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Investors send RIM shares plunging


Company’s stronghold in the industry weakens in light of intense competition

Keypad of the Blackberry Curve 8520

Via langleyo, flickr

By: Khristopher Reardon, Staff Writer

Research in Motion, Ltd (RIM) is having another rough day as shares plunge again for the BlackBerry maker.

Critics took aim at the company over its latest earning report which showed less than expected earnings for the 2012 fiscal year.

RIM’s stock plunged 20 per cent, a drop of US$5.90, on the Toronto Stock Exchange (TSX) the day after it said its second quarter net earnings were down by 58 per cent to $329 million US.

Net income per share is 80 cents while revenues for the company dropped 15 per cent to under $4.2 billion.

Several analysts cut their price targets for RIM shares after the report came out.

With earnings this year less than half of last year, a profit of $797 million previously, analysts are talking about the once mighty BlackBerry and its missed opportunities.


“These guys have misexecuted,” says Avian Securities LLC analyst Matthew Thornton to the Toronto Star. “They have been very late with the new products. They’ve missed their own forecasts. They’ve done nothing to reassure Wall Street that they’re going to get more competitive against Apple and Google’s Android products.”

Disappointing sales for its smartphones and tablets have been attributed to the growing problem at RIM.

But some people share a more optimistic view on the future for this company.

“We believe the stock will rebound as evidence grows that the new devices are selling through in U.S and international markets,” said BMO Capital markets analyst Tim Long to CBC.ca.

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“They’ve done nothing to reassure Wall Street that they’re going to get more competitive against Apple and Google’s Android products.”

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They only shipped 10.6 million BlackBerrys and 200,000 BlackBerry Playbook tablets, smaller figures that what was expected by analysts.

Rim predicted revenue of $5.3 to $5.6 billion in the current quarter, with a stock earnings between $1.20 to $1.40 per share.

RIM is trying to catch up to other smartphone competitors after having a strong hold on the industry for a number of years.

It hasn’t been a good year for the ailing Canadian telecommunication and wireless device company who recently had to hand out 2,000 layoffs in its hometown of Waterloo, the biggest lay-off in the history of the company. They also shuffled executives to try and shake up operations and get the company to regain focus within the industry.

But some believe that the BlackBerry can’t be the staple in the market that it once was, and time for the company’s loyal user base is running out as better products hit the market.

Wunderlich Securities analyst Matthew Robison says RIM’s staying power is short term, adding that RIM’s updated BlackBerrys are nearly equal to competitive offerings.  He said hardcore users overseas will stay faithful to their BlackBerrys for a little while longer, at least.

 

ARB Team
Arbitrage Magazine
Business News with BITE.

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