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The Wallstrip Blog

December 3, 2008

RIM slashes third quarter targets

by Wallstrip 4
RIM slashes third quarter targets

Research In Motion has adjusted its revenue and earnings guidance for the third quarter. The handset maker blamed an unfavorable foreign exchange rate and the sagging economy. People just aren’t willing to spend 500 bucks on a new crackberry anymore. And corporate sales of new phones have certainly dropped.

But RIM itself is partially to blame. The company’s two new phones, the Blackberry Bold and the Storm, were not released on time. And the latter, a supposed iPhone-killer, has gotten pretty lukewarm reviews.

Here’s more, from Marketwatch:

  • In early Wednesday trades, Research In Motion fell less than 3% to $36.43. The stock is already down 68% in 2008.
  • Late Tuesday, Research In Motion issued a statement saying it expects adjusted earnings per share in the quarter ended Nov. 29 to range from 81 cents to 83 cents a share, compared with a prior forecast of 89 cents to 97 cents.
  • RIM also expects sales to grow by about 65%, to a range of $2.75 billion to $2.78 billion. That’s lower than the previous estimate, a range of $2.95 billion to $3.1 billion.
  • Analysts surveyed by FactSet Research had estimated, on average, profit of 91 cents a share on sales of $2.94 billion.
  • Gross margins, meanwhile, are expected to range from 45% to 46%. The company previously guided for 47% gross margins for the quarter after recording a 50.7% gross margin in the fiscal second quarter.
  • About a third of the change in the Research In Motion forecast is due to the dollar’s strength against other currencies, the company said. The greenback has picked up as foreign central banks follow the U.S. Federal Reserve in cutting interest rates.
  • The remaining difference is due to lower-than-estimated shipments of existing products, with the company citing general economic weakness in the U.S. and “shifts in product-launch dates” — in other words, the later-than-expected releases of the BlackBerry Bold and Storm.

    • Read the full story here.

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