RIM shares crash on cost estimates

Michael Carroll
28 Mar 2011

Markets have reacted badly to guidance from RIM of higher costs during its current fiscal 1Q12 to cover the rollout of its hotly-anticipated PlayBook tablet.

The firm’s share price tumbled in late trading yesterday, FT.com reports, after it revealed earnings per share were likely to fall to between $1.47 and $1.55 in the current quarter. This compares to $1.78 per share in fiscal 4Q11, which covers the three months to end-February.

RIM is gearing up to launch the PlayBook – its first tablet – next month, and is also cautious about potential component shortages arising from the downturn in production caused by natural disasters in Japan. However, the firm still expects to grow earnings per share to $7.50 from $6.34 in its current fiscal year.

The concerns over higher costs in fiscal 1Q12 overshadowed a decent set of earnings for fiscal 2011, with net profit up 47% to $3.4 billion and revenues growing by a third to $19.9 billion. Devices remain the firm’s biggest earner, generating 81% of revenues in the past year, with service revenues accounting for 16% of the total, and 3% coming from software and other sources.

Co-chief executive Jim Balsillie hailed record device shipments of 52.3 million smartphones during fiscal 2011, and states the firm is “in an excellent position to benefit from the continuing convergence of the mobile communications and mobile computing markets,” in the coming year.

“We are laying a strong foundation for RIM’s expanding market opportunity through focused investments,” Balsillie noted.

While analysts were disappointed with the firm’s 1Q12 outlook, its fiscal 4Q11 results were better than expected. Earnings per share were $0.02 higher than consensus estimates, and revenues broadly in-line with forecasts of $5.64 billion, Reuters reported.

Related content

Follow Telecom Asia Sport!
No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.