BlackBerry Slides as Z10 Launch Falls Flat

It looks like the market is spelling "D-O-A" as "Z-1-0" today.

BlackBerry's (NASDAQ: BBRY  ) hyped smartphone launch of last Friday continues to drag the company's stock down into a new week. With so much riding on the success of the Z10, it's no surprise. How are you going to compete with established smartphone leaders Apple (NASDAQ: AAPL  ) and Samsung when your major American retail and telecom partners can't get themselves excited enough about it to run promotions? According to Goldman Sachs analysts, both AT&T (NYSE: T  ) and Best Buy (NYSE: BBY  ) retail outlets have barely bothered to promote the Z10 in a crowded smartphone field.

In some respects, this is also an example of "buy the rumor, sell the news" in smartphones. How many times has Apple soared on the back of pre-release hype, only to pull back? However, BlackBerry's launch is different. In the past two trading days, shares have fallen from nearly $17 to just more than $14 -- a 15% haircut. That's not the reaction of a market expecting long-term smartphone success. Analysts at BGC Partners go further than most with a $7 price target on BlackBerry shares, representing a further 50% drop from here. Goldman, by comparison, downgraded the shares from buy to hold after seeing little consumer interest in the Z10.

AT&T's domestic online wireless store seems to be in love with Nokia's (NYSE: NOK  ) Lumia 920: All but one of the "Top Rated" phones on its wireless splash page are Lumias in various colors. On "What's New," the logical place for the Z10, there's not a BlackBerry to be found. Samsung's S4 dominates the top of the page. It's not until you go to the "Smartphones" tab of AT&T's wireless storefront that the Z10 shows up, under a refurbished Lumia and a one-cent iPhone 4. At least Best Buy features the Z10 on its online storefront, but you have to go to a store to buy it. By the time you get there, you might have changed your mind.

What makes the Z10 stand out from the Lumia and the iPhone? Well, take a look at it:

Take your time to think about it. I'll wait.

AT&T sells brand-new Lumia 920s for $99. The iPhone 4 is practically free. A brand-new iPhone 5 will set you back $199 on the low end -- the same amount you'd spend to get a new Z10. Goldman was expecting the new BB10 operating system to have about a 30% chance of success prior to launch, but now it predicts only a 20% likelihood of success. That might be overstating it. Even the well-received European launch is now being walked back, with consumers returning the Z10 and European telecoms deprioritizing its promotion.

It's hard to stand out in the crowded and mature smartphone market these days. A phone design that offers nothing new over its competition, paired with an unfamiliar operating system that lacks several key apps popular on the two leading platforms, won't get BlackBerry over the hump.

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Read/Post Comments (11) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 25, 2013, at 3:15 PM, DavesHere wrote:

    Smart phones have been commoditized! The lesson of Warren's shirt factory learned again. Nothing else to discuss.

  • Report this Comment On March 25, 2013, at 3:39 PM, CZZZZZZ wrote:

    a new low for the Fool and the bear analysts it likes to quote on Blackberry...trashing a company based on no sales figures...brilliant anlaysis..

  • Report this Comment On March 25, 2013, at 3:44 PM, Oril wrote:

    I see that you don't mind quoting an unknown analyst target of $7.00 yet when you mention Goldman you simply say it was a downgrade omitting the target of $17.00 which is approximately three dollars higher than the current price.

    You American fools are well named at least.

  • Report this Comment On March 25, 2013, at 3:48 PM, Oril wrote:

    Guess what isn't selling in Costco at all?

    I will give you a hint, its emblem is an apple with a big bite out of it.

  • Report this Comment On March 25, 2013, at 3:56 PM, greenember wrote:

    "At least Best Buy features the Z10 on its online storefront, but you have to go to a store to buy it. By the time you get there, you might have changed your mind."

    Really? You honestly think someone would drive to a store to buy something and then say "nah, forget it" when they get there? And we're supposed to take the rest of your article seriously why???

  • Report this Comment On March 25, 2013, at 4:13 PM, ddeeds wrote:

    Not a good sign that refurbished Nokia 920s are already on sale for $9.99.

    This soon after launch I wouldn't expect that they would have enough returns to refurbish that they could be advertising this.

    http://www.att.com/shop/wireless.html#fbid=Ut-pD5-x5Ff

  • Report this Comment On March 25, 2013, at 4:51 PM, TimKnows wrote:

    What a garbage article thanks!

  • Report this Comment On March 25, 2013, at 5:00 PM, snowboarder1983 wrote:

    Attention Motley Fools...March 28 is going to be a very interesting morning! The estimates are so low across the board! If BB comes out with additional cash, .5-2% higher market share and release Z10 sales that top estimates (which Thorstein H. did say that it was their most successful launch in BB history). This news above combined with the estimated 35% short interest should prove for an interesting way to end the week! I'm from Toronto and I truly believe in the overdue success for this Canadian company. I hope fellow Canadians see the light and start supporting home grown businesses! I personally know 10 ppl that switched from IOS/Android to join the BB bandwagon:)

  • Report this Comment On March 25, 2013, at 6:45 PM, Oril wrote:

    With only two more trading days left before Blackberry releases its better than expected results on Thursday MORNING it is now too late for the very large institutional short sellers to cover their losses but there is still opportunity for small investors to take advantage of these incredibly cheap prices.

    If there was any chance of missing Mr Heins would have certainly warned by now but instead he has been increasingly positive on the worldwide results to date. The last thing he would want to do as the new leader of this great Canadian company is to intentionally mislead his loyal customers and investors. Options expiry at the close of trading on Thursday should also make for an interesting day.

    So load up on BBRY, BB.To shares while you can and then sit back and enjoy the action.

  • Report this Comment On March 25, 2013, at 7:22 PM, suavan1 wrote:

    Writing for the Motley Fool does not mean you have to assume the name "fool"......cause you sound like a fool....FOOL!

  • Report this Comment On March 30, 2013, at 9:10 PM, Thinkb4uspeak wrote:

    Why the iPhone is not selling at Costco....it's because it's not available! Costco would LOVE to sell ALL Apple products, but they can't. Apple will not allow it and that is the only reason the iPhone is not selling there.

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