BlackBerry Maker Takes A $486 Million Hit After Poor Tablet Sales
Research In Motion's Playbook. Justin Sullivan/AP hide caption
Research In Motion's Playbook.
Justin Sullivan/APIt seems the fortunes of Research In Motion, the maker of BlackBerry devices, just aren't getting any better. Today, the company announced it was taking a $485 million hit because of all the PlayBook tablets that are sitting on store shelves. Now, RIM must sell the devices very cheaply just to get rid of them.
The Los Angeles Times reports on RIM's pretty dismal year:
"The news is the latest setback for the PlayBook and RIM as a whole, which has had a rough year so far with multiple product delays, no carriers offer up a 3G or 4G version of the PlayBook, layoffs, service outages, shrinking market share, disappointing earnings results and sliding stock prices.
"'As previously disclosed, RIM has a high level of BlackBerry PlayBook inventory,' the Canadian company said in a statement. 'The Company now believes that an increase in promotional activity is required to drive sell-through to end customers. This is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software.'
"The significant loss, which is technically called a pre-tax provision, will allow RIM to expand its marketing push around the PlayBook in a bid to boost sales, the statement said."
The Toronto Star reports that RIM, based in Ontario, is still committed to the tablet market. Quoting analysts, the paper reports that the scale of the PlayBook charge indicated that the company was probably sitting on five million unsold devices and "is now marking down the units to below cost in promotional sales."
The Wall Street Journal reports that shares of RIM fell 9.7 percent today on the news, but the company "remains profitable and sits on a comfortable cash pile, which the company said grew modestly in the third quarter."