We’ve seen various BlackBerry PlayBook promotions since the fall, and now we get to see the financial impact of RIM knocking $300 off a device that normally retails for $500. RIM today said “it would record a pre-tax provision in the third quarter of fiscal 2012 of approximately $485 million, $360 million after tax, related to its inventory valuation of BlackBerry PlayBook tablets.” I don’t speak accountese, but I gather that means despite the sales and the cut in profit cut they were expecting from promotional prices, they still missed targets by $360 million. Though RIM is still wrapping up their financial figures, they expect they’ve sold 150,000 PlayBook units, versus 200,000 the previous quarter. Predictably, RIM’s stock dropped about 9% this morning following the announcement.
Despite all of that, plus a service outage that cost them $50 million, RIM expects to have $1.5 billion in the bank after an $80 million increase. RIM claims that they’re long on PlayBook stock, even though retail outlets sold out of the 16 GB model pretty much as soon as the price was slashed. RIM says they’re planning on pushing these kinds of promotions further in the future, which may also cut their margins.
It’s worth noting that in parts, the PlayBook is worth about $200, so RIM at least breaks even on that front. Of course, that cost doesn’t take into account labour, shipping, marketing, R&D, and all of the other stuff that goes into getting the PlayBook into people’s hands. Right now, it sounds like RIM is more interested on just hooking people on the new BlackBerry operating system, and getting the public ready for February, when we’ll get a look at what the experience will likely be on smartphones. Overall, it feels like this is going to be a long, painful transition period during which the old OS is kicked to the curb, and RIM finally starts pumping out competitive products again. As far as financials alone go, dropping your guidance repeatedly can seriously hurt investor confidence; here’s hoping it doesn’t become a trend, for RIM’s sake.