BlackBerry Drops on Report of Cutback in Production Plans

BlackBerry fell in New York trading after investment research firm Wedge Partners said the smartphone maker has probably scaled back production plans for its flagship Z10 device.

The company may have cut 4 million to 6 million units, Brian Blair, a Wedge Partners analyst, said today in a note, without saying where he got the information. The shares erased gains of as much as 3.3 percent and were down 0.6 percent to $14.81 at the close in New York.

“If accurate, these cuts would mark a meaningful hit to BlackBerry’s own expectations, and full-year units will come in well below consensus views,” said Blair, who is based in New York. “The recent carrier launches in the U.S. have provided no evidence of meaningful sell-through, and a production cut could simply be a reaction to weak sales, post the U.S. launch, and an effort to avoid a channel inventory buildup.”

BlackBerry (BBRY), based in Waterloo, Ontario, is counting on the touch-screen Z10 and a keyboard model, the Q10, to help it regain market share after ceding ground to Apple Inc. (AAPL) and Samsung Electronics Co. The stock has fallen as low as $12.50 and climbed above $16 in the past two months as analysts speculate on how the new BlackBerry 10 lineup of phones is doing against the iPhone 5 and Samsung Galaxy S lineup.

BlackBerry doesn’t comment on speculation, Crystal Roberts, a spokeswoman, said in response to the Wedge report.

BlackBerry said April 12 it would ask securities regulators to investigate a report from Detwiler Fenton & Co. that its new phones have high return rates, arguing that the “false” information may have been released in a deliberate attempt to manipulate its stock price.

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

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