Research in Motion cut its outlook for its fiscal first quarter because its BlackBerry shipments are looking light.
The company said in a statement that it is expecting earnings of $1.30 a share to $1.37 a share, lower than the $1.47 a share to $1.55 a share it previously forecasted just last month. Revenue for the quarter will be "slightly below" the $5.2 billion to $5.6 billion range. Wall Street was expecting first quarter earnings of $1.48 a share on revenue of $5.44 billion.
This shortfall is primarily due to shipment volumes of BlackBerry smartphones that are now expected to be at the lower end of the range of 13.5-14.5 million forecasted in March and a shift in the expected mix of devices shipped towards handsets with lower average selling prices. Gross margin for the first quarter is expected to be similar to the 41.5% previously guided. This mix shift is also expected to result in revenue that is slightly below the range of $5.2-5.6 billion guided on March 24.
RIM was sure to note that shipments of its BlackBerry PlayBook are in line with its expectations. The supply chain is also solid and there isn't any disruption due to the Japan earthquake.
The natural question here is whether PlayBook sales can pick up the BlackBerry slack. The two devices are meant to go together.
On a conference call with analysts RIM co-CEO Jim Balsillie faced a tough crowd among analysts. In a nutshell, Balsillie said he was upbeat on the company's prospects said the outlook was cut due to "a natural aging" of its product line and a "transition to newer products."
Despite the first quarter outlook, RIM is keeping its earnings target for the fiscal year of $7.50 a share. RIM continues to bank on its new products as well as big third and fourth quarters.
Wall Street doesn't buy RIM's earnings target for the year. Analysts expect earnings of $6.87 a share.
The lack of confidence showed. The more Balsillie talked the more RIM shares fell in afterhours trading.