RIM shares plunge as earnings disappoint

Shares of Waterloo, Ont.-based Research In Motion plummeted Thursday after it reported that net profit plunged by more than half in its second quarter.

RIM shares were down $5.31, or 18 per cent, at $24.26 US in extended hours trading.

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 $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.

 "They are just not selling. They are not competitive," said Peter Misek, an analyst at Jefferies & Co. in New York.

"They are getting really hit hard by Android phones."

Misek said RIM's future depends on it releasing new BlackBerrys with the company's long-promised new QNX operating system, designed to compete with iPhones and Android phones.

RIM has promised to release phones with that software in early 2012.

The firm is predicting 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.

It 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 June, the firm announced it planned to cut 2,000 jobs, or about 11 per cent of its global workforce, in order to cut costs in the face of intense rivalry in the smartphone market.

The BlackBerry brand has dropped 25 per cent of its value to $3.3 billion, down to 10th place in the top 15 Canadian brands, says the latest analysis from the Brand Finance Canada index.

The last new RIM phone product line to debut was the BlackBerry Torch, with both a touch screen and pullout keyboard, in August 2010.

Upgraded BlackBerry Bold and BlackBerry Torch smartphones, which have improved operating systems, were rolled out last month.