RIM provided more details of its attempt to clear excess BlackBerry PlayBook stock. The company revealed that it was taking a provision of $360 million after tax, $485 million before, to account for the worth of its unsold tablets. There was still a “high level” of inventory, the company said.
The company largely admitted that it needed to keep price cuts active for sales to keep going. Its decision to delay PlayBook 2.0 to February was a factor, but it also admitted that “recent shifts in the competitive dynamics of the tablet market” were to blame. The tablet has never had success competing with the iPad 2, but RIM may most of all have to compete with the Amazon Kindle Fire, which is based on the very PlayBook it’s competing with but, at $199, costs less than half of RIM’s originally intended $499 price.
Accordingly, despite the sale’s original December 1 end date, Best Buy is still showing all PlayBooks at the same sale prices.
In taking the financial hit, however, RIM also noted that its sales were finally working. The company shipped just 150,000 PlayBooks to stores during its most recent quarter but, in a rare instance of revealing clues of its actual sell-through, said it had sold these plus cleared some of its backlog. RIM confirmed relatively high demand and note that there had been a “significant increase” since the cuts.
CEO Mike Lazaridis also tried to put down rumors that there were no plans for future tablets after the current PlayBook. The company still saw it as a “compelling” tablet for home users that still had enterprise-friendly features, he said, reassuring developers there would still be a platform to support.
“RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy,” Lazaridis said.
The financial hit still suggests that RIM may still have several weeks, if not months, of inventory to clear.
RIM in warning of the cash hit added that its BlackBerry phone shipments were in line with its guidance range at 14.1 million.
