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from the L.A. Times

RIM to take $485 million loss on unsold BlackBerry PlayBook inventory

BlackBerry PlayBook

Research In Motion said Friday that it will take a $485 million loss on its unsold BlackBerry PlayBook tablet inventory, sending shares in the company down about 8% in day trading after the announcement.

The news is the latest setback for the PlayBook and RIM as a whole, which has had a rough year so far with multiple product delays, no carriers offer up a 3G or 4G version of the PlayBook, layoffs, service outages, shrinking market share, disappointing earnings results and sliding stock prices.

"As previously disclosed, RIM has a high level of BlackBerry PlayBook inventory," the Canadian company said in a statement. "The Company now believes that an increase in promotional activity is required to drive sell-through to end customers. This is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software."

The significant loss, which is technically called a pre-tax provision, will allow RIM to expand its marketing push around the PlayBook in a bid to boost sales, the statement said.

But while the PlayBook has been painfully costly for RIM so far, the company said it isn't planning on giving up on that tablet market.

"RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy," Mike Lazaridis, RIM's co-CEO, said in the statement. "Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise."

Lazaridis said that the response to PlayBook sales promotions so far have shown a "significant increase in demand across most channels."

Still, the numbers are small compared with the sales of competing tablets. RIM said in its statement that it sold about 150,000 PlayBook tablets to retailers in the quarter ended Nov. 26 "and sell-through to end customers, based on RIM's internal data, was higher than this amount."

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-- Nathan Olivarez-Giles

Twitter.com/nateog

Photo: The BlackBerry PlayBook tablet from Research in Motion. Credit: Nathan Olivarez-Giles / Los Angeles Times

 
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