BlackBerry delays hamper RIM's growth
Published: 24 Nov 2005 09:55 GMT
Research In Motion on Wednesday lowered its new-subscribers projection by 8 percent for the rest of the year after two new BlackBerry models failed to ship on time. However, the company said sales forecasts should remain unchanged.
This is the third time this year that RIM, which makes the BlackBerry wireless email device, has lowered its new-subscriber forecast. In March it lowered its estimated number of new subscribers by 3 percent to between 775,000 and 825,000. Then, in September, the company lowered its forecast again to between 680,000 and 710,000.
RIM blamed the revision on problems with two widely anticipated new products — the BlackBerry 8700 Series for EDGE (Enhanced Data rates for Global Evolution) networks and the BlackBerry 7130 Series for EV-DO (Evolution Data Only, Evolution Data Optimised) networks.
The 8700 was from Cingular in the US and from Rogers Wireless in Canada; the 7130 model was from Verizon. Neither device met the early November shipping deadline.
"Due to unanticipated launch delays, these new handsets have only become commercially available through business channels this week and national retail availability is now expected in early December," RIM said. "As a result, many customers delayed purchases in anticipation of the newer products."
The company said it expects its estimated revenue for the current quarter to be in line with analysts' expectations. RIM said it expects revenue of $540m to $570m (£314m to £331m) for the fiscal third quarter, ending 26 November. Analysts on average are expecting $555.6m.
In addition to its own business, 30 percent of RIM's subscribers come from its BlackBerry Connect software and service, the company has said. Both allow individuals to have wireless always-on access to email and corporate data on portable devices.
RIM is expected to report actual third quarter subscriber additions and financial results, and hold its quarterly results conference call, on 21 December, 2005.
At midday trading on Wednesday, RIM stock was down $2.86 at $64.22 on Nasdaq.
"Despite neutral impact on revenue, RIM is first and foremost a BlackBerry subscriber story, so expect heavy impact on shares," Conscius Capital Partners analyst Kona Shio said in a note.
It is likely that investors are also fretting over the impact of a patent dispute with patent holding company NTP, Shio said.
NTP sued RIM in 2002 for patent infringement and won an injunction in 2003 — which was stayed pending appeal — to shut down RIM's service in the US. With the appeal process largely exhausted, RIM faces the risk of a fresh injunction.
Judge James Spencer is expected to rule this week on the validity of a $450m settlement agreement that the parties signed in March.
Lawyers for NTP accused RIM on Monday of a steady stream of delay tactics and court disruptions to wait out NTP's patents, which expire in 2012.
A representative with RIM was not immediately available to comment on NTP's claims.
Reuters contributed to this report
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