BUSINESS

BlackBerry Z10: Shares Fall After Analyst Says Company Reducing Production

04/25/2013 03:41 EDT | Updated 04/25/2013 04:33 EDT

BlackBerry has probably reduced production of its new Z10 line of phones due to poor early sales, a U.S. analyst has said.

The news from Wedge Partners analyst Brian Blair caused BlackBerry’s stock to turn negative on Thursday, after initially starting out the day strongly.

We believe Blackberry has trimmed their production expectations for the Z10 for the remainder of calendar year 2013,” Blair wrote in a note, as quoted at Barron’s. “We estimate that the company may have trimmed Z10 production units by 4-6 million units for the year. If accurate, these cuts would mark a meaningful hit to Blackberry’s own expectations and full year units will come in well below consensus views.”

BlackBerry shares were up 3.3 per cent for the day in New York until the news broke, sending the shares down 0.5 per cent below opening levels as of noon, Bloomberg reported.

Waterloo, Ont.-based BlackBerry unveiled its full-screen, touch-screen smartphone, the BlackBerry Z10, in January. The Q10, the company’s new phone featuring its signature physical keyboard, is due to arrive in Canadian stores on May 1.

There have been numerous conflicting reports about how the Z10 has been doing since it went on sale in the past few months.

Canadian cellphone retailer WirelessWave gave BlackBerry some good news when it reported the Z10 was outselling Apple’s iPhone and Samsung’s Galaxy phones at its outlets. But that may have been simply due to a “bump” in BlackBerry sales due to the fact the Z10 is a newly released phone.

And though BlackBerry has asserted the Z10 has broken sales records for the company, analysts aren’t so sure. Canaccord Genuity reduced its estimates for first-quarter Z10 sales to 300,000 from 1.75 million.

Most recently, analysts from Detwiler Fenton caused a commotion with a report that the Z10 is seeing abnormally high levels of returns. An outraged BlackBerry denied the report, and asked securities regulators in the U.S. and Canada to investigate.

Jefferies telecom analyst Peter Misek countered that return rates for the Z10 appear to be normal for a smartphone.

A clearer picture of BlackBerry’s situation will emerge when the company reports first-quarter earnings in June.

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