Initial Demand for Blackberry (BBRY) BB10 Phones Not Sustainable, Warns Analyst

March 26, 2013 3:04 PM EDT
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Price: $11.57 --0%

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Last week BlackBerry (Nasdaq: BBRY) began selling its new Z10 smartphone in the U.S. While much has been made about the initial success of the Z10, analyst Colin W. Gillis of BGC Partners is concerned about longer term demand this summer and into next year.

"The other major market participants are actively positioning for growth to shift to the mid and entry level segments of the market just as Blackberry is renewing its pursuit of the high end. The pricing for the Z10 in the U.S. at $199 with a two year contract – parity pricing with the top brand name models –seems a poor value proposition to a user who is being asked to take a risk with a new operating system," said Gillis.

Gillis thinks a $50 to $100 price point would have driven more sales, and warned that price may reach this level later this year.

"We see the company getting a degree of traction in the higher end market, but doubt there is a return to its former glory. At best BBRY becomes a niche player, and at worst its current focus on the higher end market causes it to lose traction in emerging markets," concluded the analyst.

BGC Partners has a Sell rating on BlackBerry with a price target of $7.00

For an analyst ratings summary and ratings history on BlackBerry (NASDAQ: BBRY) click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $14.23 yesterday.

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