Unsold PlayBook inventory costs RIM $485 million
Research in Motion announced on Friday that its inability to sell PlayBook tablets to consumers has forced the company to take a $485 million charge.
The mostly non-cash inventory provision is yet another bad sign for the PlayBook, which has failed to gain any traction in the tablet market dominated by Apple. Retailers began a fire sale of the touchscreen device last month, slashing as much as $300 off the price of the PlayBook in an effort to move inventory.
The PlayBook sold just a half-million units in the first quarter of availability, but dropped to 250,000 the following quarter. In the third quarter, sales dipped to just 150,000.
However, RIM has reiterated that it is committed to the PlayBook, and the company remarked that deep discounts on the hardware, selling it for as little as $199, have spurred sales.
In addition to poor sales of the PlayBook, RIM warned investors on Friday that it is seeing "lower sell-through and demand" of its products, which will affect not only its third quarter, but also the company's fourth quarter. Accordingly, RIM has lowered its fiscal 2012 earnings per share outlook, as it no longer expects to meet its $5.25 to $6.00 EPS guidance.
Analyst Mike Abramsky with RBC Capital Markets said while RIM's smartphone shipments and gross margins are in line with expectations, the company's product mix has shifted toward devices with lower average selling prices. In addition, RIM is seeing sell-through of its hardware deteriorate, and it expects fourth-quarter shipments to be down sequentially.
In contrast, Apple is expected to be in the midst of its strongest quarter ever, riding high on the launch of the iPhone 4S. Apple executives said in October that they expect to set new records for both iPhone and iPad sales in the current holiday quarter.
The mostly non-cash inventory provision is yet another bad sign for the PlayBook, which has failed to gain any traction in the tablet market dominated by Apple. Retailers began a fire sale of the touchscreen device last month, slashing as much as $300 off the price of the PlayBook in an effort to move inventory.
The PlayBook sold just a half-million units in the first quarter of availability, but dropped to 250,000 the following quarter. In the third quarter, sales dipped to just 150,000.
However, RIM has reiterated that it is committed to the PlayBook, and the company remarked that deep discounts on the hardware, selling it for as little as $199, have spurred sales.
In addition to poor sales of the PlayBook, RIM warned investors on Friday that it is seeing "lower sell-through and demand" of its products, which will affect not only its third quarter, but also the company's fourth quarter. Accordingly, RIM has lowered its fiscal 2012 earnings per share outlook, as it no longer expects to meet its $5.25 to $6.00 EPS guidance.
Analyst Mike Abramsky with RBC Capital Markets said while RIM's smartphone shipments and gross margins are in line with expectations, the company's product mix has shifted toward devices with lower average selling prices. In addition, RIM is seeing sell-through of its hardware deteriorate, and it expects fourth-quarter shipments to be down sequentially.
In contrast, Apple is expected to be in the midst of its strongest quarter ever, riding high on the launch of the iPhone 4S. Apple executives said in October that they expect to set new records for both iPhone and iPad sales in the current holiday quarter.
Comments
Next.
Ahh, AI's first dose of Schadenfreude for the day. Classy.
Your disagreement doesn't bother me at all.
Your abject refusal to explain your point does.
But...but...it runs flash! I thought people would be lining up to buy it after experiencing the flash-less horror that is the iPad!
Next.
We don't see many explanations from the "Android kicks iOS' butt" crowd as to why Android tablets can't seem to get off the ground. They seem happy to stick to the smartphone market share argument for some reason. They also don't seem too enthused to compare total iOS vs Android device market share either. "An inconvenient truth" to quote a former VPOTUS?
So to any other companies out there thinking of building junk. Stop! Do yourself a favour and ask me first.
The appropriate term, I believe, is "death spiral".
I thought it was "beleaguered".
It's time for the board to unseat the dolts who claim to be co-ceo's. Two heads, both with outdated, delusional, ideas on how to run the company - are not better than one (ceo who knows what the hell they're doing).
Without a significant change in leadership and business model, RIM will continue to lose market share and brand equity until there is nothing left to save.
The only thing keeping them alive now is that Wall Street has remained BB-centric - which just goes to show that streeters are really far removed from reality. It's made even more pronounced with their inability to value Apple appropriately, but that's a different thread altogether.
I thought it was "beleaguered".
no, it's 'doomed'.
no, it's 'doomed'.
No, no, Apple is doomed. They have exclusive rights to being 'doomed'.
At least, the naysayers say so, so it's probably right.
No, no, Apple is doomed. They have exclusive rights to being 'doomed'.
At least, the naysayers say so, so it's probably right.
and Samsung has second dibs
The only people I know that have BlackBerrys are executives that haven't figured out that it makes them look like a dinosaur and people who think thought they were 'hip' in a rapper way, a decade ago and haven't looked up long enough from their Curves to notice that Justin Bieber is the new Vanilla Ice.
No, no, Apple is doomed. They have exclusive rights to being 'doomed'.
That's true.
Considering that, maybe the Touchpad firesale wasn't as bad a decision as we thought. I still think it could have done ok if sold at-cost and the money was made up with dev tools and app revenue though.
Uh, you have to sell the thing first, in order to get any app revenue. You do understand this, right?
Give it awayyyy Give it awayyy Give it awayyy Nowwww
Ah, if we're equating this to song lyrics, allow me to post the only two lines of this song that I know in a similar fashion:
"My hardware is a cage? ?that keeps me from selling to the consumers? "
No idea who sings it, what it's called, or where it's from; I just heard it on some recent trailer on Apple's site. Thought it fitting.