BlackBerry (BBRY) Plunges on the Z10's Lackluster Reception
Shares of Research in Motion (BBRY), which was recently renamed BlackBerry, plunged last week after analysts at Deutsche Bank issued a report claiming that initial sales of the BlackBerry Z10 were very poor, even in the company's native Canada. The Z10, which runs on BlackBerry's eagerly anticipated BlackBerry 10 platform and uses a full touch screen instead of a keyboard, has been widely considered BlackBerry's comeback product in a market split in half by Google (GOOG) Android and Apple's (AAPL) iOS products. Daily Chart
Deutsche Bank analysts stated that they checked with 150 different stores in the U.K. and Canada, where the phone was released first, and found that none had sold out of the phone. Few sales representatives recommended the handset without being directly asked about it, with a lower percentage of sales reps recommending the phone in the U.K. than Canada. To make matters worse, two Canadian carriers have already reduced their prices on the Z10, indicating that supply is outpacing demand. The firm claimed that "euphoria (was) waning" and that there simply wasn't any pent up demand for the product. However, no stores reported customer returns of the Z10 due to dissatisfaction with the product. In addition, analysts believe that some faithful BlackBerry customers are waiting for the Q10, which will be released in late April and feature the full keyboard that older customers are more accustomed to. However, at this point it is pure speculation on how the Q10 will perform, given the Z10's muted reception. Deutsche Bank reiterates its "hold" rating on the stock, with an $8 price target on the stock - which indicates that the stock could still lose nearly half of its value from current levels. Hard retail numbers have yet to be released for Canada and the U.K. Meanwhile, Hudson Square Research conducted a similar survey of stores in the United States on the Z10's American launch. AT&T released the phone last Friday, while Verizon Wireless released the phone yesterday. Their findings were similar to those of Deutsche Bank. "This morning we visited and called stores to survey early demand for the Blackberry Z10," stated Daniel Ernst, a Hudson Square Research analyst. "We found no lines, no signage announcing the launch, and clerks told us they had very few pre-orders." Although BlackBerry, which currently holds the number three spot in smartphone operating systems, behind Android and iOS but ahead of Nokia's Windows 8 Phones, is betting on the Z10 and Q10 models to revive its slumping fortunes, which have cost the company 86% of its market cap over the past five years. Morningstar analyst Brian Colello is not optimistic. "I think the US will be a challenge for BlackBerry more so than some of the countries where they have already launched," he stated. "The momentum for iPhone and Android is too strong here. I still think they can win over some enterprise users, but the US is a country where BlackBerry's brand has been greatly diminished." Shares of BlackBerry currently trade without reliable P/E or PEG ratios, since the company is currently unprofitable. It does not pay a dividend. Other News About BBRY Muted debut for BlackBerry Z10 in US
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Published on Mar 29, 2013
By Leo Sun