Research In Motion got smacked by investors Friday, its shares down 12 per cent after announcing disappointing financial results and a delay in the rollout of new BlackBerrys aimed at the U.S. market.
Shares in the Waterloo, Ont., company were down $1.90 to $13.90 in afternoon trading on the Toronto Stock Exchange.
“They’re losing share in the U.S.,” Evercore Partners analyst Alkesh Shah said from New York. “They know the U.S. is a premium market.”
The BlackBerry maker’s market share in the lucrative American smartphone market is about 10 per cent this year, down from 15 per cent in 2010, and RIM has said it will focus on winning over more customers south of the border.
RIM has announced it will not roll out its new generation of BlackBerrys until late 2012 due to a delay in getting a chipset that will give the smartphones long battery life and will allow them to run on faster, advanced networks in the United States that are ideal for video streaming and other data services.
“I can understand why they want to come up with a killer device,” Shah said.
“The challenge is, even though the device may be amazing from an engineering specification point of view, it may not be attractive enough to a consumer from a user experience point of view.”
By the time these BlackBerrys arrive in the marketplace, there will be more Android smartphones to choose from as well as Windows smartphones and another new iPhone, he said.
The latest stock tumble came after RIM (TSX:RIM) reported late Thursday that quarterly profits plunged to US$265 million, a steep drop from $911 million in the same three-month period last year.
Analysts were quick to criticize the results and the outlook for the new year.
“This could be game over for the BlackBerry franchise,” wrote National Bank analyst Kris Thompson.
“We can’t be confident RIM even hits the 2012 holiday season.”
RIM has faced heightened competition in recent quarters as other smartphones like Apple’s iPhone and devices powered by Google’s Android system take a larger chunk of the market.
Co-CEOs Jim Balsillie and Mike Lazaridis have come under fire for the company’s lacklustre response to the growing number of alternative devices on the market.
On Thursday, the executives responded by announcing plans to slash their salaries to $1 as they focus on returning the company to its former glory.
They pleaded for understanding.
“We ask for your patience and confidence,” Lazaridis said on a conference call late Thursday.
RIM, which has been forced to cut 2,000 jobs this year, has watched as its PlayBook tablet offering landed on the market with a thud and also had to contend with a worldwide BlackBerry outage that cost it more than $50 million in revenues and tarnished its reputation.
“Disappointingly, RIM is largely sticking with the status quo, with a few minor exceptions,” said UBS analyst Phillip Huang, pointing to the salary reduction and the comprehensive review as two areas where they’ve taken action.
RIM had warned investors that it will book a US$485-million charge on the cost of discounting the price of PlayBooks by more than half to help boost sales.