TORONTO — Canada’s technology icon, Research In Motion Ltd., has done everything it can over the past seven months to set the BlackBerry PlayBook up for success.
Now it’s time to see how all that hard work will pay off.
On Tuesday, RIM’s first foray beyond the smartphone market goes on sale across North America, and the Waterloo, Ont.-based company is hoping for line-ups of rabid BlackBerry fans outside electronics stores in Canada and the United States, anxious to get their hands on a PlayBook.
Of course, what investors want to know is the impact sales of the PlayBook will have on RIM’s balance sheet, an important question for a company that has watched its shares slide more than 25% since the launch of Apple Inc.’s iPad last April.
Although RIM no doubt has set internal sales targets for the PlayBook, the company has declined to offer any public sales forecasts, leaving analysts and observers to speculate about the device’s effect on the company’s balance sheet.
Wall Street analysts and market research firms have forecast RIM could sell anywhere from two million to five million PlayBooks by the end of the calendar year. The expectation is that RIM will sell about 500,000 PlayBooks, ranging in price from $499 to $699, in the remaining six weeks of the current quarter.
By contrast, Apple sold 300,000 iPads on the first day of sales.
Based on an average selling price of $600, RIM would be looking at about US$300-million in new revenue if it sells 500,000 PlayBooks by the end of the quarter.
Still, in their most recent quarterly conference call with shareholders, RIM officials said the company expected revenue of between US$5.2-billion and US$5.6-billion for the first quarter of fiscal 2012, which concludes at the end of May.
Considering RIM generated US$5.6-billion in revenue for the final quarter of 2011, ended Feb. 26, it would appear the company doesn’t see the PlayBook moving the needle substantially in the current quarter.
Either that, or RIM believes sales of the PlayBook will do little more than offset the company’s falling share in the North American smartphone market.
However, it would appear the company has at the very least baked sales of its first tablet device into its financial guidance for the full 2012 fiscal year; RIM has forecast earnings per share to grow 18% to $7.50 diluted, up from $6.34 per share diluted at the end of 2011. If RIM manages to sell two million PlayBooks by year’s end — in line with estimates from BGC financial analyst Colin Gillis — the company could be looking at about US$1.2-billion in tablet revenue.
If RIM sells four million PlayBooks — in line with estimates from Gartner Inc. and RBC Capital Markets analyst Mike Abramsky — that would translate to about US$2.4-billion in new revenue.
RIM will get a closer look at its competition on Wednesday when Apple reports second-quarter earnings. Since its launch a year ago, more than 14.75 million iPads, 7.33 million in the most recent quarter, have been shipped.
IPad sales added US$4.6-billion to Apple’s revenue in the latest quarter and have increased the company’s revenue by nearly US$9.6-billion since it went on sale. In the most recent quarter, iPad sales accounted for 17% of Apple’s revenue.
RBC’s Mr. Abramsky has forecast RIM’s revenue to grow 43% in 2012 to US$28.5-billion, helped by PlayBok sales. RIM’s total revenue for fiscal 2011 was US$19.9-billion, up 33% over the year prior.
A recent study from RBC Capital Markets suggests that while 12% of BlackBerry users plan on purchasing a PlayBook, more than half plan on waiting at least four months before doing so.
Financial Post
mhartley@nationalpost.com
