In Struggling to compete against Apple Inc.s iPhone and iPad, and a host of Android based smartphones, RIMs shares have plunged after its earnings report disappointed investors for the third consecutive quarter. The grim financial news has caused some analysts to question the future of the company in the highly competitive smartphone market.
RIM said that its second-quarter net income fell by 58.7 percent to $329 million, or 63 cents a share, from $797 million, or $1.46 a share, in the same quarter a year ago. Revenue fell by 10 percent to $4.2 billion, an amount greater than analysts had expected. RIM has performed poorly by every measure. Its gross profit margins dropped to 38.7 percent from 44.5 percent a year ago. Cash and cash equivalents are down 52 percent from the previous quarter while inventories more than doubled, mostly because of unwanted PlayBook tablets.
The number of BlackBerry phones shipped stood at 10.9 million, which is about one million less than what analysts had expected. The companys newest product, the BlackBerry PlayBook tablet computer, fared even worse. RIM shipped about 200,000 of the devices to stores, fewer than half of what analysts had expected. On a conference call with investors, RIM managers blamed weak demand for older handsets as it introduced smartphones based on new software late in the quarter. By the end of trading, RIMs shares had lost as much as 19 percent of their value.
During the past few months, RIM has made some aggressive moves, by launching new smartphones running its new BlackBerry 7 software. The company is also preparing to launch new phones based on software from QNX, which RIM acquired last year. The same software is being used in RIMs BlackBerry PlayBook tablet computer. In a conference call with investors, RIM said that it was working on a strategy of reviving interest in PlayBook by offering new features and lowering the price.
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