Obviously, estimating smartphone sales volumes is fiendishly difficult. BlackBerry beat the Wall Street consensus on BlackBerry 10 device shipments by 100% in the February quarter. Most hedge funds have long suspected that most “store check” research reports are crude hoodoo, particularly outside the United States. But now former London hedge fund analyst Michael Collins has published a very detailed piece on just how dreadful the quality of even top-tier Wall Street store checks can be. The target here is Brian Modoff, the telecom analyst at Deutsche Bank, and this is a particularly relevant smack-down because we are talking about a leading brokerage.
In his piece, Michael Collins brings up a number of points, but two very blunt lines of questioning about Deutsche Bank’s store checks are pivotal.
- Why did Modoff’s team conduct half of their U.K. store checks at the Everything Everywhere chain… before the BlackBerry Q10 was even widely available at this retailer? Did his team not realize that it’s dicey to do store checks during the preorder stage?
- Why didn’t Modoff do store checks at Carphone Warehouse or Phones4u — arguably the most important consumer points of sale for smartphones in the U.K.? Why do checks at O2 stores, but not at Vodafone, which is traditionally BlackBerry’s strongest partner in the U.K.?
Store checks have long been one of the wobbliest parts of sell-side research on Wall Street. It’s interesting to see a British ex-buy side client finally give a detailed critique about the practice.