BlackBerry Falling Below Expectations

By: Zain Nabi  |   February 21st, 2013   |   News, O Canada, Smartphones

The reality is no different than it sounds in the title of this article. BlackBerry is reportedly falling behind the expectations when it comes to the success of its recently launched Z10 smartphone.

 

According to Forbes, Pacific Crest analyst, James Faucette, has mentioned in his report that BlackBerry is performing below the expectations of the Street. The Street had expected around 1 million units of the new smartphone to be sold out in the February quarter, but the figures mentioned in the report (275,000 to 325,000 units) state a very gloomy trend.

 

Not only that, the report also predicts that the new phone might stay below expectations in the May quarter, and although the number of smartphones sold would increase – apparently because of the phone’s launch in the U.S. – it will still stay below expectations. Forbes mentioned from his report:

 

“We believe the Street has gotten ahead of the potential reality for BB10 shipments. There is no line of sight to profitability; we remain sellers of BBRY.”

 

The report also says that the profit BlackBerry could gain through sales of the Z10 phone would make up for the declining sales of the BlackBerry Bold 9900. It states:

 

“Any benefit from the Z10 is likely to be at least partly offset by cannibalization of Bold 9900 sales, which our checks indicate have declined materially since the Z10’s launch.”

 

The report mentions about the May quarter:

 

“Applying normal rates of decay in launched markets and assumptions for channel fill in the United States, we believe the company is likely to ship-in roughly 1 million to 1.5 million units in the May quarter. We estimate Street expectations are for roughly 3 million to 4 million units.”

 

It should be noted that recently some analysts questioned the progress of the new BlackBerry smartphone. In response to the reports claiming that the new smartphone had gained huge success and that there was a sell-out in a few markets, some market researches questioned that progress and maintained that the shortage was caused in some markets only because the company had provided limited stock. This and the new research report do not bode well for the company’s targets. A single report would not harm the company, but such reports have been coming from different sources, all of them indicating more or less towards the same trend for the company. Talking about the new smartphone’s prospects, James Faucette writes in his research report:

 

“We continue to believe the Z10 launch involves relatively small shipment volumes and only moderate sell-through so far in markets which have historically been some of BlackBerry’s strongest. As a result, investor optimism that the BB10 could reverse the company’s trajectory appears to be well overdone at current levels, in our view. To achieve sustained profitability, we believe the company would need to ship roughly 3x to 4x more BB10 devices than we anticipate on a quarterly basis. We remain skeptical that BlackBerry has any reasonable path toward achieving these kinds of shipments.”

 

Photo: Reuters