TORONTO Reports of a lackluster launch of its pivotal new smartphone in the U.S. market cost BlackBerry an influential downgrade on its stock on Monday and a 4 percent drop in its share price, just days ahead of quarterly results that will offer the first concrete gauge of how its new phone is being received.
The results, due on Thursday, will offer a glimpse of sales of the new Z10 device in Britain, Canada and several other markets, where it has been available for more than a month.
Sales in the vital U.S. market began only on Friday, and to little or no fanfare, prompting Goldman Sachs to cut its rating on BlackBerry to "neutral" from "buy". Goldman cited little marketing support from the company and apparently low sales.
The Goldman report, coupled with other media and analysts' reports of a flat U.S. debut, have pulled down the volatile stock more than 11 percent on the Nasdaq since Friday, including a fall of 4.5 percent to $14.23 on Monday.
Nevertheless, an upbeat forecast from the company on Thursday could push BlackBerry shares higher again, said Eric Jackson, founder and managing Partner of Ironfire Capital LLC, which owns shares in BlackBerry.
"Even if they report a so-so quarter ... If they provide robust guidance for the current quarter that could really light a fire under the stock," said Jackson, once a long-time bear on BlackBerry's stock but who is now bullish on its prospects.
BlackBerry unveiled the Z10 on January 30 and has reported fairly solid demand for it in its home country, Canada, and in other countries such India and the United Arab Emirates, where BlackBerry still has a strong brand and presence.
But the late debut in the United, due to a longer carrier testing process, and the muted reception there has cast doubts on BlackBerry's chance of a turnaround.
The Z10 is the first in a line of devices that will be powered by BlackBerry's new BB10 operating system. It is a key part of the company's attempt to regain relevance and win back market share in the smartphone arena that it once dominated.
But delays in transitioning to the new platform have hurt BlackBerry's fortunes, and the company has ceded much ground to rivals like Apple's iPhone, Samsung Electronics Co's Galaxy line and other devices powered by Google's market-leading Android operating system.
"It remains to be seen if BlackBerry 10 can gain mainstream acceptance against Android and (Apple's) iOS," said Sterne Agee analyst Shaw Wu, who still expects BlackBerry to meet or beat investor expectations when it reports its fiscal fourth-quarter results on Thursday, driven by momentum around the Z10.
"We anticipate a decent quarter as expectations are low," Wu said. "However, we remain on the sidelines as we are concerned with lack of profitability."
Analysts, on average, expect BlackBerry to report a loss of 29 cents a share in the period on sales of $2.8 billion, according to Thomson Reuters I/B/E/S. Wall Street will be looking for sales of about 1 million Z10 devices in the quarter.
Shares of BlackBerry closed down 68 cents at $14.23 on the Nasdaq on Monday, while its Toronto-listed shares fell 68 Canadian cents to C$14.51.
(Reporting by Euan Rocha; Editing by Lisa Von Ahn, Janet Guttsman and Peter Galloway)