BlackBerry Sales: The Good, The Bad, and The Ugly

Because BlackBerry’s (NASDAQ:BBRY) new Z10 smartphone will not be released in the United States until mid-March, the phone’s sales figures in the United Kingdom and in Canada are being closely watched by analysts.

The importance of this phone’s sales, and that of its Q10 counterpart, for the future of BlackBerry is evident. Before the company’s unveiling of its BlackBerry 10 operating system last Wednesday, it hadn’t put a new product on the market in more than 18 months, and in that same time frame, Apple (NASDAQ:AAPL) has released multiple iterations of the iPhone and while seemingly every other smartphone competitor worth its salt has released at least a couple new Google (NASDAQ:GOOG) Android devices. Apple and Google have together amassed a huge share of the smartphone market, making BlackBerry’s slog back to the top a difficult proposition.

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But what will actually determine whether BlackBerry’s new phones are a success is hard to say. Its success certainly cannot be defined as the moment when its share of the U.S. market surpasses that of Apple. But the phone could be seen as successful depending on the number of units sold, or how much revenue it posts in the upcoming quarters, or how well it competes against Nokia’s (NYSE:NOK) Lumia, the most popular Windows Phone on the market (Microsoft is currently the #3 smartphone OS after bumping BlackBerry to fourth). Only time will tell if the the Z10 can boost BlackBerry’s profitability…
One possible measure of the phone’s success, the analysis of sales from the U.K. and Canada, has been mixed so far. RBC Capital analyst Mark Sue, who holds a Sector Perform rating on BlackBerry’s shares, wrote in a research note seen by Barron’s that the Z10 had a good start.

“Checks at 40 stores in Canada indicate sell-through of the BlackBerry Z10 smartphone is strong on its launch day, with numerous stores selling out towards the end of the day,” Sue said, while sales of “the BlackBerry Z10 in the UK is exceeding RIM’s expectations, with some stores sold out as well.” In fact, the phone is the fourth-most popular device in the United Kingdom, according to the product comparison website uSwitch, ahead of the LG Electronics’ (LGEAF.PK) Nexus 4 and Lumia 920.

But Canaccord Genuity’s Mike Walkley is less confident in the phone’s initial popularity. “Limited initial supply was cited as the reason for early post-launch stock-outs at some carrier stores versus overwhelming demand,” he stated in a research note. “In fact, our surveys indicated most stores received less than 15 units and sold a majority of these units over a two- to three-day period, leading to initial stock-outs at a few stores and low inventory levels at others.” Much of the demand the phone did experience came from “loyal” BlackBerry users that had waited to upgrade their BB7 devices. Walkley holds a Sell rating on the stock.
James Faucett, an analyst at Pacific Crest, has drawn a worse picture of the company’s fortunes, and he holds a Underperform rating on the stock. “If Z10 sales continue to develop as we expect, U.K. shipments imply a global quarterly run rate of 1 million to 1.5 million; we believe that would be disappointing,” he wrote in a note seen by the publication.

However, David Pogue of The New York Times has given the Z10 a positive review. “Well, BlackBerry’s Hail Mary pass, its phone, is finally here. It’s the BlackBerry Z10, and guess what? It’s lovely, fast and efficient, bristling with fresh, useful ideas.”

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