RIM to book $485m charge due 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.
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