Blackberry falls on day of U.S. debut amid sales concerns
TORONTO BlackBerry, which released its new Z10 phone in the U.S. Friday, tumbled the most in more than a month in New York trading after analysts raised concerns that the devices were getting a lukewarm response.
The shares fell 7.7 per cent to $14.91 US, the biggest drop since Feb. 13. In Toronto, shares fell eight per cent or $1.33 to close at $15.19.
Before Friday’s drop, the stock had climbed 36 per cent this year, lifted by optimism that the company’s new lineup would fuel a turnaround.
Ahead of the Z10’s U.S. debut, Deutsche Bank AG analysts checked inventory in Britain and Canada, where the phone is already available. The findings suggested that sales had been slow and store employees were not promoting the devices, the firm said in a report.
“We contacted 60 stores in total and not one was sold out,” Deutsche Bank said in the report. “In Canada, only a few recommended the Z10 unsolicited.”
At an AT&T Inc. store in midtown Manhattan Friday morning, there were no lines of shoppers waiting for the new BlackBerry or signage promoting the release. Most buyers of the phone will probably be corporate customers, rather than consumers, said Jorge Garcia, a sales representative at the shop on Lexington Avenue.
“Most of the corporate clients are asking for BlackBerrys,” said Garcia, who expects about 90 per cent of the new phone’s sales to come from those customers, with 10 per cent coming from walk-in shoppers. He said he wasn’t expecting to get many units of the Z10.
Chief executive officer Thorsten Heins kicked off U.S. sales of the touch-screen device Thursday night at a theatre in New York’s Times Square. The event featured performances by rapper Ludacris and R&B singer Janelle Monae. The phone will be offered by Verizon Wireless on March 28.
A lot of hard work has resulted in the “culmination of selling a fantastic device in the U.S.” Heins told those gathered at the Best Buy Theater.
Heins is trying to reverse BlackBerry’s fortunes in the U.S., where the onetime smartphone leader has lost ground to Apple Inc.’s iPhone and Google Inc.’s Android. Sales in the country fell by almost half to $520 million in the third quarter from a year earlier, though the U.S. still accounts for about a fifth of revenue for Waterloo, Ont.-based BlackBerry.
“There’s no risk of overstating the importance of the U.S. for BlackBerry,” said Ramon Llamas, an analyst with IDC in Framingham, Mass. “It’s such an important bellwether market.”
AT&T, the second-largest U.S. carrier, will offer the Z10 for $199.99 US on a two-year contract, putting it at the same price level as the main iPhone. The phone was first unveiled on Jan. 30, and it’s been available for weeks in the U.K., Canada and other markets. Heins has attributed the U.S. delay to the longer equipment-testing procedures of American carriers.
Verizon Wireless, the nation’s biggest carrier, has begun taking orders for the Z10 ahead of making it available in stores next week. Sprint Nextel Corp., No. 3 in the market, won’t sell the Z10 at all. It’s waiting to offer the Q10, a version with a smaller screen and physical keyboard that’s coming out later this year.
Early demand suggests that the Z10 will perform as well in the U.S. as in BlackBerry’s home market of Canada, chief marketing officer Frank Boulben said in an interview.
“I expect that we’re going to hit the ground running,” he said, citing “substantial pent-up demand.”
The U.S. will add to the phone’s global footprint, Boulben said. By the end of April, BlackBerry expects the Z10 to be available from 150 carriers around the world. By this time next year, there should be six different BlackBerry 10 models on the market, he said.
“It’s not a one-trick pony — neither from a country standpoint nor a device standpoint,” Boulben said.
The rollout of the new phones is supported by the biggest marketing campaign in the company’s history. As part of the blitz, BlackBerry splurged on a Super Bowl ad in early February, betting that it could build excitement around the phone even though a U.S. debut wasn’t imminent.
BlackBerry, long popular with corporate clients, has tried to project a more artistic image with the new products. At the Jan. 30 unveiling, it introduced Grammy-winning singer Alicia Keys as its global creative director, a new title.
At Thursday’s event, Richard Piasentin, BlackBerry’s head of U.S. sales, said he had been on the road for almost four weeks straight promoting the new lineup.
“This is a pivotal moment for the company and we all know it,” he said in an interview. “I’ve never seen a team galvanized around a moment like this.”
The key to the Z10’s success will be how well store salespeople can demonstrate how the phone works to both BlackBerry loyalists and others, said IDC’s Llamas.