Can BlackBerry and the SEC Sort Out This Mess?
The story of BlackBerry is well known to many who follow the mobile industry. With the advent of touchscreen smartphones, BlackBerry-branded devices just slid right to the margins, and it’s been struggling to regain relevance. BB10 — its latest operating system — and the Z10 — its latest hardware — are the company’s attempt to take on Apple (NASDAQ:AAPL), Samsung (SSNLF.PK), and Nokia (NYSE:NOK).
Unfortunately for BlackBerry, a report released Thursday from a somewhat obscure source, research and investment firm Detwiler Fenton, suggested BlackBerry’s sales were so sluggish and its devices so undesired that device returns were actually outpacing sales. Naturally, a report like that incited investors to sell, pushing shares down 7.7 percent after the news became known.
However, BlackBerry has been quick to call Detwiler Fenton’s claims false. According to BlackBerry, Z10 returns have not exceeded the company’s forecasts and are following the industry norms. Thorsten Heins, the company’s chief executive officer, said that “to suggest otherwise is either a gross misreading of the data or a willful manipulation.”…
That is where things got serious, as BlackBerry announced that it would seek investigations by the U.S. Securities and Exchange Commission and the Ontario Securities Commission. Detwiler Fenton hasn’t responded to back up its claims, and the firm was unwilling to release the methods used to reach its conclusion on BlackBerry sales and returns.
But BlackBerry was not the only one refuting Detwiler Fenton’s claims; Verizon Wireless (NYSE:VZ), which carries the Z10, has also said the claims were false. BlackBerry said it sold 1 million Z10′s in its most recent quarterly earnings call — before the devices went on sale in the U.S. — but, since the U.S. launch in March, ITG analyst Joe Fersedi said the device’s sales have fallen to between 1 percent and 2 percent.
In Detwiler Fenton analyst Jeff Johnston’s report, he said, “we believe key retail partners have seen a significant increase in Z10 returns to the point where, in several cases, returns are now exceeding sales.”
After refuting the claim and calling for regulatory involvement, BlackBerry shares have bounced back up slightly, but there is still a wound left by Detwiler Fenton’s claims, and involvement by the SEC could help BlackBerry sort out the situation.