RIM stock plummets after profit forecast
By Susan Taylor
OTTAWA (Reuters) - Research In Motion Ltd shares plunged 28 percent on Friday in their biggest one-day decline in eight years after the maker of BlackBerry smartphones revealed an profit outlook that was softer than analysts had expected.
RIM, which reported quarterly results after markets closed on Thursday, said it sees its gross profit margin getting pinched as it spends heavily to push into the consumer market with a new crop of BlackBerrys.
The dour outlook sparked a string of downgrades from analysts, unfamiliar territory for a market darling accustomed to fatter profits and upbeat guidance.
The Canadian high-tech star plummeted to close at $70.76 on Nasdaq and C$72.57 on the Toronto Stock Exchange, ending the session as the biggest net loser on both bourses.
Nearly 95 million shares traded hands on Nasdaq, about five times the daily average.
Dragged down by RIM's declines, the Toronto Stock Exchange's main index sank more than 3 percent and rival Apple Inc got caught in the wake, falling 2.8 percent on jitters that the whole sector could be in trouble. "People are concerned about the smartphone market," said Cross Research analyst Shannon Cross.
Several analysts, surprised by RIM's poor outlook, said the selloff represented a buying opportunity.
"We are disappointed that the weakness originates not in a temporary setback owing to a product transition but in a permanent step-down in gross margins," JPMorgan analyst Paul Coster said in a note. Continued...