BlackBerry maker Research In Motion (RIM) on Thursday reported a sharp drop in net income and revenue as it sold far fewer tablet computers than it expected.
Shares plummeted more than 19 percent as the crisis at the once high-flying tech company intensified.
The fiscal second-quarter results show RIM continued struggle to compete with the iPhone and smartphones running Google’s Android system and raised the pressure for the company’s long-promised new phone software to be a hit.
RIM said its net income was US$419 million, or US$0.80 per share, in the three months ended Aug. 27. That’s down from US$796.7 million, or US$1.46 per share, a year ago. Analysts expected US$0.90 per share, according to a survey by FactSet.
The company, based in Waterloo, Ontario, said revenue fell 15 percent to US$4.2 billion.
Shares hit a fresh new five-year low, falling US$5.74, or 19.4 percent, to US$23.80 in after-hours trading. RIM’s stock has lost more than half its value this year.
“They are just not selling. They are not competitive,” said Peter Misek, an analyst at Jefferies & Co in New York. “They are getting really hit hard by Android phones.”
Misek said RIM’s future depends on it releasing new BlackBerrys with the company’s new QNX operating system, designed to compete with iPhones and Android phones. RIM has said it would release ONX-based phones early next year.
“They need them out as soon as possible. They need to be good, and they need to be well received by consumers,” he said. “If they are not, they will be in a lot of trouble. It will be very difficult to envision a turnaround if they do not get those out as soon as possible.”
RIM co-chief executive officer Mike Lazaridis, who joined the analysts’ conference calling following the release, said the company would not rush the QNX phones.
He added that prototype phones would be out in the not-too-distant future and said RIM plans announcements about the phones at a conference next month.
He expects the higher-end QNX phones will be selling a year from now, but said they will not represent the majority of the phones the company sells because the cheaper BlackBerry 7 models will still be selling globally.
“We understand that the past few quarters have been challenging,” Lazaridis said. “We are confident that we are on track to return to growth in Q3 and beyond.”
The Playbook tablet computer was a major disappointment. RIM said it sold about 200,000 units in the quarter. That was far short of what analysts had expected.
Lazaridis acknowledged it was “well below where we would like it to be,” but said ultimately it will be a success in a market that is in its infancy and rapidly growing.
RIM’s tablet, like many others, remains in the shadow of Apple’s iPad.
“Apple sells more iPads in two days than RIM sells in a whole quarter,” BGC financial analyst Colin Gillis said.
Gillis said RIM was too busy talking about their next generation phones when it should be trying to sell its current models. He said the gap was widening between RIM and its competitors and said it might be time to find new management.
“There is just so much that seems so haphazard about the company right now,” Gillis said.
RIM said in July it would cut 10 percent of its work force, about 2,000 jobs.
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