Blackberry Maker Hit With Charge on Weak Tablet Sales
NEW YORK - In the latest hit to Blackberry maker Research In Motion, the company said Friday that it would take a $485 million charge in its fiscal third quarter after marking down the value of its inventory of its PlayBook tablets.
The technology company, hit by competition from Apple and Google devices that have overtaken it in U.S. market share, also cut its revenue and earnings expectations amid disappointing sales of the tablets, which have led it to cut its price.
The stock dropped sharply in early Friday trading. As of 10:05am ET, it was down 8.8 percent to $16.95. Late last month, the stock had hit a 52-week low of $15.98.
"The company now believes that an increase in promotional activity is required to drive sell-through to end customers," RIM said about the PlayBook tablets, which have been met with weak reviews and buzz. "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 Blackberry maker said it wants to "expand upon the aggressive level of promotional activity recently employed by the company in order to drive PlayBook adoption around the world."
Co-CEO Mike Lazaridis said in a statement: “RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy. Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise.”