RIM shares sag on profit outlook

Shares of BlackBerry-maker Research in Motion Ltd. fell more than 15 per cent on Wednesday after the company said fourth-quarter earnings will likely come at the low end of its earlier projections.

On the Toronto Stock Exchange, RIM shares dropped $10.88 to close at $60.

Prior to the start of trading, RIM offered a mixed outlook for its fourth quarter. The company said it was expecting its fourth-quarter net subscriber base will be 20 per cent higher than it initially forecast in December.

However, the company cautioned that its gross margin and earnings per share for the quarter are expected to be at the low end of the previously guided ranges. RIM had been forecasting diluted earnings per share of 83 to 91 cents US based on a gross margin of between 40 and 41 per cent.

The Waterloo, Ont.-based company said on Dec. 18 that it was expecting 2.9 million net new accounts for the quarter.

RIM 3-month TSX chart

"RIM had record levels of net subscriber account additions throughout the month of December and continued to see strong levels following the holiday buying season," the company said Wednesday.

"RIM achieved a very strong start to the holiday buying season and the momentum carried on stronger than expected during the past seven weeks despite a seasonally slower time frame and the challenging economic environment," said Jim Balsillie, RIM's co-CEO at RIM.

The company also told investors it is reaffirming its financial guidance for the fourth quarter and expects its revenue to be at or near the mid-point of its previous forecast. Back in December, RIM said fourth-quarter revenue was projected to be in a range of $3.3 billion to $3.5 billion US.

The company's fiscal fourth quarter ends on Feb. 28, and RIM said it will release its results for the quarter and give its first-quarter outlook on April 2.

Looking to the first quarter, RIM said it expects net subscriber account additions to grow at a slower pace than in the fourth quarter due to the lack of a holiday surge.