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.

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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 Do weak initial numbers bode ill for BlackBerry? New BlackBerry Z10 will sell millions fewer in US than predicted: Analyst More bad news for BlackBerry. Other Stocks in the News Is Guess a Big Mess? Is Guess doomed? Why Warren Buffett is Wrong About the Washington Post Is the Oracle wrong about print media? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Mar 29, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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