By Gurmukh Singh, IANS,
Toronto : BlackBerry stock sank Thursday as slow sales of its smart phones forced device maker Research In Motion (RIM) to slash its quarterly profit outlook.
Issuing a revised lower outlook for the current quarter ending May 28, RIM said it now expects to earn in the range of $1.30-$1.37, lower than the range of $1.47-$1.55 previously forecasted March 24, 2011.
“This shortfall is primarily due to shipment volumes of BlackBerry smart phones that are now expected to be at the lower end of the range of 13.5-14.5 million forecasted in March,” RIM said.
The wireless giant ascribed the slashed outlook to a shift in its sales mix towards low-priced handsets which are selling well in overseas markets.
This shift in sales towards low-prices handsets will “result in revenue that is slightly below the range of $5.2-5.6 billion guided on March 24,” RIM said.
Though RIM will unveil new smart phones at its next week’s annual BlackBerry World conference in Orlando, there is little to cheer investors as these devices may not enter the market till the end of the current quarter.
RIM co-chief executive Jim Balsillie also tried to assure investors during a conference call Thursday when he said that the company was all set to unveil new BlackBerry devices and a new BlackBerry operating system at its next week’s annual conference.
He said the revised lower forecast was a temporary issue, adding that the outlook will improve with the unveiling of new smart phones and the new BlackBerry operating system.
“Because it’s such a big upgrade, it’s taken a little longer. So on the one hand, we’re super excited about the opportunity and the demand and the power and the beauty of these things, but on the other hand, we’re not happy that it takes longer. Welcome to the reality of this transition. But it puts us in a position where we’re anchored for a long, long time architecturally going forward,” Balsillie said.
The slashed outlook Thursday took its toll on RIM stock which sank as much as 11 percent in after-hours trading.
In fact, trading in the stock was stopped briefly before RIM made the announcement. It sank 15 percent on resumed trading on the Nasdaq to recover only slightly before close. Friday is expected to be a choppy day for RIM on the markets.
RIM stock has sunk nearly 20 percent this year alone, and it is trading almost at a third of its all-high of $150 reached in June 2008 just before the onset of global downturn.
(Gurmukh Singh can be contacted at [email protected])