RIM Drops on Concerns Sales Will Make It ‘Niche’
Research In Motion Ltd. (RIMM), struggling to compete in the smartphone and tablet computer markets, plunged in Nasdaq trading after its earnings report disappointed investors for the third consecutive quarter.
The maker of the BlackBerry smartphone is losing ground in that market to Apple Inc. (AAPL)’s iPhone and devices that use Google Inc. (GOOG)’s Android software. RIM has made little progress with its PlayBook in the tablet computer market, shipping just one device for every 46 iPads that Apple sold in the latest quarter.
“RIM is on a path to becoming a niche player,” said Ted Schadler, an analyst for Forrester Research Inc. “RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products.”
RIM, based in Waterloo, Ontario, fell $5.50, or 19 percent, to $24.04 at 11:24 a.m. New York time on the Nasdaq Stock Market, after tumbling as much as 23 percent for the largest intraday decline in three months. The stock had dropped 49 percent this year before today.
Profit for the fiscal second quarter, excluding some costs, fell to 80 cents a share, RIM said yesterday in a statement. Analysts predicted 88 cents, according to a Bloomberg survey. Revenue fell to $4.17 billion in the three months through Aug. 27, compared with the average estimate of $4.47 billion.
“RIM’s earning misses over the past few quarters has tainted investors’ confidence,” said Blaine Carroll, an analyst with Rodman & Renshaw LLC in New York. He has an “outperform” rating on the stock.
At least three analysts downgraded their ratings on the stock, including Steven Li of Raymond James Ltd. in Toronto, who dropped his recommendation to “market perform.”
What do you think about this huge DROP ?