BlackBerry Z10 Gets Record Orders in Canada

Feb. 4 (Bloomberg) -- Benchmark Capital's Bill Gurley, Social + Capital Partnership's Chamath Palihapitiya and SurveyMonkey's Dave Goldberg grade the performance of BlackBerry, Google and Apple. They speak on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

BlackBerry’s Z10 smartphone has attracted record orders at Canadian wireless carrier BCE Inc. (BCE), and analysts say sales are off to a strong start in the U.K., sparking a 23 percent stock rally over the past two days.

BCE, Canada’s No. 2 carrier, said early orders for the Z10 have topped any previous BlackBerry model, while one Rogers Communications Inc. (RCI/B) outlet in Toronto had sold out of the Z10 by 11 a.m. today on the first day of sales.

Amid the reports of brisk early sales, Chief Executive Officer Thorsten Heins gave a speech to Canadian investors and dropped by a Rogers store to hand out the first Z10 sold in North America. BlackBerry is counting on a robust start before the Z10 goes on sale in the U.S. in March to help reverse six quarters of declining sales and years of market-share losses to rivals led by iPhone maker Apple Inc. (AAPL)

See: BlackBerry CEO Heins Says Signs Pointing in Right Direction

“Even if the long-term prospects for the platform are very uncertain, we believe all is in place for BlackBerry 10 to enjoy a great debut,” said Pierre Ferragu, an analyst at Sanford C. Bernstein in London. Ferragu raised his rating on BlackBerry to the equivalent of a buy yesterday after getting preliminary sales information from his contacts in the industry.

Photographer: David Paul Morris/Bloomberg

BlackBerry is counting on a robust start before the Z10 goes on sale in the U.S. in March to help reverse six quarters of declining sales and years of market-share losses to rivals led by iPhone maker Apple Inc. Close

BlackBerry is counting on a robust start before the Z10 goes on sale in the U.S. in... Read More

Close
Open
Photographer: David Paul Morris/Bloomberg

BlackBerry is counting on a robust start before the Z10 goes on sale in the U.S. in March to help reverse six quarters of declining sales and years of market-share losses to rivals led by iPhone maker Apple Inc.

“Initial feedback we have received from distributors on the first days of sales is particularly positive,” he said.

‘Good Success’

BCE’s Bell Mobility site has been taking Z10 pre-registration since the beginning of January, and the device topped all BlackBerry orders even before the Jan. 30 unveiling, said Mark Langton, a Bell spokesman. Rogers, the country’s largest wireless carrier, said it has received “thousands” of orders for the touch-screen Z10.

“We’ve had the reservation system up and running, and we’ve seen some pretty good success on that,” Rogers CEO Nadir Mohamed told reporters today at an event at the company’s flagship Toronto store.

Rogers, BCE and Telus Corp. (T), which said its early customer response to the Z10 has been “very positive,” begin selling the phone in stores across Canada today.

A Rogers store in First Canadian Place in Toronto’s financial district had sold out of its supply of Z10 phones by 11 a.m., while staff at another outlet nearby said they’d sold about 30 Z10s in two hours after opening. The Q10, a model with a physical keyboard that is likely to appeal to BlackBerry’s traditional user base, will go on sale “around the April-May time frame,” Heins told reporters.

The Z10 won’t go on sale in the U.S. until March because of lengthier testing by AT&T Inc. and Verizon Wireless, Heins said, reiterating previous remarks.

“We were trying to get there, but, you know, unfortunately sometimes it just doesn’t work out this way,” he said. “We’re just going to get going in the U.S. as soon as we can.”

Setting Stage

In the meantime, Canadian sales should help generate buzz before the U.S. debut, Heins said.

“Canada will set the stage,” he said. “Canada will be raving about BlackBerry Z10 and consequently will influence the U.S. market.”

BlackBerry shares climbed 6.9 percent to $16.02 at the close in New York. That followed a 15 percent jump yesterday, the most since April 2009. The stock tumbled 17 percent in the two days after the phones’ unveiling last week amid concerns the delay in hitting the U.S. market will hurt BlackBerry’s (BB) recovery.

The shares have lost about 90 percent of their value from a mid-2008 peak.

Talking Up

Heins gave a speech to a sold-out business lunch crowd in a downtown Toronto hotel, where he sketched out his plans for BlackBerry’s mobile computing while also talking up the Z10’s capabilities.

“I have just come from a Rogers store on Bloor Street, and the excitement and passion of so many BlackBerry fans is energizing,” he said.

Canadian support for the Waterloo, Ontario-based company, known until last week as Research In Motion Ltd., helped shore up BlackBerry sales for a few years after the debut of the iPhone in 2007. However, by the end of 2011, Apple had toppled BlackBerry from the top spot in Canada.

About 230,000 BlackBerrys were shipped in the third quarter, or 7 percent of total phone volume in Canada during the period, according to IDC data. The iPhone accounted for 31 percent of Canadian sales in the period.

Good Reviews

In 2010, BlackBerry set out to build a new operating system after sales growth of its aging smartphone began to slow. While delays of more than a year tested investors’ patience, the BlackBerry 10 software has won good reviews for its keyboard innovations and ability to run multiple applications at once.

That has gotten U.K. sales off to a “strong start,” said Peter Misek, an analyst at Jefferies & Co. in New York. He rates BlackBerry a buy. Carphone Warehouse Plc is seeing widespread sellouts, while carriers O2, Vodafone Group Plc (VOD), Orange and EE are seeing robust demand, Misek said, citing the checks he and his colleagues have made.

“Initial sales bode well for the broader launch in March,” Misek said.

Spokesmen from Vodafone and EE -- France Telecom SA and Deutsche Telekom AG (DTE)’s U.K. joint venture -- declined to comment on BlackBerry 10 sales. O2 is pleased with sales of the Z10, John Maley, a spokesman for the Telefonica SA-owned carrier said, declining to elaborate.

Sold Out

Sales staff at a Carphone Warehouse (CPW) store in London who spoke to Bloomberg said they sold out of the Z10 within 20 minutes. They declined to give their names as they were not representatives for the company, Europe’s largest mobile-phone retailer.

Four analysts have downgraded the stock since the phones were unveiled, including GMP Securities’ Deepak Kaushal, who cut his rating to reduce, the equivalent of a sell. While praising the hardware and software, Kaushal said, “We see little at this point that will attract subscribers back from competing smartphones.”

Analysts cited the $199 U.S. price for the Z10 as potentially too high to compete with Samsung smartphones, as well as the fact the Z10 wouldn’t arrive in the U.S. for another month.

Those are negatives that investors shouldn’t dwell on, Ferragu said.

“The strength of this launch is overlooked by investors, creating strong opportunity to buy BlackBerry,” he said.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.