Shares of BlackBerry maker
Research in Motion
plunged after the company missed Wall Street's second-quarter expectations and guided below profit estimates for the third quarter due to the rising costs of new product launches.
The Waterloo, Ontario-based BlackBerry maker said second-quarter profit rose to $495.5 million, or 86 cents a share, compared with a net income of $287.7 million, or 50 cents a share, a year earlier. Revenue rose 88% to $2.58 billion from $1.37 billion a year ago.
Analysts polled by Thomson Reuters were expecting revenue of $2.59 billion and earnings of 87 cents a share. RIM had offered guidance in its first-quarter report of earnings a range of 84 cents a share to 89 cents a share on revenue of $2.55 billion to $2.65 billion.
Shares of RIM finished 82 cents, or 0.9% higher during Thursday's session at $97.53, but were falling 20% in recent extended trading to $78. That marks a new 52-week low for shares of RIM.
Looking ahead to the critical third quarter, when wireless carriers begin running holiday promotions, RIM guided revenue in the range of $2.95 billion to $3.10 billion. The company forecast earnings in the range of 89 cents to 97 cents a share. Wall Street is expecting the company will notch a profit of 98 cents a share on revenue of $2.94 billion.
RIM said its profit expectations were based on a gross margin estimate of about 47%, below the 50.7% mark shown in the second quarter. During the company's conference call, RIM said the decline in gross margin is due to higher costs for new product launches. Looking beyond the third quarter, RIM said it expects long-term gross margin in the mid-40% range.
The third quarter looks to be a big one for RIM, as the company plans to launch its touch-screen
, the Kickstart fliphone and the Javelin, which is an update of the popular BlackBerry Curve.
During its conference call, RIM warned that new product launches will likely come late in the third quarter, with the product ramp to straddle the third and fourth quarters. The slip in timing is "beyond our expectations" and could impact third-quarter results, Vice President of Investor Relations Edel Ebbs said during the call.
In the second quarter, RIM shipped about 6.1 million devices and looks to increase that number to 7 million units in the third quarter. One point troubling investors was that the company expects the average selling price of its devices to remain the same in the third quarter despite selling more of the newer, possibly more expensive BlackBerry models.
Average selling prices had grown sequentially to $344 in the second quarter from $341, and the company had anticipated ASPs of $350 in the latest third quarter.
"We shipped over 11 million BlackBerry smartphones in the first half and we're gearing up for an even stronger second half," said Jim Balsillie, co-CEO with Research In Motion, in a statement. "Our enterprise business remains strong and our momentum in the consumer marketplace continues as we head into the holiday buying season with an amazing product portfolio and solid marketing support from partners."
Approximately 2.6 million BlackBerry subscriber accounts were added in the second quarter, matching the company's expectations and bringing the total BlackBerry subscriber account base to more than 19 million. Net subscriber account additions in the third quarter are expected to be approximately 2.9 million, RIM said.
RIM's stock has tumbled nearly 30% in the last three months, nearly the same as rival
and handset maker/market-share leader