RIM’s shares tumble on lowered profits, modest forecast

Shares of BlackBerry maker Research In Motion Ltd. tumbled in after-hours trading after the device manufacturer posted second quarter financial results that showed a drop in profits and lower than expected demand.
While total revenues surged nearly 40% year-over-year to $3.5 billion during the quarter an increase in expenses dropped net income from $495.6 million last year, a return of 86 cents per share, to $475.6 million this year, a return of 83 cents per share. Gross margins also dropped from 50.7% to 44.1% over the same time frame.
RIM said it shipped 8.3 million devices during the quarter and added 3.8 million new subscriber accounts ending the first half of its fiscal year with about 32 million customers using its service.
Along with the lower than expected quarterly results, RIM’s forecast of profits between $1 and $1.08 per share on revenues of between $3.6 billion and $3.85 billion was lower than the $3.9 billion expected by analysts. RIM also said it expects to ship nearly 10 million devices during the current quarter, with co-CEO Jim Balsillie touting the pending launch of higher-end devices.
Analysts were disappointed by the growth forecasts noting RIM was seeing a greater than expected challenge from Apple Inc.’s iPhone in the enterprise space.
RIM’s stock, which was already down more than 3% prior to the release of its financial results, plunged another 11% in after hour trading to just under $74 per share.