Research In Motion Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Research In Motion (Nasdaq: RIMM  ) dropped 11% in intraday trading today after the company issued disappointing guidance for the current quarter.

So what: Management expects EPS of $1.47 to $1.55 in the current quarter, compared to the consensus estimate of $1.64 and year-earlier EPS of $1.38. For the coming four quarters (fiscal 2012) it is forecasting EPS in excess of $7.50, well above the consensus estimate of $6.81.  

Now what: During the current quarter the company plans to step up spending to launch its PlayBook tablet and expects a mix shift to lower-priced handsets. Although fourth fiscal-quarter EPS of $1.78 beat the consensus estimate of $1.76 and was up an impressive 40% from the year-ago quarter on record handset shipments, RIM is under severe pressure from Apple's (Nasdaq: AAPL  ) iPhone and iPad and smartphones and tablets based on Google's (Nasdaq: GOOG  ) Android operating system. The need to boost spending for the PlayBook launch exacerbates fears about further market share losses and creates doubt around fiscal 2012 guidance.

Interested in more info on RIM? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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