RIM shares fall on lower outlook

Shares of Research In Motion fell 11 per cent in after-hours trading Thursday after the company lowered its estimate of earnings over its first quarter. Its stock fell by $6.29, to $50.30 US.

RIM said in a release that it shipped fewer BlackBerry smartphones than it had expected.

Waterloo, Ont.-based RIM, which reports in U.S. dollars, said it now expects earnings per share for the quarter ending May 28 to be in the range of $1.30 to $1.37.

Its forecast on March 24 had been for $1.47 to $1.55.

The firm said the number of BlackBerrys shipped is now expected to be at the lower end of the range of 13.5 million to 14.5 million it forecast in March.

PlayBook shipments still in line

RIM also said it was seeing "a shift in the expected mix of devices shipped toward handsets with lower average selling prices."

Revenue, it said, would be slightly below the range of $5.2 billion to $5.6 billion it predicted in March.

"Shipments of BlackBerry PlayBook in the quarter continue to be in line with our previous expectations," the company said in a release, "and we have not experienced any significant supply disruptions in [the quarter] due to the impact of the Japan earthquake."

RIM said it still expects to achieve full year earnings per share of about $7.50.

RIM slashed its outlook a week after rival Apple Inc. reported a blowout quarter, with a record 18.65 million iPhones shipped.

RIM is expected to introduce a new line of more powerful smartphones, dubbed "super phones" with a new operating system that's based on the system in its PlayBook. The new phones may also support applications for Google's Android operating system.

RIM may be predicting customers will hold off on buying phones, said analyst Alkesh Shah of Evercore Partners in New York. He said RIM may have inaccurately estimated how much retailer and customer demand would slow down ahead of the new product launches.

"If you were somebody buying a new BlackBerry today and if you were told that you could wait three months and then have Android applications on the next generation BlackBerry, you might wait," Shah said.

Prices expected to fall

"It's a disappointment that they didn't get this right when they gave the original guidance because now it hurts management's credibility to come back a month later and lower guidance again."

Wunderlich Securities analyst Matthew Robison said RIM is feeling the effects of being in a transition to new products and competition with Android and Apple's iPhone.

"They're not seeing much demand for their high-end products because they've got so many new ones coming out and all of the competitive issues aren't getting any easier," Robison said from San Francisco.

He said part of RIM's challenges are having its existing smartphones compete with the new ones expected to enter the market later this year.

Technology analyst Mark Tauscheck says RIM will see average selling prices move downward for the next few quarters.

"They go down market in terms of the devices, so what you'd see is a lot more BlackBerry Curves, sort of lower-end devices selling in those markets — as opposed to higher-end Torches selling in North America."

It's the second hit for the stock in just over a month. When reporting earnings for the previous quarter on March 24, the company disappointed investors by lowering its earnings outlook to the $1.47 to $1.55 per share range, below analyst expectations at the time.