RIM Smartphones & Tablets Miss Estimates, Stock Drops 18%

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Research In Motion reported earnings for its second fiscal quarter (ending August 27th) that included the news that both its smartphones and its tablets missed estimates, news that sent the stock tumbling by more than 18% in the after hours market. It didn’t help that tablet sales missed even recently lowered Wall Street estimates, as the BlackBerry PlayBook sold just 200,000 units.

In the after hours-session, the stock was trading at US$24.08, down $5.46 (-18.48%). In the chart below, you can see that the stock traded in a narrow band throughout the day, and then dove off a cliff in the after hours session. After hours trading historically represents a more exaggerated reaction to both good news and bad, but an 18% sell-off isn’t a good thing for any company.

RIMM Chart for September 15th

Chart for RIMM for September 15th, including after hours trading.

Research In Motion reported adjusted revenue of $4.18 billion and earnings of $0.80 per share. Analysts had been expecting earnings of $0.87 per share and revenue of $4.47 billion.

The firm said it shipped 10.6 million BlackBerry smartphones during the quarter, below expectations of 11.8 million units. In a statement, the company blamed the slow sales on “Lower than expected demand for older models.”

At the same time, the firm released several new models devices running on BlackBerry 7, a new version of the company’s operating system. The company didn’t break out sales of those new models, but did say that they were “near the high end” of its own internal forecasts, according to Marketwatch, but didn’t offer any context for what that internal forecast was.

On the tablet side, the company’s results were even more atrocious. RIM reported that it shipped some 200,000 BlackBerry PlayBooks, the company’s 7” effort at competing with Apple’s 9.7” iPad. Analysts had been expecting RIM to ship 562,000 PlayBooks. In addition to failing to meet Wall Street expectations, that compares to the 9.25 million iPads Apple sold during the June quarter, Apple’s most recently completed quarter.

“We had cut our PlayBook numbers, and they still came in below that,” analyst Mike Walkley of Canaccord told Marketwatch. “So I think it’s a big worry, since QNX is the platform of the future for the company.”

Before RIM introduced the BlackBerry PlayBook, the company was full of tall talk about how fast it was, how awesome it was that it supported Flash, and how it “was built for developers.” since its introduction, however, customers have shown little interest in the device.

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