RealTime IT News

BlackBerry Maker Latest to Feel Economy's Sting

Research in Motion (NASDAQ: RIMM) is now on the growing list of mobile handset vendors feeling a financial pinch.

The BlackBerry maker said third-quarter revenue will be less than expected, about $2.75 billion to $2.78 billion, as compared to projections of $2.95 to $3.10 billion.

The updated forecast, which still represents a 65 percent jump over third quarter in 2007, is due to currency valuations, the weak U.S. economy, lower shipments and missed product launch dates.

Yet Co-CEO Jim Balsillie remains bullish on what the year's end will bring.

"Customer response to the new BlackBerry products launched this quarter has been exceptional and RIM has experienced particularly strong momentum in recent weeks," Balsillie said in a statement.

RIM did not return requests for additional detail or comment by press time.

The news marks the latest in a turbulent series of developments for RIM, which, like many of its peers in the mobile device space, is looking ways to fight back against an influx of new rivals, like the Apple iPhone, amid a grim economic climate.

The company faltered earlier this year when its BlackBerry Bold shipped six months late, arriving in November -- well after Apple (NASDAQ: AAPL) debuted its iPhone 3G on June 9.

The Bold reportedly suffered delays due to problems in network testing by its exclusive carrier, AT&T (NYSE: T).

More recently, RIM's new BlackBerry Storm -- seen as its best attempt yet to thwart the challenge posed by Apple's strong push into the market -- is meeting with lackluster reviews.

It's unclear precisely how many products RIM wound up shipping during the third quarter. The company had previously said it expected to ship over 7 million units during the quarter, a comment that came during its second quarter earnings report in late September. The company shipped 6.1 million units in the second quarter, it said at the time.

But RIM and its peers may still fare better than other sectors of the economy.

How so? A recent J.D. Power and Associates report said mobile device users are paying more for handsets and services this year, with the average purchase price hitting $107 -- an increase of $15 from last year.

It's also undeniable that RIM continues breaking milestones. It said its daily net subscriber accounts hit a record level with the launch of the Storm on Nov. 21, and that it set a record number of weekly net subscriber additions during the last week of the third quarter.

"Initial sales of new products have been very positive and we believe we have the strongest smartphone portfolio in the industry by far," Balsillie said. "RIM is well positioned to capitalize on the increasing smartphone market opportunity and we remain focused on driving growth in the fourth quarter of fiscal 2009 and beyond."

A cloud over the industry?

Yet RIM's warning comes on the heels of lowered projections by smaller rival Palm.

The company said revenue for the second quarter of its 2009 fiscal year would land way below analysts' expectations of $299 million to $363.4 million, based on Reuters Estimates. Instead, Palm (NASDAQ: PALM) said revenues would hit somewhere between $190 million and $195 million.

Recent Gartner research showed Motorola (NYSE: MOT) struggling as well during the second half of this year. The company fell to fourth place in global mobile handset sales, trailing behind Nokia, Samsung and Sony Ericsson, in that order.

The only handset maker that doesn't appear to be suffering is Apple.

A Piper Jaffray analyst reported last week that the iPhone will continue its meteoric rise into the New Year.

According to the report, the smartphone will represent nearly 20 percent of the Mac maker's overall sales in 2009 -- up from 5.7 percent of the company's total sales this year.