Saturday, March 26, 2011

Blackberry firm Research in Motion hurt by tablet cost

Shares in Research in Motion (RIM) fell 12% in after-hours trading after the firm said profits this quarter will be much weaker than expected.

It blamed the cost of developing its new tablet-format Blackberry, as well as a migration of consumers towards cheaper handsets in its product range.

The share price fall came despite the Canadian firm reporting $934m (£579m) net profits for the last quarter, in line with expectations.

Profits were up 31% on a year earlier.

'Investments in the future'
Revenues of $5.6bn - up 36% - were slightly short of expectations, according to the results released after the close of trading on the Nasdaq exchange.

The company has seen its share of its core US market steadily eroded by smartphone rivals.

Some 48% of its business now comes from outside the key markets of the US, Canada and the UK.

But growth in these new markets has gone hand-in-hand with a shift towards lower-margin entry-point products, the firm conceded.

RIM is banking on its new tablet computer - the Playbook - to regain the initiative.

It will be half the size of Apple's iPad and will be compatible with Google's Android operating system.

"These are investments in the future," said co-chief executive Jim Balsillie, explaining the unexpected increase in money spent on research, development, sales and market.

"I have many corporate clients that have approached us about, you know, each wanting tens of thousands, several tens of thousands of Playbooks."

As well as the new product launch, the company is also revamping its operating system.

The firm lowered its profit guidance for the current quarter, and also broadened its range due to uncertainty over the possible impact of Japanese supply chain problems.


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