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Not revealing BlackBerry 10 unit sales was a big mistake

BlackBerry Earnings Analysis Q1 2014

BlackBerry’s May-quarter handset shipments of 6.8 million units was probably at least 400,000 units short of what the company needed for the quarter. That is a painful miss for the period when both the Z10 and the Q10 were available. But the decision to avoid disclosing how many BlackBerry 10 units were sold into channels in BlackBerry’s earnings release is making the situation even worse for the company.

Analysts thought BB10 shipments would fall between 2.5 million and 5 million units in the fiscal quarter. The unit consensus had ticked up in the days before earnings as analysts raised their expectations. No matter what the real number is, everyone expected BlackBerry to reveal it in the earnings report. Leaving the investors in the dark about this key metric is worse than revealing even a weak figure; the uncertainty makes people speculate about all kinds of worst case scenarios.

It is possible BlackBerry will reveal the BB10 volume number later, but leaving it out of the initial report has already helped trigger a -20% decline in share price by 8:00 a.m. on Friday morning. Investor confidence in the management has been shaken again.

The most likely reason for the low shipment figure in the May quarter is a combination of sub-3 million shipment volume of BB10 models and weak sales of legacy Curve phones in the emerging markets. This leaves BlackBerry entirely dependent on the success of the Q5 model currently debuting in Middle East and arriving to Europe and Asia within weeks.

The big worry now is that the Z10 and Q10 may have been priced out of the handset market where dirt cheap Android phones are already undermining  both Nokia and Apple. The new Q5 is 40% cheaper than the Q10, but its price still levitates more than 100% above cheaper Android smartphones with similar or better displays and better cameras.

Update: BlackBerry just revealed that BB10 unit sales were 2.7 million during May quarter. It’s close to the low end of the consensus range. Hiding the number for an hour did not exactly help the company; the share price now down -23% in pre-market trading.


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