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BlackBerry maker's shares drop 21.5% after forecast misses estimates

Research in Motion says quarterly revenue may drop for the first time in nine years and unveils plans to reduce jobs.

June 17, 2011|Bloomberg News

Shares of Research in Motion Ltd. dropped 21.5% to their lowest level since 2006 on Friday after the BlackBerry smartphone maker said quarterly revenue might drop for the first time in nine years and unveiled plans to reduce jobs.

Revenue will be $4.2 billion to $4.8 billion in the fiscal second quarter, RIM said Thursday. That was less than the average analyst estimate for sales of $5.47 billion, according to a Bloomberg survey. Profit this quarter will be 75 cents to $1.05 a share. Analysts had predicted $1.40.

RIM is losing market share in the U.S. to Apple Inc.'s iPhone and handsets running Google Inc.'s Android software, in part because it hasn't introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads in Latin America, Asia and Europe, threatening the popularity of less-expensive BlackBerry models like the Curve.

RIM, based in Waterloo, Ontario, plunged $7.58, or 21.5%, to $27.75, the lowest level since Sept. 12, 2006. The stock has dropped 52% this year.

"Its product portfolio is just not up to snuff with its key competitors," said Paul Taylor, chief investment officer at BMO Harris Private Banking in Toronto.

RIM has come under increasing scrutiny from investors after its stock slumped, the company lost phone market share, and its new PlayBook tablet computer, a rival to Apple's iPad, was criticized by technology columnists.

Last week, investor Northwest & Ethical Investments called for RIM to separate the roles of chairman and chief executive as analysts question whether RIM's co-CEO structure is the best way to manage the company.

The company plans to eliminate an unspecified number of jobs and make organizational changes to accelerate product introductions. Benefits from the job cuts should start to appear in the third quarter, said Chief Financial Officer Brian Bidulka.

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