RIM continues to struggle under execution challenges

Shares in BlackBerry-maker Research In Motion (RIM) slipped by as much as seven per cent in extended trading on December 15 as the under pressure handset manufacturer reported another disappointing quarter, provided a weak sales outlook for the current period and pushed back the launch of its new device line.

For the quarter ended November 26, net income came in at US$265 million, down 70 per cent from a year ago, while sales came in at US$5.17 billion, down from US$5.5 billion. Although RIM had earlier warned of the poor numbers, the figures were still below most analyst forecasts.

The company sold 14.1 million devices in the quarter, increasing its BlackBerry subscriber base to 75 million, up 5 million on the previous quarter. However, it shipped just 150,000 units of its PlayBook tablet.

More bad news was revealed on the earnings call by co-CEO Mike Lazaridis, who said that the first devices running the new BlackBerry 10 operating system would not now appear until late next year. The delay is apparently due to the firm having to wait on critical chipsets becoming available.

The delay could be highly damaging for the firm as it struggles to keep pace with rivals such as Apple.

The guidance for RIM’s current quarter – which includes the key holiday sales period – was also below par. The firm guided that profit will be between US$0.80 and US$0.95 per share, and said that sales will be between US$4.6 billion and US$4.9 billion. Analysts had projected profit of US$1.08 a share and sales of US$4.85 billion, according to Bloomberg data.

RIM said it expects BlackBerry shipments in the quarter to be between 11 million to 12 million. Analysts had projected 12.8 million units.

In a statement, RIM said that it “continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalise on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance.”

Its two co-CEOs, Mike Lazaridis and Jim Balsillie, have agreed to take a pay-cut to just US$1 while they work through the problems. The firm faced renewed calls from shareholders to separate the roles of chairman and chief executive, which are currently held jointly by both Lazaridis and Balsillie.