NEWS

RIM shares tumble on weaker earnings

09/16/2011 10:02 EDT | Updated 01/12/2012 01:33 EST

Shares of Research In Motion fell sharply on Friday, a day after the company reported disappointing financial results.

RIM was off $5.30, or more than 18 per cent, at $24.10 at 11:11 a.m. ET.

After the close of regular trading on Thursday, RIM said its second quarter net earnings dropped 58 per cent to $329 million US, or 63 cents per share for the three months ended Aug. 31, after factoring in the costs of slashing 2,000 jobs from its workforce and as revenues slipped on lower than expected sales of smartphones and tablets.

That compared with a profit of $797 million or $1.46 per share on revenue of $4.62 billion a year ago.

Adjusted net income was 80 cents a share. That compared with analysts' estimates compiled by Thomson Reuters of 90 cents US.

Revenues fell 15 per cent to just under $4.2 billion from $4.6 billion.

RIM shipped 10.6 million BlackBerrys, less than analysts' expectations of between 11 million to 12 million. It shipped approximately 200,000 BlackBerry PlayBook tablets, which was also below analysts' forecasts.

Co-CEO Mike Lazaridis said updated versions of the BlackBerry Bold, Torch and Curve were only on sale for a few weeks of the quarter, and he expected stronger sales to come.

RIM predicted revenue in the current quarter of $5.3 billion to $5.6 billion and earnings per share in the range of $1.20 to $1.40. The company expected earnings per share for the full year to be in the lower end of the range it announced previously of between $5.25 and $6 per share.

In the wake of the earnings report, several analysts cut their price targets on RIM shares.

However, not every analyst is down on the 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.

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