Research In Motion (RIM), depending on its new PlayBook to bolster sales as demand for its BlackBerry phones withers, may have shipped just one of the tablet computers last quarter for every 19 iPads from Apple.
The company, which reports earnings tomorrow, probably sold about 4,90,000 PlayBooks during the first full quarter of sales, according to a Bloomberg survey of analysts, compared with the 9.25 million iPads shipped last quarter. Analysts cut estimates for full-year PlayBook shipments, to an average of 2.2 million, according to the survey.
“RIM overplayed the PlayBook in terms of its sales and prospects,” said Charlie Wolf, an analyst at Needham & Co in New York.
“What this really shows is that the company’s prospects will depend on the next generation of BlackBerrys.” When RIM first disclosed plans for a tablet last year, analysts including Tero Kuittinen, then at MKM Partners, said the device had the potential to evolve into a significant new product category. Yet RIM didn’t get the 7-inch tablet to market until April, a year after the first iPad and behind rivals such as Samsung Electronics.
Even then, RIM drew criticism for introducing the PlayBook without dedicated e-mail or instant messaging and a shortage of consumer applications like Netflix movies. The company will ship about 1.5 million tablets this year, compared with 39.2 million for Apple and 7 million for Samsung, said Michael Walkley, an analyst at Canaccord Genuity.
“RIM hasn’t given up on the Play-Book, but it’s clearly off to a poor start,” said Minneapolis-based Walkley, who has a “hold” rating on the company.
That creates “huge pressure” on the new BlackBerry phones, he said. Last week, Walkley lowered his PlayBook forecast for fiscal 2012 to 1.5 million from 2.2 million, and William Power, an analyst at Robert W Baird & Co, cut his 2012 estimate to 2 million units from 2.45 million.
This week, Steven Li, an analyst at Raymond James, reduced his PlayBook forecast to 2.4 million units from 4 million. Jamie Ernst, a spokeswoman for RIM, said the company won’t have any comment before its quarterly earnings announcement. The Waterloo, Ontario-based company will likely report its first revenue decline in nine years when it releases results tomorrow.
Sales for the fiscal second quarter will probably decline to $4.53 billion from $4.62 billion, according to a Bloomberg survey of analysts. Profit may drop to 91 cents a share from $1.46, according to analysts. RIM is struggling to compete in the smartphone market against Apple and companies such as Samsung and Motorola Mobility Holdings that use Google’s Androidoperating system.
RIM’s share of the global smartphone-software market dropped to 12% in the second quarter from 19% a year earlier, according to Gartner. In the same period, Apple climbed to 18% from 14%, and Android rose to 43% of the market.
After its last earnings report in June, RIM tumbled 21% as the company cut its profit forecast for the year. RIM also unveiled plans to eliminate about 2,000 jobs, or a 10th of its workforce. RIM fell 77 cents, or 2.6%, to $29.36 at 10:13 a.m. New York time in Nasdaq Stock Market trading. Before Wednesday, the stock had dropped 48% this year. The company is introducing new smartphones to gain back ground against rivals.
RIM started selling phones that run on the BlackBerry 7 operating system in the US this month and in Europe last month. The company plans to shift to a new operating system, QNX, with a lineup of phones that co-chief executive officer Mike Lazaridis said will come out in early 2012. Analysts have mixed impressions of the latest phones. Power, of Robert W Baird, said early sales of the BlackBerry 7 phones are sluggish.