Technology: IPad Outsells 19-1

Story first appeared in Bloomberg News.

Research In Motion Ltd., depending on its new PlayBook to bolster sales as demand for its BlackBerry phones withers, may have shipped just one of the tablet computers last quarter for every 19 iPads from Apple Inc.

The company, which reports earnings tomorrow, probably sold about 490,000 PlayBooks during the first full quarter of sales, according to a Bloomberg survey of analysts, compared with the 9.25 million iPads shipped last quarter. Analysts cut estimates for full-year PlayBook shipments, to an average of 2.2 million, according to the survey.

RIM overplayed the PlayBook in terms of its sales and prospects,
said Charlie Wolf, an analyst at Needham & Co. in New York. What this really shows is that the company’s prospects will depend on the next generation of BlackBerrys.

When RIM first disclosed plans for a tablet last year, analysts including Tero Kuittinen, then at MKM Partners LLC, said the device had the potential to evolve into a significant new product category.
Yet RIM didn’t get the 7-inch tablet to market until April, a year after the first iPad and behind rivals such as Samsung Electronics Co.
Even then, RIM drew criticism for introducing the PlayBook without dedicated e-mail or instant messaging and a shortage of consumer applications like Netflix Inc. movies.

The company will ship about 1.5 million tablets this year, compared with 39.2 million for Apple and 7 million for Samsung, said Michael Walkley, an analyst at Canaccord Genuity Ltd.

Minneapolis-based Walkley, who has a hold rating on the company said RIM hasn’t given up on the PlayBook, but it’s clearly off to a poor start. That creates huge pressure on the new BlackBerry phones, he said.

Revenue Decline

Last week, Walkley lowered his PlayBook forecast for fiscal 2012 to
1.5 million from 2.2 million, and William Power, an analyst at Robert W Baird & Co., cut his 2012 estimate to 2 million units from 2.45 million. This week, Steven Li, an analyst at Raymond James Ltd., reduced his PlayBook forecast to 2.4 million units from 4 million.


The Waterloo, Ontario-based company will likely report its first revenue decline in nine years when it releases results tomorrow. Sales for the fiscal second quarter will probably decline to $4.53 billion from $4.62 billion, according to a Bloomberg survey of analysts.
Profit may drop to 91 cents a share from $1.46, according to analysts.

New Smartphones

RIM is struggling to compete in the smartphone market against Apple and companies such as Samsung and Motorola Mobility Holdings Inc. that use Google Inc.’s Android operating system. RIM’s share of the global smartphone-software market dropped to 12 percent in the second quarter from 19 percent a year earlier, according to Gartner Inc. In the same period, Apple climbed to 18 percent from 14 percent, and Android rose to 43 percent of the market.

After its last earnings report in June, RIM tumbled 21 percent as the company cut its profit forecast for the year. RIM also unveiled plans to eliminate about 2,000 jobs, or a 10th of its workforce.

RIM slipped 4 cents to $30.13 yesterday in Nasdaq Stock Market trading and has dropped 48 percent this year.

The company is introducing new smartphones to gain back ground against rivals. RIM started selling phones that run on the BlackBerry 7 operating system in the U.S. this month and in Europe last month. The company plans to shift to a new operating system, QNX, with a lineup of phones that co-Chief Executive Officer Mike Lazaridis said will come out in early 2012.

Analysts have mixed impressions of the latest phones. Power, of Robert W Baird, said early sales of the BlackBerry 7 phones are sluggish.
Ehud Gelblum, an analyst at Morgan Stanley, said positive initial reviews may bolster sales.

QNX Prospects

Models like the new touchscreen Bold 9900 are proving popular with corporate users and existing BlackBerry fans, while phones without keyboards like the Torch 9810, aimed at ordinary customers, are selling less well, said Canaccord’s Walkley.

He said consumer-centric retail store checks indicated smartphone customers continue to overwhelmingly choose the iPhone 4 or new Android smartphones.

The real test of RIM’s ability to compete with Apple and Google will come when it introduces the first QNX phones, said Gelblum. Because of how long it took RIM to get the PlayBook on the market, he’s concerned they may be delayed.

Gelblum, who is based in New York and rates RIM equal weight and said BB7 is just a stepping stone to QNX devices, but given RIM’s recent track record, it is difficult to know for certain if these devices ship on time.

Slow sales of RIM’s PlayBook raise the stakes for the next generation of smartphones. Now more than ever, RIM needs a hit to rebound the company's fortunes.