RIM caps dismal year with another profit warning
By Euan Rocha and Alastair Sharp
TORONTO (Reuters) - Research in Motion booked a huge charge to write down inventories of its unloved PlayBook tablet on Friday, capping a dismal year with a steep profit warning that sent its shares tumbling almost 10 percent.
Waterloo, Ontario-based RIM, the company whose now ubiquitous BlackBerry created the concept of on-the-go email, said it no longer expects to meet its full-year earnings forecast due to weak sales, the PlayBook writedown and a charge related to a damaging service outage in October.
"This is a classic falling knife stock," said Eric Jackson of Ironfire Capital, who has previously bet on RIM's share price dropping but does not currently have a position in the stock.
"Although people keep wanting to buy into the belief that RIM has found a bottom, I see at least six more months of pain as they keep transitioning their business."
RIM, which Canada's industry minister on Friday described as a "Canadian jewel," has fallen out of favor with investors as it struggled to keep pace in a fast-changing smartphone market. In recent years, Apple's iPhone and Google Android devices have gobbled up RIM's once mighty market share.
RIM badly needs the PlayBook, launched to scathing reviews in April, to be a success as it plans next year to launch new smartphones based on the same QNX-based operating system used in the tablet.
PlayBook is a half-baked latecomer to a market segment where Apple's iPad has established an overwhelming dominance. Yet the poor reception it has received is just one of a string of problems facing the one-time technology darling.
The company has infuriated investors with several product missteps and profit warnings and RIM faced an embarrassing global outage in October, when customers were left without email and the popular BlackBerry messaging service for several days. Continued...