Returns are Much Higher than Keepers When it Comes to BlackBerry's Z10 Smartphones

BlackBerry has been having a lot of trouble lately. Canada and the UK are questioning BlackBerry’s security, Home Depot dropped the company in favor of Apple and app development is not as high or rapid as expected. You can read my articles concerning these factors in our Mobility Techzone and TechZone 360 sites.

Now it seems that BlackBerry might have an even larger problem to confront. This depends on which side of the argument that you listen to. ITG Investment Research is an independent research broker. On April 11, 2013 ITG reported that sales of BlackBerry’s new Z10 smartphone are weak in the U.S.

The also reported that in many cases, of the total number of people who have brought the Z10, a majority of them are returning. This combined with what ITG sees as weak sales have caused BlackBerry’s stock to take a dive this morning.

While sales of the Z10 have had a head start in Europe and Canada, the smartphone was only made available in the U.S. at the end of March. AT&T was the first U.S. carrier to offer the phone, with Verizon and T-Mobile hot on their heels.

Unfortunately, these carriers have not really been promoting the phone. Reports say that AT&T didn’t even have demo units on display for its launch day. I was lucky enough to receive the Z10 from BlackBerry, when I went to AT&T a week before U.S. availability, none of the representatives could tell me what type SIM card the smartphone used.

I had to be creative and cut the one I had down to size and it works perfectly. However, you can see that the people who are manning the stores are not really up to speed on either the hardware or software side of the product.

ITG analyst Joseph Fersedi said, “The U.S. launch of the Z10 started poorly and weakened significantly as the days passed.” Fersedi attributes this to information from independent dealers.

BlackBerry disagrees with ITG’s statements. In a statement of its own BlackBerry responded with:

BlackBerry wishes to respond to media coverage today regarding speculation that there have been abnormally high levels of returns of BlackBerry Z10 devices. This is absolutely false. Our data shows that return rates for BlackBerry Z10 devices both in the U.S. and on a global basis are in line with or better than our expectations and are consistent with return rates for other premium smartphones in the market today

Towards the end of March I, along with many others reported that the U.S. Department of Defense was getting ready to dump BlackBerry. After a conversation with Lt Colonel Pickart, I wrote that the DoD was not dumping BlackBerry.

BlackBerry CEO Thorsten Heins retorted with, “Return rate statistics show that we are at or below our forecasts and right in line with the industry. To suggest otherwise is either a gross misreading of the data or a willful manipulation. Such a conclusion is absolutely without basis and BlackBerry will not leave it unchallenged.”

You can see how a statement can quickly grow out of proportion. One of the problems with a lack of Z10 sales is that not many people even know about BlackBerry 10. A recent poll by MKM Partners shows that 83 percent of Americans do not know that BlackBerry has launched a new redesigned smartphone or platform.

However, BlackBerry is not going to let the above statements go unchallenged. In fact, in an official press release, BlackBerry said that it is seeking regulatory review of the Detwiler Fenton report that stated return rates for the company’s new Z10 smartphone in the U.S. were extraordinarily high, claiming that in several cases returns exceeded sales.

These comments caused BlackBerry stock to go down dramatically today so BlackBerry is calling “hijinks” on the report. They are disputing the report’s accuracy and they are hoping that the SEC will follow up on their complaint, as well as the Ontario Securities Commission.