Black day for Blackberry

Blackberry maker RIM sees income plummet, sending warning messages about its future.

by Elizabeth Anderson
Last Updated: 23 Jan 2012
Research in Motion, maker of the Blackberry phones, saw profits drop sharply in the second quarter as its smartphones and new tablets fell even more out of fashion with consumers.  

Income before tax fell to $414m in the three months to the end of August, down from $1,088m a year ago. Revenue was $4.2bn, the lower end of the company’s expectations and down 10% year-on-year. And the future continues to look black for the Canadian company, as it now expects to reach the lower end of its full-year earnings outlook.    

RIM has long been trying to re-gain chunks in the smartphone market, but is struggling to attract customers. Once a favourite for corporate communication, the Blackberry’s popularity has declined among consumers, who are turning to Apple’s iPhone and Google’s Android.  RIM shipped just 10.6 million smartphones in the second quarter.  Even worse, only 200,000 Playbook tablet computers were shipped since June.  Considering the tablet was launched in April this year, selling 500,000 in the first quarter, a fall in sales by more than half doesn’t bode well for the product’s future.  

Analysts had expected RIM to ship around 12m handsets and 600,000 tablets in the quarter, so it’s not surprising that investors were stunned – shares dropped by around 20% in after-hours trading yesterday.  

RIM is now rushing to improve the software on the Playbook tablet.  Critics weren’t overjoyed at the original design, saying the device lacked crucial features like an accessible email client and offered few applications. They also warned it was a fatal mistake to tie the Playbook to the Blackberry, although the tablet's hardware did win some praise.

So is anyone to blame for RIM’s demise? Fingers are pointing towards RIM’s senior executives. ‘The report is another nail in the coffin of management,’ said Edward Synder, an analyst at Charter Equity Research. 

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