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BlackBerry 10's Negative Sales Reports Are Premature

BlackBerry 10's Negative Sales Reports Are Premature
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Depending on who you talk to, BlackBerry 10 (NASDAQ: BBRY) has either been a huge success or a predictable flop.

One report claimed that BlackBerry 10 had beaten the rumored sales estimates and acquired several iPhone customers from Apple (NASDAQ: AAPL).

Days prior, Canaccord Genuity reduced its sales estimates from 1.75 million BlackBerry 10 units to just 300,000 units.

Final results are expected to come before the bell Thursday, when BlackBerry reports its fiscal 2013 fourth quarter results. Good or bad, investors would be wise to proceed with caution.

Jan Dawson, chief telecom analyst at Ovum, said that while it could be a big quarter for BlackBerry 10, there are "several factors" that could work against device sales.

"Firstly, the device was only on sale for about a month before the end of the quarter, and critically didn't launch in the US until several weeks later," Dawson noted in an e-mail to the press today. "Secondly, the Q10, which has the classic BlackBerry hardware keyboard, won't go on sale for some time still, so many of the prime candidates for buying a BlackBerry 10 device will be waiting for that.

"Lastly, devices have been supply constrained in the markets where they have launched, meaning that even if people wanted to buy them they haven't necessarily been able to do so."

Dawson said that for all of these reasons, observers should "wait for the next quarter's results, which will be a much better indicator of the long-term success or failure of the platform."

"Given that context, anything more than a million Z10 sales in the past quarter may be considered a success for BlackBerry," Dawson noted. "Anything less will be disappointing. And we'll also have to watch for overall sales, which may have been depressed by would-be buyers waiting out the launch in their market."

Dawson estimated that most of the devices sold "will actually have been BlackBerry 7 devices." Many of them are likely to have been sold in emerging markets, including Latin America, "where BlackBerry remains a popular brand in smartphones."

For better or worse, investors should not expect the Z10 to become a record-breaking success in the United States.

"Even past the end of the quarter, the US launch seems to have been very low key, with carriers not featuring the devices and sales staff poorly briefed on its benefits," said Dawson. "AT&T (NYSE: T), which has had big device launches with iPhones, Windows Phones and Androids in the recent past, hasn't lavished the same attention on the Z10. Based on executives' comments, AT&T strongly believes that it needs a third ecosystem beyond iPhone and Android, but it clearly doesn't think BlackBerry 10 is it."

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or Follow him @LouisBedigianBZ

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Posted-In: Blackberry 10 Jan Dawson OvumAnalyst Color Earnings News Analyst Ratings Tech Best of Benzinga


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