Research In Motion (TSX:RIM) is cutting its financial guidance based on lower than expected shipments of BlackBerry smartphones and reduced average selling prices for the devices.
When asked about the reason behind the shipment delays, co-CEO Jim Balsillie said the new phone includes major upgrades from the last BlackBerry version, and the delays were unrelated to carrier interest.
“(Carriers) want it sooner and we want it sooner but there’s an innovation cycle that’s at play and there are certification elements at play and that’s reality for us, and we’re affected by it,” he said in a conference call late Thursday.
“I’m not going to duck that — it’s a big innovation exercise.”
The Waterloo, Ont., company says it now expects fully diluted earnings per share to be in the range of US$1.30 to US$1.37 for the first quarter of its 2012 fiscal year. That quarter ends May 28.
That’s lower than the range of US$1.47 to US$1.55 previously forecasted.
Revenue will be slightly below the range of US$5.2 billion to US$5.6 billion.
“(It’s) a function of timing. If we pulled in the (shipment) schedules earlier these numbers would be different, if we push them out then that’s unfavourable,” Balsillie said.
“We’re reflecting the reality of that in the market but we don’t believe it changes the long term prospects of the company.”
RIM is expected to introduce a new line of more powerful smartphones, dubbed “super phones” with a new operating system that’s based on the system in its PlayBook computer tablet. The new phones may also support applications for Google’s Android operating system.
Customers might hold off on buying phones in the next few months as they wait for newer versions with more bells and whistles to hit the market, said analyst Alkesh Shah of Evercore Partners in New York.
He said RIM may have mistimed how much retailer and customer demand would slow down ahead of the new product launches.
“If you were somebody buying a new BlackBerry today and if you were told that you could wait three months and then have Android applications on the next generation BlackBerry, you might wait,” Shah said, adding that this is the second time in a month that RIM has issued new guidance.
“It’s a disappointment that they didn’t get this right when they gave the original guidance because now it hurts management’s credibility to come back a month later and lower guidance again.”
Wunderlich Securities analyst Matthew Robison said RIM is feeling the effects of transitioning to new products and competition with Android and Apple’s iPhone.
“They’re not seeing much demand for their high-end products because they’ve got so many new ones coming out and all of the competitive issues aren’t getting any easier,” Robison said from San Francisco.
He said part of RIM’s challenges are having its existing smartphones compete with the new ones expected to enter the market later this year.
With the stock down in after hours trading that’s “probably a pretty good indication of the significance” of the revised guidance, Robison said.
Robison said RIM will certainly face more questions at its BlackBerry World conference next week in Orlando, Fla.
The BlackBerry maker has also been relying on international sales for much of its growth, and has to reduce prices in developing countries to sell more phones to people who make lower wages.
Technology analyst Mark Tauscheck says RIM will see average selling prices move downward for the next few quarters.
“They go down market in terms of the devices, so what you’d see is a lot more BlackBerry curves, sort of lower end devices selling in those markets— as opposed to higher end Torches selling in North America.”
RIM says shipments of the BlackBerry PlayBook tablet in the quarter continue to be in line with its expectations, but the company hasn’t said how many units it expects to ship in the quarter ended May 28.
RIM also said it hasn’t experienced any significant supply disruptions in the quarter due to the impact of the earthquake and tsunami in Japan.
RIM shares were halted for trading Thursday pending news of the earnings downgrade.
In after-hours trading in New York, RIM’s shares fell $5.53 to US$51.06, down nearly 10 per cent from the close of official trading ahead of the announcement.