"We believe the Street has gotten ahead of the potential reality for BB10 shipments," he writes. "There is no line of sight to profitability; we remain sellers of BBRY."
Faucette writes that based on his checks, he thinks Z10 shipments in the quarter are tracking to 275,000 to 325,000 units; he says the Street consensus is about 1 million units. And he adds that "any benefit from the Z10 is likely to be at least partly offset by cannibalization of Bold 9900 sales, which our checks indicate have declined materially since the Z10’s launch."
He adds that the May quarter is also tracking below expectations. "Applying normal rates of decay in launched markets and assumptions for channel fill in the United States, we believe the company is likely to ship-in roughly 1 million to 1.5 million units in the May quarter. We estimate Street expectations are for roughly 3 million to 4 million units."
In short, he simply does not think that the company's first round of phones based on the new BlackBerry 10 OS are going to cure what ails the company.
"We continue to believe the Z10 launch involves relatively small shipment volumes and only moderate sell-through so far in markets which have historically been some of BlackBerry’s strongest," he writes. "As a result, investor optimism that the BB10 could reverse the company’s trajectory appears to be well overdone at current levels, in our view. To achieve sustained profitability, we believe the company would need to ship roughly 3x to 4x more BB10 devices than we anticipate on a quarterly basis. We remain skeptical that BlackBerry has any reasonable path toward achieving these kinds of shipments."
BBRY is down 42 cents, or 2.9%, to $13.94.
Also see:
- BlackBerry: S&P Capital IQ Repeats Sell; Trims Target, Ests
- BlackBerry: Canaccord Cuts Estimates On 'Mixed' Z10 Sales
