RIM: A Less-Than-Perfect Storm?

Research In Motion’s downside guidance for the third quarter is playing hell with the company’s share price today. After market close Tuesday, RIM (RIMM) said revenues for the three months ended November will fall short of its earlier forecast. The Blackberry maker expects to report Q3 sales of $2.75-$2.85 billion, up 65 percent from a year earlier, but less than its earlier outlook of $2.95-$3.10 billion. “Initial sales of new products have been very positive, and we believe we have the strongest smartphone portfolio in the industry by far,” RIM co-chief executive Jim Balsillie said in a statement. “However, product-launch timing, general economic conditions and foreign-exchange volatility have tempered our results in the third quarter.”

A likely explanation. There’s little doubt the botched debut of the new Blackberry Storm undermined RIM’s performance this quarter. But perhaps there’s something more at work here as well–like the quality of RIM’s handsets themselves. “We think an additional factor is a poor reception to the much-anticipated Storm and Bold,” analysts at Deutsche Bank wrote in a client note. “We think the Storm has numerous flaws and the functionality of both devices is largely unchanged from previous devices.”