RIM Cuts Profit Expectations by 30% and Shares Drop 16%

Research In Motion, maker of BlackBerry, did not have a good Thursday. According to “RIM shares sink 16% on slashed outlook and layoff plans” by David Goldman of CNNmoney.com, the company stated the next BlackBerry operating system, BB7, would be delayed until August and  “the company drastically cut its full-year profit expectations by 30%”. As the title states, the market response to the news was a significant share drop.

The article reports the company’s first quarter sales missed expected forecasts and last quarter, the company sold “a disappointing 13.2 million devices last quarter, including a measly 500,000 PlayBook tablet”. The delay of BB7 is disappointing news as the company see it as the solution to its lower than expected sales. The BlackBerry Torch, the last RIM BlackBerry product, is almost a year old and the PlayBook hasn’t sold well. The new OS is expected to bring RIM "up-to-date".

The co-CEOs of the company, Mike Laziridis and Jim Balsille heavily defended their company, their co-CEO leadership and their delay of the operating system in a conference call with analysts yesterday. I previously wrote that Laziridis doesn’t handle being on defense well; two months ago, he walked out of an interview. As far as the delay and leadership style, CNNmoney.com quoted the CEOs as saying:

“We understand you’re seeing a lot of turbulence in marketplace, and it’s difficult to understand the BB7 delays…I would have liked nothing more than to get BB7 devices out sooner. But when you see the end result, you’ll see it was worth the wait.” – Laziridis

“Mike and I have been partners in this business for 20 years, and we’ve successfully navigated troubling times before… In navigating this current transition of ours, frankly few other companies would have survived. I couldn’t have done it alone and I can’t in future.” –Balsille