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BlackBerry Drops as Pacific Crest Sees Production Cutbacks

BlackBerry (BBRY) dropped the most in almost a month after Pacific Crest Securities said the Canadian smartphone maker may have to cut back production of its BlackBerry 10 devices because of lower-than-expected sales.

BlackBerry declined 4.8 percent to $14.82 at the close in New York, the biggest one-day drop since April 11. The shares are up 25 percent this year, outpacing the 14 percent gain of the Standard & Poor’s Index.

The company, based in Waterloo, Ontario, is counting on its BlackBerry 10 software platform to revive sales after ceding market share to operating systems by Apple Inc. and Google Inc.

BlackBerry is still maintaining production levels of 1.5 million to 2 million devices a month, James Faucette, a Pacific Crest analyst, said in a research note today. With estimated sales of about 1 million to 1.25 million units in each of the last two months, BlackBerry will have to reduce manufacturing at some point, Faucette said.

“BlackBerry will look to continue aggressively filling the channel,” said Faucette, who has the equivalent of a sell rating on the shares. “However, as we detect retailers and carriers carrying lower inventory levels without an accompanying reacceleration in sales, we would conclude that production cuts are likely for the company.”

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@bloomberg.net

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

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