RIM takes $485M charge on PlayBooks, lowers guidance

The hits keep on coming for Research In Motion (s rimm), which announced on Friday that it was writing down the value of its BlackBerry PlayBooks, taking a mostly noncash charge of $485 million or $360 million after taxes, due to lower-than-expected sales of its tablet. The company also lowered its guidance for the most recent quarter and outlook for the year and said it doesn’t expect to meet its full-year earnings forecast.

The news is another reminder of just how much RIM is struggling as it tries to introduce a competitive tablet offering and keep up in a smartphone market dominated by Android and iOS. (s goog)(s aapl) The PlayBook continues to be a tough product to move, due in part, said RIM, to the competitive landscape and the delayed release of PlayBook OS 2.0, which has been pushed back until February. RIM is now resorting to deep discounts and promotions, which it hopes will start juicing sales. So far in its third quarter, which ended Nov. 26, RIM said it sold into channel 150,000 PlayBook units, below the 200,000 in the previous quarter. But recent promotional activity has pushed sales higher than that number, stoking increased demand, which means it’s moving some of the existing inventory retailers bought in previous quarters.

Those paltry numbers still pale in comparison to iPad sales or even what the new Amazon Kindle is expected to do this holiday season. (s amzn) Since it debuted with sales of 500,000 units in its first quarter, the PlayBook has failed to catch on in the market without significant deep discounting. That’s now how RIM hopes to accelerate sales: by writing off the value of the PlayBooks and sticking with these big promotions like its limited-time $199 price. Said Mike Lazaridis, the co-CEO at Research In Motion:

RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy. 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. Early results from recent PlayBook promotions indicate a significant increase in demand across most channels. We look forward to continuing to grow the installed base of PlayBook users and to attracting more and more developers to expand the volume of applications, content and services that leverage the power of the industry leading QNX-based platform.

RIM also updated its third-quarter guidance and said it shipped 14.1 million smartphones, within its previous guidance. But it said it will come in below its previous revenue guidance of $5.3–5.6 billion in the third quarter. It said in addition to the PlayBook charge, it will also take a charge of $50 million related to the multiday service outage it experienced in October.

Excluding those factors, it expects diluted earnings to come in at the mid to low end of its previously guided $1.20 to $1.40 per share range. More troubling, RIM said it expects fourth-quarter unit sales to come in below the third quarter, due to current sales trends and RIM’s outlook on fourth-quarter demand. The company said it does not expect to meet its full-year adjusted diluted earnings per share guidance of $5.25–$6.00.

As I’ve written before, RIM is struggling to transition to products based on its QNX operating system. The PlayBook got off to a rough start, shipping without basic software like native email support, and the needed upgrades have been delayed until February. It now faces a market that is migrating to either the iPad on the high end or the new Amazon Kindle Fire on the low end.

On the smartphone front, RIM is facing an onslaught of Android devices and an iPhone 4S that is available now on three carriers. New BBX-based phones are rumored to be shipping in the third quarter of 2102, and the wait for that new platform makes it hard for consumers to latch on to the latest BlackBerry 7-based devices. The coming quarters are going to be even more grim and will put more pressure on the stock, which is down more than 7 percent today in premarket trading and is off 68 percent this year before Friday. For RIM, it appears it will have to look ahead to Christmas 2012 to really cheer itself up at this point. This year has been a lost cause.