RIM to take 485 million dollar charge due to poor Playbook sales

The poor sales of the Blackberry Playbook have caused its creator, Research in Motion, to take a big one time loss due to unsold inventory levels of the tablet. The company announced today that during its current fiscal third quarter, it will take a big $485 million one time charge ($360 million after taxes) as a result of RIM's decision to write down the cost of the Playbook.

Launched in April, the company failed to generate a lot of sales for the seven inch tablet device, despite a big promotional push. Last week, the company officially announced that it was cutting the price of the Playbook "for a limited time" down to $199 for the 16 GB version compared to its original price of $499.

That slashing of the Playbook's price point seems to have done the trick. Retailer Best Buy announced this week that it has sold out of its Playbook units and plans to get more tablets from RIM. RIM said today that "the Company has seen a significant increase in demand for the PlayBook" thanks to the new price structure.

In its press release today, RIM repeated that it will continue to support and update the Playbook, saying, "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 is currently planning to update the Playbook's operating system to its 2.0 version in February 2012.

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19 Comments

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Have their sale after Christmas, and I'll grab one. Black Friday was a bad time for me for them to have their sale...But after Christmas, at $200, I would pick one up Almost picked one up on Black Friday. Kinda regret it now not getting one...lol

QNX is a super stable platform. Runs everything as small servers so the kernel is never touched and can never crash.

I have seen ipads lockup - seen android systems lock up too. Im sure programs crash in the playbook but it should NEVER lock up.. again, now that QNX is no longer open-source things could change.

either way - If you are a blackberry whore then you may like it. The games look about as advanced as my nokia 3590 had on it - but now they are touch screen..

Juggle the soccer ball
gravitee - shoot the guys on the planet

Graphics are terrible.

It is the ONLY tablet I have seen that you can load up an avi and pinch-zoom on the default media player while playing. About the only cool thing I seen these do.

Maybe they should buy webOS off HP and have a real OS on their tablets. webOS is looking for a new home after the botched HP launch and RIM and a new OS for their phones and tablets

Get out of this mess and offer yourselves to Google or Rick Harrison. You might get 50 bucks.

Also, your OS is crap. So no matter how awesome your tablets/phones look or perform on the outside, they will still suck.

warwagon said,
I wouldn't even pay $150 for that.

Specs wise, it beats the Kindle Fire (2x memory, microSD, hdmi out) while keeping the exact same form factor. I think for $200 it is a good deal. Not sure how the Android support is going for the device....haven't looked into it, but if they continue fire-selling it to get rid of stock then it might be worth having.

Shadrack said,

Specs wise, it beats the Kindle Fire (2x memory, microSD, hdmi out) while keeping the exact same form factor. I think for $200 it is a good deal. Not sure how the Android support is going for the device....haven't looked into it, but if they continue fire-selling it to get rid of stock then it might be worth having.
It would be even better once Amazon releases a Kindle app for the PlayBook.

Had it's launching price have been lower, say 399 or lower, it would have sell well.

It's ridiculous than anybody would buy it, when iPad and it, cost exactly the same. Plus it has a smaller screen, and lower build and material costs.

FMH said,
Had it's launching price have been lower, say 399 or lower, it would have sell well.

It's ridiculous than anybody would buy it, when iPad and it, cost exactly the same. Plus it has a smaller screen, and lower build and material costs.

Agreed. It seems to me that RIM likes to make their products a little too pricey.

The term "iPad killer" was the result of sensationalism before the release of the PlayBook. Also, RIM is still committed to the PlayBook so it hasn't died yet.

No point in selling out of a device when each one is losing you, who knows, $200-$300? And regardless I doubt Best Buy will order more unless they sell at the lower price by default, in which case RIM's probably going to keep taking a hit on each unit.

GP007 said,
No point in selling out of a device when each one is losing you, who knows, $200-$300? And regardless I doubt Best Buy will order more unless they sell at the lower price by default, in which case RIM's probably going to keep taking a hit on each unit.

I dont think that they are loosing anything on it. I think its cost is slightly less than 200, so they are not earning much either.

qdave said,

I dont think that they are loosing anything on it. I think its cost is slightly less than 200, so they are not earning much either.

The massive one-time charge shows that they're losing a good chunk of money on each one because it's a result of the massive price cuts they decided to do. Now we don't know how many units they have made but I doubt it's a large number in the end, probably around what HP made for their touchpads, so ~2million or so.

GP007 said,

The massive one-time charge shows that they're losing a good chunk of money on each one because it's a result of the massive price cuts they decided to do. Now we don't know how many units they have made but I doubt it's a large number in the end, probably around what HP made for their touchpads, so ~2million or so.

They're not making a profit with each PlayBook that's sold but in the end, they still need to sell whatever inventory they have. And that obviously means using those components to manufacture a finished product as well as selling whatever finished goods they currently have.

The mistake that RIM made was buying too many PlayBook components. This resulted in the company not meeting their sales expectations which in turn resulted in the price cuts. The figures mentioned in the article only tells us the value of their PlayBook inventory (which consists of raw materials [components], work in process [WIP], and finished goods [PlayBooks]).