RIM stands by PlayBook

MONTREAL — Research In Motion said Thursday its PlayBook computer tablet will stay on the market and dismissed speculation that the tablet will be discontinued as “pure fiction.”

MONTREAL — Research In Motion said Thursday its PlayBook computer tablet will stay on the market and dismissed speculation that the tablet will be discontinued as “pure fiction.”

Shares in the BlackBerry maker closed down 70 cents, or about three per cent, to $21.97 on the Toronto Stock Exchange after a report the company could shut down PlayBook production.

“RIM doesn’t typically comment on rumours, but any suggestion that the BlackBerry PlayBook is being discontinued is pure fiction,” the Waterloo, Ont., tech company said in a statement.

“RIM remains highly committed to the tablet market.”

An analyst’s report suggested RIM (TSX:RIM) had stopped production of the tablet and was considering exiting that market after a staff reduction at a factory where the PlayBook is made.

RIM has sold fewer than one million PlayBooks since the tablet made its debut last April. The company only sold about 200,000 PlayBooks in its most recent financial quarter, less than half of what analysts had expected and fewer than the company itself had anticipated.

The tablet, although a minor source of revenue for RIM, uses the operating system that will be in the next generation of BlackBerry smartphones, which will debut in 2012 and be even more like mobile computers.

RIM has said it’s preparing to roll out an updated version of the PlayBook’s operating system, which includes the BlackBerry email system for the tablet, at a developer conference in mid-October. It’s hoped the upgrades and promotional marketing efforts will help stimulate sales of the PlayBook.

Two of Canada’s biggest electronics retailers, Best Buy and Future Shop, as well as the Staples office supply chain, have cut the price of RIM’s PlayBook tablet by $100 ahead of the software update planned for October.

Apple’s iPad dominates the tablet market but Amazon’s newly announced Fire tablet with its Android operating system is expected to be a challenger. There are also a host of other tablets in the market, including Samsung’s Galaxy Tab, which uses the Android operating system.

National Bank Financial analyst Kris Thompson called the PlayBook a “failure.” He said RIM’s 200,000 PlayBook shipments were “pathetic” and partly responsible for the company’s bloated inventory.

“This compares with Apple shipping over nine million units in the last quarter,” Thompson wrote in a recent research note. “The PlayBook is a failure, and is draining company resources.”

BlackBerry smartphones, while still strong among its business and government users, have been struggling in the consumer market against Apple’s iPhone and phones that use Google’s Android operating system.

Some of RIM’s institutional shareholders have been asking for changes to the company to make it more competitive, including putting itself up for sale or spinning off its patents into a separate, publicly traded company.

There are unconfirmed rumours that activist investor Carl Icahn is buying into RIM to make changes or put the company up for sale.

Icahn has taken stakes in many big American companies — from Motorola and Lions Gate Entertainment to bleach maker Clorox — and usually forced them to restructure and become more profitable. Those shares then generally rise in value and Icahn cashes in on his investment.

As a RIM shareholder, Icahn could pressure the company to appoint new board members, ask for a shareholders’ meeting to put his associates on the board or pass a resolution to put the company up for sale. Icahn could also make a bid for RIM himself.

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