Research In Motion Cuts Q3 Outlook; Shares Heading South

Research In Motion shares are trading lower yet again Friday morning after the BlackBerry maker reduced its guidance for the fiscal third quarter ended November 26, announced a large non-cash charge due to excess inventory of the BlackBerry PlayBook tablet and said it won’t meet previous full year guidance.

Here are the key points from the announcement:

The company said it shipped 14.1 million BlackBerry smartphones in the fiscal third quarter, in line with guidance of 13.5 million to 14.5 million.Adjusted revenue in the quarter is expected to be slightly lower than the previous  guidance range of $5.3 billion to $5.6 billion, “reflecting product mix and the impact of PlayBook sell-through programs in the quarter.”The company continues to see gross margin of 37% for the quarter.The company sees EPS in the low-to-middle of the previous guidance range of $1.20 to $1.40 a share.RIMM said that its cash balance at the end of the quarter increased by about $80 million to approximately $1.5 billion.Meanwhile, the company said it sees Q4 units below third quarter levels, due to “several factors including lower than expected sell-through in the third quarter and RIM’s current view of fourth quarter demand”The company said it no longer expects to meet previous full year guidance of $5.25-$6.00 a share, but it did not give specific new guidance.

The company also said it will take a pre-tax charge of $485 million in the quarter – $360 million after tax – related to excess inventory of the PlayBook tablet.

“The company now believes that an increase in promotional activity is required to drive sell-through to end customers,” Research In Motion said in a statement. “This is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software. As a result, RIM will record a provision that reflects the current market environment and allows it to expand upon the aggressive level of promotional activity recently employed by the company in order to drive PlayBook adoption around the world.”

The company said that the move should “accelerate adoption of its QNX-based platform by consumers and enterprises,” while also helping to “drive the development of a vibrant application ecosystem in advance of its next generation BlackBerry smartphones.”

RIM said it sold 150,000 PlayBooks into the channel in the third quarter, with sell-through higher than that. The company notes that anyone who buys a PlayBook now will be able to upgrade the the next version of the OS when it ships in February at no extra cost.

RIMM this morning is down $1.42, or 7.6%, to $17.16.

Via: Forbes