Dec 2, 2011 12:45 PM,

PlayBook discounts cost RIM $485 million, outages $50 million

By Michelle Maisto

RIM took some of the sting out of its upcoming Q3 earnings announcement, sharing in advance the $485 million hit from PlayBook discounts, among other bad news.

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RIM offered several pieces of unhappy news for investors today regarding its BlackBerry PlayBook tablet, October outages, fourth-quarter outlook and annual earnings.

While deep discounts to its BlackBerry PlayBook tablet indeed helped sales, those discounts are forcing it to take a pre-tax hit of $485 million, the company announced. And despite reports of Best Buy cancelling PlayBook orders, due to temporary outages (Unfiltered: Blundering Best Buy to restock RIM PlayBooks) RIM is in no danger of needing to fire up the factory and make more.

"RIM has a high level of BlackBerry PlayBook inventory," the company said in a statement, adding that it believes the current promotions will help to "drive sell-through to end customers."

RIM's widely reported October service outages, it added, are likely to cost it in the neighborhood of $50 million, and third-quarter revenue, as a result of this and its "PlayBook sell-through programs," is expected to be "slightly lower" than the $5.3 million to $5.6 million originally forecast.

Added to this, "RIM expects unit shipments in the fourth quarter to be below third-quarter levels," said the statement. "The lower expected shipments in the fourth quarter are due to several factors including lower-than-expected sell-through in the third quarter and RIM’s current view of fourth-quarter demand. The company no longer expects to meet its full year adjusted diluted earnings per share guidance of $5.25-6.00."

While some have written off the PlayBook ("When the PlayBook is supposed to be the savior and it's not, where do you go?" Bahl & Gaynor Investment Counsel's Matt McCormick told Bloomberg), RIM co-CEO Mike Lazaridis was, as ever, hopeful about the PlayBook's chances, saying in the statement that RIM "believes the tablet market is still in its infancy."

He added, "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.”