Tag Archives: Playbook

Can a responsible adult please take over RIM

Company says it is taking a $485 million charge because they are selling the Blackberry Playbook at around $200.  The good news is that they are actually selling.  The bad news is that they are sold about about a $150-$200 loss per unit.

A $485 million writedown for the discounting, along with costs related to a worldwide shutdown of BlackBerry service in October, caused RIM to warn that third-quarter revenue would be “slightly lower” than the $5.3 billion to $5.6 billion it had previously forecast.

In a statement, the company also said that it did not expect to meet its earnings target for the year. RIM will announce official results for the third quarter on Dec. 15.

RIM has repeatedly struggled to meet targets this year as it worked to stem a loss of market share for BlackBerry phones in North America. Friday’s restatement sent RIM’s shares down by $1.81, or 10 percent, to $16.77 a share, on Nasdaq.

Its stock is down 76 percent from the 2011 high of $69.86 posted on Feb. 18.

The base model Playbook, once priced at $500, is now being offered for $200. Tavis McCourt, an analyst with Morgan Keegan in Nashville, estimated that the tablets cost RIM $350 to $400 to manufacture.

I heard on the radio today that the per unit cost is around $265 and this site says that they only cost $205 to manufacture if you marketing and research and development costs are not included.  It was odd to look back and read that RIM was going to ship this and that within 60 days of it’s launch and nothing has shipped yet.  It’s what stopped me from purchasing a Playbook a couple of months ago.  The other thing that has to hurt is when you see the Acer Iconia and the Motorola Xoom running Android which actually include Skype, IM, and email.

RIM has consistently overpromised and under delivered which is one of the reasons I traded in my Blackberry for something else, I lost confidence in the company.

RIM Slashes Playbook’s Price

RIM Playbook

I think this is a good move by RIM.  It’s a seven inch tablet for the same price as the 10 inch iconic iPad.  By slashing their prices (Wal-Mart is offering them for $249), it gives people like me a reason to look at them.

Hewlett-Packard Co.’s TouchPad device was deemed a spectacular failure when it launched this summer, which led to now-former chief executive Leo Apotheker’s decision to discontinue the webOS tablet after just 48 days of sales in the U.S.

But when the world’s largest computer maker opted to slash the price of the TouchPad to just US$99 in an effort to sell off its remaining inventory — a decision which may have cost HP more than US$400-million and helped cause Mr. Apotheker’s untimely ouster last week — customers were lining up outside electronics stores to get their hands on the TouchPad.

It appears the PlayBook price cuts may already be having the desired result. Future Shop’s online store lists the 16 GB version of the PlayBook as “temporarily out of stock” and other retailers have reported selling out of the PlayBook.

But just as HP wound up feeling the pain of the TouchPad’s demise on its balance sheet, if RIM’s only recourse to bolster PlayBook sales is to offer steep discounts, the company could be facing a devastating financial reckoning the next time it reports quarterly financial results in December.

While the price drop is likely to give a much needed shot in the arm to PlayBook sales as electronics retailers gear up for Black Friday and the ensuing holiday shopping season, the fact remains that margins in the consumer electronics business are razor thin, and falling prices put a squeeze on potential profit.

In the most recent quarter, RIM’s gross margin fell to 38.7% with net income of US$329-million, down substantially from a gross margin of 43.9% and net income of US$695 in the prior quarter. What sort of impact this price cut has on RIM’s balance sheet remains to be seen.