BlackBerry, the Canadian smartphone maker, said it will ask securities regulators to investigate a report 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.
Detwiler Fenton & Co., a financial-services firm in Boston, said yesterday that U.S. retailers were seeing a significant increase in customers returning their Z10s because they found the interface unintuitive. “In several cases, returns are now exceeding sales, a phenomenon we have never seen before,” Detwiler Fenton said. The report contributed to a 7.8 percent plunge in BlackBerry shares yesterday, marking the stock’s worst one-day drop in almost two months.
BlackBerry, based in Waterloo, Ontario, responded that sales are meeting expectations and return rates are in line with the rest of the industry. It asked both the U.S. Securities and Exchange Commission and the Ontario Securities Commission to review the Detwiler report, saying it was either “a gross misreading of the data or a willful manipulation.”
“We call upon the appropriate authorities in Canada and the United States to conduct an immediate investigation,” Chief Legal Officer Steve Zipperstein said in a statement. “Everyone is entitled to their opinion about the merits of the many competing products in the smartphone industry, but when false statements of material fact are deliberately purveyed for the purpose of influencing the markets a red line has been crossed.”
Verizon Wireless, the largest U.S. carrier, said the Z10 isn’t suffering from quality problems, though it declined to discuss return rates.
“After the first 14 days, quality performance of the Z10 has been in line with similar devices we’ve launched,” Verizon, which began offering the Z10 last month, said in an e-mail. AT&T Inc., the second-largest carrier, declined to comment.
BlackBerry, formerly known as Research In Motion Ltd., is counting on the new Z10 phone -- and its pending companion device, the Q10 -- to fuel a turnaround after years of market-share losses. While its stock has more than doubled since September on optimism about the company’s prospects, more short sellers are betting that the comeback will fail. Short positions by investors looking to profit from a drop in the shares are near a record high.
Anne Buckley, a spokeswoman for Detwiler Fenton, declined to comment and said none of its analysts are available to discuss the matter. Detwiler Fenton’s six-person equity research team focuses on tracking technology and consumer stocks, according to its website.
BlackBerry rose 0.7 percent to $13.64 at the close in New York today. The shares have gained 15 percent this year.