RIM's third quarter outlook shouldn't shock, but does anyway

By Tim Conneally | Published December 3, 2008, 1:58 PM

Research in Motion made an out-of-cycle announcement last night that its fiscal Q3 revenue would be 9% below Wall Street projections, citing economic conditions and product-related troubles.

RIM said in its statement that approximately 33% of the difference between expectations and actual revenue comes from the weakening of the Canadian dollar against the US dollar. The rest, it stated, is due to "lower than estimated unit shipments, which RIM believes is a reflection of general economic weakness in the United States and shifts in product launch dates within the quarter."

The launches of both the BlackBerry Bold and BlackBerry Storm were both problematic, with repeated delays forcing their premieres into the late end of quarter. The Bold was delayed due to several software issues, and the Storm was reported to be generally unavailable when demand for it was at its highest.

Also problematic for the company is its lower-than expected gross margin, which the company yesterday attributed to a mix of product revenue and foreign exchange rates. This after hardware analysis firm iSupplitore down the BlackBerry Bold and estimated its bill of materials to be $169.41 or around 57% of the device's cost, concluding it has "a healthy margin." A complete teardown of the Storm has not officially determined that device's margin yet.

RIM Co-CEO Jim Balsillie said, "Initial sales of new products have been very positive and we believe we have the strongest smartphone portfolio in the industry by far. However product launch timing, general economic conditions and foreign exchange volatility have tempered our results in the third quarter."

RIM's final report of third quarter earnings -- when it will also provide its Q4 projections -- will come in two weeks.

Comments

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Both devices seem like they would sell pretty well.

It is ironic that RIM and AT&T are airing a TV commercial featuring a ridiculously fast track athlete about how "fast" the Storm performs on the "fastest" 3G network....

But of course, as only Apple is capable of making 'outlandish' claims, we won't hear anything with regards to RIM and AT&T's ad. LOL! Despite the fact that neither's claims are worth more than a grin.

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