineup of smartphones and its ability to succeed in a hyper-competitive marketplace.
On Thursday, RIM announced second-quarter profits were down 58 per cent to US$329 million, well below expectations from analysts.
RIM also said it's paying out $118 million to cover the cost of slashing 2,000 jobs, or about 11 per cent, of its workforce, based on disappointing sales of BlackBerry smart phones as well as the PlayBook tablet.
Mike Lazaridis, co-CEO with Jim Balsillie, said the numbers didn't truly reflect the company's sales, as updated versions of the Bold, Torch and Curve smart phones were on the market for only a couple of weeks of the second quarter, which ended in August.
He pledged the company expects to return to positive sales in the months ahead -- a prediction that some analysts have suggested is overly rosy.
Troy Crandall, vice president and equities analyst with Macdougall, Macdougall and Mactier, notes that with Google's Android, Apple's iPhone and even Microsoft planning to launch new phones, the competition is not abating for RIM: it's intensifying.
"The big question is: is RIM going to continuously play catch-up or is it actually going to get ahead and start selling these and pull itself back in," Crandall told Friday afternoon.
David Haigh, founder and CEO of Brand Finance, said RIM simply hasn't been able to compete with Apple's popular iPhone and iPad.
He said Apple has learned how to anticipate consumers' needs and to respond with products which match their desires. RIM hasn't done that, he said.
"I think in the end you've got to listen to your consumers and I think one of the problems is a company like RIM is a classic example of a product-push company driven by engineers who come up with new products and send them out there," Haigh told Friday.
"They don't necessarily think about the needs and desires of the end consumers."
Kris Thompson, an analyst with National Bank Financial, said RIM missed a wide range of targets.
"We believe RIM is losing (market) share so much faster than expected," Thompson wrote in a research note.
"The short synopsis is the company missed on most everything: handset and PlayBook shipments, revenue, gross margin and EPS (earnings per share)."
RIM's 2,000 job cuts is also an insufficient measure, he wrote, noting that the company is now struggling to retain its top talent as the company's future becomes uncertain.
However, Tim Long at BMO Capital Markets suggested the lower share price could represent a good buy for bargain-hunting investors.
"Our view on the stock is unchanged, particularly as we believe the negative effects of the missed product cycle are behind the company," Long said in a note.
"We believe the stock will rebound as evidence grows that the
Worldwide reaction: BlackBerry maker's stock price plunges after earnings report
Research In Motion, struggling to compete in the smartphone and tablet computer markets, plunged 19 percent in Nasdaq trading after its earnings report disappointed investors for the third consecutive quarter.
The maker of the BlackBerry smartphone is losing ground in that market to Apple's (AAPL) iPhone and devices that use Google's (GOOG) Android software. RIM has made little progress with its PlayBook in the tablet computer market, shipping just one device for every 46 iPads that Apple sold in the latest quarter.
"RIM is on a path to becoming a niche player," said Ted Schadler, an analyst for Forrester Research. "RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products."
RIM fell $5.61 to $23.93 Friday, its largest one-day drop in three months. The stock has lost 59 percent this year.
Profit for the fiscal second quarter, excluding some costs, fell to 80 cents a share, RIM said Thursday in a statement. Analysts predicted 88 cents, according to a Bloomberg survey. Revenue fell to $4.17 billion in the three months through Aug. 27, compared with the average estimate of $4.47 billion.
"RIM's earning misses over the past few quarters has tainted investors' confidence," said Blaine Carroll, an analyst with Rodman & Renshaw. He has an "outperform" rating on the stock. At least three analysts downgraded their ratings on the stock.
The company shipped about 200,000 PlayBooks, compared with the average estimate of 490,000 units. Analysts have cut estimates for full-year PlayBook sales to an average of 2.2 million. In its last quarter Apple shipped 9.25 million iPads.
RIM shipped 10.6 million BlackBerrys last quarter. Analysts predicted 11.9 million, according to the average of 10 estimates compiled by Bloomberg.
Co-Chief Executive Officer Jim Balsillie attributed the sluggish shipments to lower-than-expected demand for older devices that have struggled to compete with the iPhone and Android devices such as the Samsung Galaxy. He also said on a conference call Thursday that RIM's latest handsets, which run on a new BlackBerry 7 operating system, are "having an excellent reception."
Co-CEO Mike Lazaridis said RIM will issue a software upgrade for the PlayBook next month that will include dedicated email, contacts and calendar programs, as well as software to allow the PlayBook to run Android applications. RIM drew criticism for introducing the PlayBook in April without email and a shortage of apps like Netflix (NFLX) movies.
Lazaridis also said prototypes of phones built on a new QNX operating system that already underpins the PlayBook will be available "in the not-too-distant future" and that he will give more details at a conference in San Francisco next month.
"RIM is still going to have a challenging next few months until the QNX products are out and the Android app products are available," said Alkesh Shah, an analyst at Evercore Partners. "The transition probably doesn't finish until sometime mid to late 2012."
RIM forecast third-quarter revenue of $5.3 billion to $5.6 billion and shipments of between 13.5 million and 14.5 million BlackBerrys. Earnings excluding charges related to job cuts will be in the range of $1.20 to $1.40.
Analysts estimated sales of $5.3 billion, 13.8 million units shipped and earnings per share of $1.38. RIM also said that earnings for the year, excluding some costs, would be at the low end of its previous forecast of $5.25 to $6 a share.
"We don't trust those numbers," said Jeff Fidacaro, an analyst at Susquehanna International Group.
RIM's share of the global smartphone market dropped to 12 percent in the second quarter from 19 percent a year earlier, according to Gartner. In the same period, Apple climbed to 18 percent from 14 percent, and Google's Android, used in phones from Samsung Electronics and Motorola Mobility, rose to 43 percent.
Net income fell 59 percent to $329 million, or 63 cents a share, from $797 million, or $1.46, a year earlier.
"Remain skeptical of guidance," said Phillip Huang, an analyst at UBS, who kept his "neutral" rating unchanged. "RIM needs fundamental change in vision and strategy, and its transition to QNX must be near flawless to garner support from developers."
You have read this article BlackBerry-maker Research in Motion took a beating in the markets Friday /
co-CEO with Jim Balsillie /
Investors wiped out $3 billion in RIM's stock value /
losing 23 per cent /
Mike Lazaridis
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