RIM to book $485m charge due to poor PlayBook sales

RIM to book $485m charge due to poor PlayBook sales

Summary: Research in Motion, the BlackBerry smartphone and tablet maker, is set to take a near-half billion dollar charge related to poor PlayBook sales.


Research in Motion will write down $485 million in excess PlayBook inventory and said that its sales will fall short of targets.

The BlackBerry maker said that it will stick with the tablet market, but held out hope that the price cuts will boost demand -- in similar fashion to the HP TouchPad's post-firesale success, and that the holiday season will see a rise in sales.

The company announced ahead of Friday's trading that it would miss its third-quarter guidance when it reports its earnings later this month. Research in Motion also revised its revenue guidance downwards.

The BlackBerry maker confirmed that it will not meet the $5.3 to $5.6 billion in revenue it had forecast when the company reported second-quarter earnings.

The company is looking to book a one-time pre-tax provision of $485 million in the third-quarter in a bid to write down the value of its BlackBerry PlayBook tablets, where sales never took off the ground. In doing so, the BlackBerry maker will wipe off nearly half a billion dollars off the value of its inventory, knowing full well it cannot recoup the losses in future sales.

Research in Motion said that the after-tax $360 million charge: "reflects the current market environment and allows it to expand upon the aggressive level of promotional activity recently employed."

Just over 150,000 PlayBooks were shipped to retail stores in the third-quarter, but Research in Motion had to push massive discounts to coax consumers away from the iPads and the Galaxy Tab tablets. Then Amazon's Kindle Fire took off.

Shares in the company have fallen by around 60 percent this year, as competition from Apple and Google rages on and churns over the dominant marketshare.

Wall Street was expecting earnings of $1.21 a share on revenue of $5.3 billion for the fiscal third quarter.


Topics: Security, Mobility, BlackBerry

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  • RE: RIM to book $485m charge due to poor PlayBook sales

    Only one letter separates RIM from RIP. The question is how many quarters do?
    • RE: RIM to book $485m charge due to poor PlayBook sales


      That's brutal. Inventive but brutal. Let's pray that the RIMM's employees can weather this product transition period.
  • 'iPad and the Galaxy Tab tablets'? These two can not be in one sentence ...

    ... together since sales level is drastically different. Despite bloggers loved to speculate how much Apple is in fear of SGTs and this is why they sue Samsung, the reality proves that it is matter of principle, IP protection, rather matter of competition. No matter how Samsung tries, SGT sales are minimal. And others like Motorola and RIM sell only 100-150 thousand units per quarter versus Apple's 11 million.<br><br>The only device besides iPad that could do millions per quarter is Amazon Kindle Fire (though Amazon does not announce numbers, as well as Samsung, so we can only have rumours about have successful it is).
  • Galaxy Tab on Woot yesterday for $199

    It's unlikely that the news is any better for Motorola or Samsung. The difference is that Samsung can bury the bad news in a sea of televisions and washing machines. Motorola... not so much.
    Robert Hahn
  • RE: RIM to book $485m charge due to poor PlayBook sales

    Two words: FIRE SALE!!!!