Bes Stocks To Buy 2014, Best Stocks For 2014: RIM Shares Weighed Down by Outlook (Update 1)

Monday, December 19, 2011

RIM Shares Weighed Down by Outlook (Update 1)

Embattled handset maker Research In Motion(RIMM) beat Wall Street's expectations for its fiscal third-quarter results but saw its stock slump in extended trades after offering up a disappointing outlook.

Shares of RIM were trading down 7.6% to $13.98 in after-hours action on Thursday. The BlackBerry maker has already seen its stock drop more than 70% in 2011 since the beginning of the year as it deals with delays transitioning its phones to its new QNX operating system.

"The last few quarters have been some of the most trying in the history of this company," RIM co-CEO Jim Balsillie said during an earnings call with analysts. "We understand shareholders may feel like we let them down."

Both Basillie and co-CEO Mike Lazaridis will take a salary of $1 per year effectively immediately, they said.

For the three months ended in November, RIM posted adjusted earnings of $1.27 a share on revenue of $5.3 billion. Analysts were expecting earnings of $1.19 per share on revenue of $5.3 billion.

For its fiscal fourth quarter ending in March, however, RIM forecast earnings of 80 to 95 cents a share with revenue seen ranging between $4.6 billion and $4.9 billion. The current consensus view is for earnings of $1.18 per share and revenue of $5.1 billion in the fourth quarter.

RIM expects smartphone shipments of between 11 million and 12 million units for the fourth quarter, lower than the 14.1 million devices it shipped during the third quarter.

RIM has been unable to counter market share loses in the smartphone market for several quarters thanks to gains by rivals Apple(AAPL) and Google(GOOG).

RIM's market share slid to 8% during the third quarter compared to 22% in the same period last year, according to market research firm NPD.

It may face further losses after pushing back the launch of its next-generation BlackBery software QNX, viewed as crucial to RIM's futur! e.

R IM said during the company's earnings call that the devices won't be available until the "latter part" of next year. The product delay was caused by a chipset the company selected that isn't yet ready.

The company has also faced competition from Apple and others in the enterprise space, its traditional stronghold. The PlayBook, the company's attempt at breaking into the tablet space, suffered from a botched launch and disappointing sales figures.

"We're completely committed to the PlayBook," Balsillie said in a response to an analyst who asked when the company would be giving up on the device.

RIM's troubles have stoked chatter the company could be a takeout candidate for acquirers like Microsoft(MSFT)or HP(HPQ).

Interested in more on Research In Motion? See TheStreet Ratings' report card for this stock.

>To submit a news tip, send an email to: tips@thestreet.com.

>To order reprints of this article, click here: Reprints

Related Articles: