Here’s the thinking behind Goldman’s BlackBerry downgrade

Goldman Sachs
By Chris Umiastowski on 25 Mar 2013 07:44 pm EDT

Following a week of largely positive BlackBerry news, this week has started off with a major analyst downgrade.  Goldman Sachs analyst Simona Jankowski has downgraded from a buy to a hold recommendation, cutting her target price to $17 (previously $19). 

I got a copy of the report (thanks, sender) and had a chance to go over it this afternoon.  In a nutshell, Goldman has two main reasons for the downgrade.  Those reasons are 1) the AT&T launch; and 2) consensus estimates have been rising. 

Let’s break it down into plain English ...

The AT&T launch

Goldman thinks the AT&T launch wasn’t very strong.  They checked over 20 stores which consist of company-owned stores as well as Best Buy and RadioShack stores.  Numbers-wise, some stores only sold 2-3 units per day while some sold closer to 10 per day.  They consider this to be disappointing.  

How does this translate back to their financial model?  They think of BlackBerry as a binary event.  Either BlackBerry 10 succeeds or it does not.  If it fails, they see the stock as being worth $15 using a sum of the parts valuation.  If it succeeds, they see the stock as worth $30 using a 10x price to earnings ratio on estimated earnings power.

Consensus estimates have been rising

This reason is secondary, but Goldman also points out that other analysts have raised expectations for device average selling price, gross margin and other key financial metrics.  So when Goldman got bullish on the stock a few months ago, they were making more of a stand-out call.  Today their estimates don’t stand out so much, so they don’t feel as comfortable pounding the table telling investors to buy. That’s pretty much the logic behind their downgrade.

My Analysis

So what are my thoughts?  Oh, I’m so glad you asked!

First of all, the AT&T channel checks are hard to judge.  They only checked about 20 stores and some of them were smaller stores (RadioShack brand).  I kinda wish Jankowski had spent some more time thinking about what the numbers imply.  AT&T has more than 2200 corporate owned stores.  Say each store only sells 3 devices per day.  That’s about 600,000 devices per quarter.  AT&T is a major carrier, but it’s still only a piece of the US market as opposed to the entirety of the global market.  I think AT&T selling more than a half million Z10 phones per quarter is pretty decent when you consider that most analysts think 5 million BB10 sales per quarter would be an enormous financial success for the company.

And we still have to consider sales at Best Buy, RadioShack, Costco, Walmart, and Amazon.  We’ve also got to keep in mind that AT&T has fewer subscribers than Verizon.   As far as BlackBerry subscribers goes, I think the effect is further amplified.  Remember that Verizon sold far more BlackBerry product than any other US carrier over the last few years.  So I’m betting Verizon’s launch will do better than AT&T’s. On top of that throw in some extra sales for Sprint and T-Mobile and I think we can safely say BlackBerry Z10 sales will exceed 1.5 million per quarter in the US alone. 

That’s not bad.  And that doesn’t count the Q10 or any other new product to hit the market in the coming weeks / months.

As for Goldman’s other reason for downgrading?  I understand it.  They upgraded when everyone else still thought BlackBerry was a goner.  Now that a lot of analysts have boosted expectations for device pricing and profitability, it’s not such a lone call anymore. 

Anyway, we’ll see BlackBerry report Q4 (February quarter) results on Thursday night.  I look forward to the fun.

Topics: BBRY Editorial

Reader comments

Here’s the thinking behind Goldman’s BlackBerry downgrade


it felt like sh-t totally didn't understand why people did it so I tried it and am even more confused now.... but olympus has fallen is a good movie tho... lol

I think the real measuring stick will be the Q10. As much as I like the Z10 - and I very much like mine - I think the QWERTY Model will still be the indicator, especially with current BlackBerry users adoption of BB10.

Posted via CB10

Thanks for giving the information, many times stock holders have nothing but the misinformation from post news. You help us a lot

Posted via CB10

The media is reporting that ATT sales people weren't trained on the Z10, they didn't have any signage or banners for the Z10, and salespeople didn't even have displays set up. For a new device, this is rather disappointing. Was Apple and/or Google involved here? Why weren't ATT folks prepared for the biggest BB launch in history? Someone really dropped the ball here, and BlackBerry had better find the culprit. I really think they should continue to have big launches with TMo and Verizon, but these ATT sales are sadly disappointing considering it has nothing to do with how good the product was but rather how pathetic the sales effort was. I am very disappointed with ATT. I know Verizon is a huge Android seller so if it didn't go well with ATT, we can't assume it will get better with big V. BlackBerry will have to do their very own marketing and hope buyers start picking them up from Best Buy or elsewhere.

Verizon already has signage in a lot of stores people have seen and the phone isn't even available yet. A lot of the reps are excited and trained. I think Verizon will have the biggest launch.

I sure hope it beats ATT! This is a great phone and deserves to get a fair shot. No training for salespersons, no signage and no displays. That is really, really sad for the largest carrier in the U.S.A.

I just checked with the Verizon stores near me. I talked to employees directly, and all of them had been through a 3 hour learning cours,e and they all said they were really impressed by the phone and the OS. All of the Verizon stores also had signs out, and all of them were planning to have Z10's on display to use the moment they launch it. I went to 3 of the AT&T stores (their actual stores, not BestBuy), and didn't see one sign. Apparently AT&T's advanced launch was a meager attempt to undercut competing Verizon and T-Mobile

This is encouraging. Perhaps ATT did rush their Z10 launch to beat the competition, but that in turn is hurting the critical first impression of the device and the new platform that BlackBerry has built. On a level playing field, this phone has a chance to erase the negative image BlackBerry has been painted with for the past two years. It should not be about being first, but about being the best and offering the most quality choices. This Z10 phone offers that. A new and effective approach to using a smartphone - it deserves fair shot at success.

I couldn't agree more. Especially about the Z10 being the best of offerings. After all, the smartphone was built to essentially shrink your desktop into a highly mobile unit. To literally be a small computer. Out of all of the current operating systems for smartphones, it's obvious that BB10 is really the only one that can live up to that. As for coming first, I agree that it shouldn't matter. However over the last several years ATT has shown that it apparently matters to them.

"Apparently AT&T's advanced launch was a meager attempt to undercut competing Verizon and T-Mobile"

Like someone posting "first" here... meager attempt at relevant posting...

TM have NO in store displays before launch,
with limited website information ... only "coming soon"
Phone and 'chat' CS does not know ANYTHING!
DUH! How are they going to sell it?

Serious? What's that all about? Being second????? I wonder if their sales folks got any training yet. What sort of crap is this? TMo isn't even showing the Z10 as one of their featured phones on their website. It is still showing as Coming Soon. Hope that changes tomorrow.

Chris, Sprint isn't selling Z10 only Q10. You might need to correct this statement to only include T-Mobile.

"On top of that throw in some extra sales for Sprint and T-Mobile and I think we can safely say BlackBerry Z10 sales will exceed 1.5 million per quarter in the US alone."

Yeah. My screw up. When I wrote the sentence I was thinking of Q10 also, hence the Sprint reference. But I wrote Z10, which is wrong.

Posted via CB10

So the hope is in the BlackBerry 10 people. That thing carriers us happening in my country too, they know nothing about blackberry and the want to sell android or apple. I even think S4 is going to be released before than z10 :(

Posted via CB10

" On top of that throw in some extra sales for Sprint and T-Mobile and I think we can safely say BlackBerry Z10 sales will exceed 1.5 million per quarter in the US alone. "

Chris, Sprint will not sale the Z10...only Q10

How do people let analysts get away with projecting anything from such obviously statistically flawed samples. They are totally unrepresentative samples of the US population focusing on a handful of stores in a small geographical area and yet they do their analysis like they have done a truly random sample where every store in the country had an equal chance of being selected.

Great article Chris! It's always nice to read an article from someone who has actually done some research and put some thought into what they write! :)

I hate the shit talk going on. Give BlackBerry a chance. They JUST LAUNCHED THE Z10. CHILL OUT!!! Thanks chris!!!

Posted via CB10

I always refer people to CrackBerry no matter what phone they have, Especially for BlackBerry.

BlackBerry needs to have ads that show how to use the phone. The four basic gestures. That's one ad. Folks need to know how to use the phone before they walk into a store. Otherwise, the store clerks might pretend they don't know how to use it or that it's clunky and quickly shift them over to another device.

Customers need to have their minds made up before they walk into a store. I've been at Best Buy and heard someone ask for an iPad mini and it didn't matter that the sales guy was raving about the new Nexus 7 tablet, the customer wanted the iPad mini. His mind was made up, and he wasn't about to be swayed.

Crackberry does a great job on the tips, but an ad on how to use it with snips here and there is great.
My son was joking with his iTouch , he held the home button down and swiped up and said dad my itouch is like
your Z10 !! quite funny ! Now do that gesture all day long on AAple all day long would be a laugh

Apple spends big money selling just their earphones on TV. Not the iPhone, but one small aspect of it in each ad. BlackBerry needs to show consumers how those four basic gestures work and how simple and intuitive they are. Focus on just those four gestures and get those ads everywhere on TV even just for a couple of weeks. My point is that people need to know how these gestures work before going into the store to ask to see one.

The Z10 is Blackberry's "shot across the bow" for the competition. ATT is probably sitting on a Warehouse full of iPhone 5s', and isn't interested in seeing BB10 launch with lots of of their subscribers switching from apple. Lets see what Version and T-Mobile bring to the party and then we'll know how beholden they are to the other fruit.

Lots of speculation and we can certainly add many more; however, I am pi$$ed at ATT. There's money in the equation somewhere. That's a given. This wasn't just a mistake. The iPhone 5 must sell well before the GS4 comes out, so you may well have a good point to make. I'm usually not one for conspiracies but this blunder isn't BlackBerry's to bear. It's ATTs to own and wear! Shame!

I don't listen to the 'analysts'. I feel they have a greater obligation to boost their own positions in other companies (say, other phone makers), rather than taking a positive view of a small competitor (such as BB).

Everyone thought BB (then RIMM) was dead and ready to be put in the ground only a half year ago. The stock price went close to US$6. I bought the stock based upon the early previews of OS10 here on CB. Then, the stock went up to $10; I bought more. The stock has had more ups and downs (percentage wise) than I would like, but, currently the share price seems to be relatively stable around $14. IMO, BB is the type of stock to own if you want long range appreciation, not short term gains.


I think you're right . Goldman are at the worst profit-taking and at best setting themselves up for a bigger leap on the 28th, when the Quarterly Earnings are announced. Remember the stock market is a blood sport and this is probably a win-win for Goldman. I like Chris' writing but even in trying to make his own analysis is giving Goldman too much credit.

The guidance for the next quarter is what will drive the price up or down for the next 3 months.

I worked with sprint Verizon tmobile and ATT guess who sold the least? ATT, why? Because ATT is the HOME of iPhone, those att employees bleed iPhone, plus there was NO SIGNS of the new Z10 on release date, another reason why att release did not go well, like I said before Verizon will be an excellent launch, they truly have love for BB and not just stand by it like ATT.

Demand is usually strongest when a device first releases... so it is safe to assume that 10 devices a day will drop significantly

Posted via CB10

No No sir, people jump on the band wagon ALLL the time, it takes years but it happens, No one had the Galaxy it did not take off until the S2 then the S3 it takes word of mouth for the average person who buys a phone, then u have people like us that look daily at the NEXT new phone, most people are not like that, they jus want whats new and there are A LOT of people that still don't know BB has a new phone, it takes time with a brand new OS/Phone

In this case, the public is still tuned to iPhone and Galaxy. Many people think BB is a dead bunny. It will take more than a few months to gain steam.
The big kick will be when the Enterprise folk make their decision to adopt OS10.

Not really true for a new device though :as much people will hear about it, see it around and touch it / try it in stores, expect the sales to increase. Don't forget that many have a bad opinion about blackberry right now and the media doesn't help it at all. More people will know how different b10 is from the legacy os, more they will be tempted to buy it
Right now bb10 has to carry the negativity of the previous os and change it. It's not going to happen overnight. It's a marathon, not a sprint.

Posted via CB10

Hey Chris,

Thanks so much for your comments - they are always much appreciated. I also look forward to the fun on Thursday ;-)

I think AT&T failed to really try to promote it. They showed the commercial on the NCAA games and I think that is because they were one of the corporate sponsors. The postings and my own experience is that most stores failed to really make the public aware of the phone existence. I think AT& T may change their opinion once they see it selling great on VW

It has been 3 days since the war for the US market started. One battle does not determine the outcome of the war. Mr.Heins said in the interview with Kevin that the marketing support will come in the coming days. Just think of this as a marketing campaign, the media is bashing BBRY indirectly it is marketing for this product by letting the public knows about it. In the end it is the consumers that will decide the success or failure of the new device. Everyone is reacting as if the phone have failed already. We need to be patient and have faith.

For the investors who are not comfortable with the volatility of the stock should not be in the market right now. I suggest you guys wait for clear indications of success before you jump in. I have been long on the stock since last September and i have witnessed a real roller coaster. Prior to the launch of BB10 I was 50/50 on success of BB10 however ever since I had my hands on this device I am 100% committed.

And if I am wrong? Then I will live with my decision. Given that this product is truly amazing I quite comfortable with my decision even if it failed.

FYI: I got accepted to a very prestigious University in the States to persue my MBA. I also was offered a loan from the Bank for grad School but I betted it all on BB.TO. I have as much to lose as anyone here so my fellow BB fans and investors have faith and trust yourself. It is only a light skirmish, the battle hasn't started yet you guys make it sound like the war is already lost. Go BB10!!

Posted via CB10

Wow, so you took out your student loan and dumped it into one stock? That is a very risky move. When do you have to sell the stock in order to pay for grad school?

That is a great comment. I have a pretty significant stake in this also but yours is the best story I have heard so far.

Thanks for your continued faith.

Posted via CB10

20 stores out of more than 2200 let's you publish an "Analysis" that brings down the value of a stock. There should be a law against this. Some minimum data requirements. Too much shoddy work out there.

Posted via CB10

Investment houses manipulating the stock price for their own benefit and their friends too! What's new? Happens all the time, but they're too big for even the feds to take on and too big to fail.

Hi Chris,
Even if the initial launch data was not impressive, it's surprising to downgrade after just a couple days and at just 1 carrier. Shouldn't they have waited to at least see if the Verizon launch to form an opinion? They must have been on the fence and looking to use any reason to downgrade...I just worry that this step 1 in a downgrade to sell post earnings if we don't get any real guidance.
Blackberry really needs a U.S. investor to step up and take a 5%+ stake in this company to shake out some of the bears and the nonsense. Right now it just trades on various rumours. I respect Prem Watsa, but it doesn't hold a lot of weight in the U.S.

They downgraded to Neutral and a strike price of $17. If you bought now at $14.50 and the stock hit $17 in 12 months you would have a very nice return. So they aren't saying anything really negative about BBRY. They are just reflecting that the AT&T launch didn't look so good. And you can't argue with that.

I have no interest in stocks yet I always look forward to chris's articles. Awesome read as always.

Posted via CB10

Thanks Chris, I was starting to get upset, all day its been negative articles until yours. Thank you

I hope people keep showing off their z10 and sell like hell. I always believed BlackBerry would never die, I still don't think it will but after a month with my z10 I'm not sure what I would do if BlackBerry disappeared.

I guess my grandmother was right when she said nothing worth having comes easy

Posted via CB10

Here is my problem with BBRY as a stock. Uncertainty. It's still Uncertain times. The numbers aren't in. There is a lot of chatter. The only time you feel confident in a company is when they have had hit after hit, or if they are in a buoyant sector. Am I right?

BBRY has delivered two of three products demoed. BB10 and Z10, with the Q10 to come soon. If the CEOs talk of six new devices and an even more superlative flagship to debut in time for the holidays. Then going into 2014 BBRY will have an incredible portfolio. If they have the cash to do this then who knows who will buy the product.

I haven't liked the launch to date.

For the sake of honesty. I'm not long or short BBRY, except in my heart.

Much of the current delay to release was due to the networks taking their time to do testing. I doubt it was a BB problem since Canada and UK release seem to have gone smooth. OR, BB had limited stock to start-up.

I notice a couple of the bears (Citi and Evercore) still expect north of 1mm z10 units in the feb. quarter to be released on thurs. makes me wonder if a number like 1mm won't necessarily be a positive catalyst.

If you sell "3 devices a day per store it would equal 600,00"... you are assuming that sales never decrease from launch day... the launch day should be one of the biggest selling days so you wouldn't use that as the average number for the whole quarter.

Yes, but the low end numbers would not remain constant over the quarter. Though I hope you are right, 600,00 from AT&T alone would be good for BBRY.

Thanks for the thoughtful analysis, Chris. Waiting patiently for the Verizon launch and my pre-ordered Z10. So long, Sprint. Shame on you ATT.

Thanks for another fine article. I must say that I have learned a great deal reading the articles you write. I look forward to learning a lot more.

Posted via CB10

Thanks Chris...everything I wanted to say has been said other than it appears with 140mm+ short they are only trading their positions amongst themselves (for the most part)...hence the 6-9% swings.

Posted via CB10

My biggest disappointment is the current ad which shows nothing. Dont they known most people think Blackberry had no apps. Show some winners then show the peak while playing angry birds or something. The new ad is about the same as the bold ads but the product is so much better.

Posted via CB10

I agree 100%. BBRY must show how the phone works in their ads: "Here's how you get to the home screen from anywhere - boom! Here's how you get to your Hub from anywhere - boom! Here's how you switch apps - boom! Here's how you get into the app drawer - boom! Here's how you access settings - boom! Okay, now let's rock!"

By the way Chris, they are reporting the Q4 on Thursday morning before the market opens
Perhaps that's a good sign

Posted via CB10

All I need is 20 stores do a few phone calls and I am hired at GS for $500K
Great overview Chris

I don't see any promotions by AT&T or Verizon, there is iphone TV commercial every 10 minutes & Samsung every 15 minutes, I did not see any for BlackBerry since the super ball weird commercial. Lot of american people are not aware of the new BlackBerry release.

Apple and Samsung have relatively unlimited marketing funds to pay for the ads. BB is currently close to the wallet with little spare cash in the bank.

I have just watched my 1st BB10 TV commercial 5 minutes ago from AT&T, very disappointing, boring, no mention of the personal/work separation or the only smart phone having the US government security certificate along with the playbook. I think they are using the same Microsoft advertising company.

Hopefully the marketing team take lessons from the AT&T launch and make a big difference with the other carriers.

Posted via CB10

Hi, from USA here. I spent weekend at local Best Buy, ATT and T-mobile. ATT guy was well prepared on Sunday, had working phone and knew how to work it. Could demonstrate some stuff, but no special treatment. Sounded like he was rooting for us. Best Buy display was bad, but phone expert employee had his own Z10 and let me use it and spoke favorably of it. Its now his personal phone. Also, I spoke with other employees there that had used the phones and raved about how good the keyboard is. I talked another one who hadn't tried it into trying one to replace his broken Android. Then it dawned on me that we 80 million users really need to get off our duff and get out there and educate the store employees. No complaining, get out your Z10's and get out there and show what the phone can do. I am going to do it in thanks to the BB team for making such a helpful phone.

Also T-mobile people had been briefed and well trained on the phone at the physical store, but agree with previous poster online chat person did not know anything. Anyways, I can tell you this. I will be able to buy my phone from T-mobile tomorrow morning! Booyah!

If you guys aren't seeing commercials then you aren't watching the highest rated show on television these days, NCAA Basketball tournament. They have the Keep Moving commercial on at least once during every game as far as I can tell. Now that is a nice commercial. But I agree with statements above that they need to show the phone and how to use it more. But at least we can all agree that this commercial is vastly better than the incredibly confusing Super Bowl commercial.

Thanks for this article. I was wondering when you guys would address the downgrade and the AT&T launch.

This makes me feel a bit less worried about recent events.

Posted via CB10

So in other words, they base the entire performance of a multi billion dollar international company on how a new phone sells in 20 stores, in one company, in the first few days, in one country.


How much do these guys get paid??

Posted via CB10

Has it been pointed out that sprint won't have the Z10? Hope that was just a simple mistake when you wrote this up

Goldman Sachs has fed the "whales" (their really big clients) and themselves, with pieces of the "muppets" (their smaller clients). This "pump and dump" is nothing new for Goldman Sachs (see Jim Cramer explain how to manipulate BlackBerry stock: ). The AT&T non-launch (which was to be expected) was just a convenient excuse to justify their negative "analysis".

Thanks for making the financial picture very understandable and clear. I was attending local Costco store, located the wireless kiosk, found the ATT z10 and it was a dummy model. The kid didn’t seem interested in helping us out. I am on Sprint and plan on switching carriers just for the phone. Does anyone have suggestions which carrier I should switch to?

Chris ..... Thursday MORNING ! Not Night. MORNING !!!!

8 AM ..... be there .... or Be Square !!!

I'm long BBRY. And when I see these drop$ i look for opportunities to add more. Like tomorrow morning when I believe there will be another dip. Stock is still volatile and subject to a lot of manipulation.

Im not a marketing expert but if the commercials in the U.S are like the ones here in Canada then definitely they re not promoting the phone. Just like how Apple does for its iphones and ipad commercials showing off its features is exactly what BB should be doing with its new BB 10 OS. Show how the peak, hub, flow, time shift, balance, etc and I m sure that would have sparked up more interest of the phone. BlackBerry has always been bad with its marketing!

I just want to say this as an old blackberry user who loved blackberry that left for the iphone and never thought I'd ever go back to a blackberry ever again well i couldn't of ever been so wrong I gave the z 10 a chance expecially since I had nothing to lose with my carrier giving me 14 days to try it well i figured I'd be back for the iphone 5 well once again I was wrong this phone is amazing in every sense of the word I cannot say enough about how wicked this phone is touch screen typing is a breeze multitasking has never been so easy I rarely pick up my laptop I love the z10 and those analyst need to understand anyone who gives this phone a chance will never want any other phone great job blackberry I'm glad to be back

Posted via CB10

Thanks for sharing that! If folks know the basic gestures and try it, they will love it. It's that simple. With just a day or two with the phone, it is very difficult to go back to a traditional user interface. The Z10 is truly special so give it a spin. There is nothing to lose as you can exchange it if you're not happy with it.

I will say this. only 1 out of 5 at&t/Best Buy locations in my Area, (Tampa) had the Z10 in STOCK! So I dont see why it would be a success, no advertisements or demo models. BS!

I cant even buy one if I wanted to.

Thanks for clearing that up. It would seem that any hint of BlackBerry losing momentum is big news. Too bad the analysts ignore all the evidence to the contrary.

<note: slightly modified repost from another CB blog I replied to earlier ... >
There are SO many troubling issues with this "Analyst Report" that no-one else seems to be addressing - even questioning - that it makes me sick; I have the following points (sorry, there are several!!) that I HAVE to "get out" of my system.

[U][B]1: Ulterior Motives?[/B][/U]
ALL of the negative nannies so far have been stock analysts. WHEN, in recent memory, have "analysts" EVER gotten a call "just right" - before a major hit or flop? Getting "data" is one thing; interpreting it correctly and making the correct recommendation is a completely different one. Someone correct me if I'm wrong, but even in cases when they KNEW a company (like, let's say, AAPL) always makes ultra-conservative forecasts, most analysts' ratings are often WAY "off".

Where I DO smell a rat is in the analyst firm's or clients' stock-holdings. The SHORT position in BBRY is - to quote Austin Powers's Fat Ba$**rd - "Friggin' HUGE!!"
With a recent run UP in the share price on relatively "good news," the short-sellers MUST reduce their risk and beat-down the stock to limit losses and re-purchase the stock to cover positions. Getting analysts to make negative statements is the fastest sure-fire way to do it with impunity and without personal risk. THIS is a proven tactic for short-sellers and those looking to buy at a discount, and shouldn't have come as a big surprise. ESPECIALLY since no-one knows "if or how many" shares Goldman Sachs held 'long' or 'short' before their analysis, and what they did before and after they released this most definitive assessment & conclusion.

[U][B]2: Erroneous Data = Just Plain Wrong Conclusion[/B][/U]
Let's recall "Statistics 101." You need a STATISTICALLY VALID (i.e. "large enough") sample size in order to make inferences from a data set about the greater population being analyzed. For things like election or major issues opinion polls, AT LEAST 1000 respondents are generally accepted as a sufficiently large & statistically valid data set to accurately predict a population trend.

Calling "a dozen, even 20" stores doesn't just fall flat in this regard; it falls on its face. Even a "50" US-store survey is merely 1 store per state; 100 store surveys might result in "1 urban and 1 small-town" sampling, but how accurate could THAT possibly be?

Realistically, it's usually just a few stores within ANY franchise that are responsible for a majority of sales, regardless of 'Who' or 'What' is being measured. Not 'every' AAPL store sells at the same rate either, right? So, call the wrong stores and your data is WAY OFF!
Unless these schmucks have a 200-400 store (of ALL types!!) sample size, I can't accept ANYTHING they say as anything more than dart-board or beer-pong guesswork.

[U][B]3: Can't Get there from Here[/B][/U]
Far as the pace of sales goes, let's recognize THE ONE crucial (unknown) factor: "Carrier contract expiration & break-fees."
My own carrier contract expires in March, 2014 (yes, almost 1 year) and my "early upgrade fee TODAY is $165!!" Since my penalty-upgrade disappears at the end of November (a full 8 months away) and I ab-so-friggin'-lutely refuse to fork over a single extra penny to Ma Bell, it's BBRY and a Z10 sale that must suffer.

Of my 2-3 dozen close friends and business contacts with whom this comes up, [B]EVERY SINGLE ONE[/B] is ineligible to upgrade devices for the next [B]5 to 14 months[/B]!! THAT could mean we get the BB11 or even 12. And, no-one I know using any device is currently (or soon) 'off-contract.'

The assumption that ALL mobile phone users will ditch their otherwise still functional devices every 9-16 months "just because the next higher-numbered version is available," the way iPhone fashionistas do, falsely extrapolates an already-ridiculed herd mentality to the mainstream.

[U][B]4: There is another ....[/B][/U]
I expect many - MANY! - BB die-hards are holding out for the Q10 (QUERTY) despite the Z10's great reviews ... and even super Z10 reviews from keyboard fanatics aren't likely to change that "quickly or easily" enough to satisfy immediate sales # demands.

[U][B]5: Just 'Ma Bell' so far ... ?[/B][/U]
So far, all the attention has focused on the lack of Z10 support from AT&T, and that it "must" mean low sales.
Anecdotally from the CB forums, I'd say "not necessarily;" several posts have shown that AT&T IS selling Z10s despite the lack of display & support.
Also, everyone knows that AT&T is an AAPL-centric shop and I don't expect that to change easily. AT&T also used to get 30-90 day global carrier exclusivity for new devices (from BBRY) and THAT changed with the Z10 launch.
It's likely that AT&T demanded this exclusivity again this time and BBRY said "not unless you launch it at the beginning of February, 2013" to which I expect BBRY heard either silence or laughter.
SO, Thorsten might have said [I]"EFF-'em; let's launch in Canada, UK, etc., first and deal with AT&T (or "the USA") when they're ready."[/I]
BUT, saying "NO!" to AT&T probably resulted in a reciprocal [I]"EFF-'em! Let's not give them any meaningful in-store support; let 'em sink or swim."[/I] Additionally, AT&T probably still has a truckload of iP5s to ditch, and isn't playing nice with Z10 to spoil their own commitment & investment.

There's still BestBuy selling on all carriers, plus the much-larger Verizon and a slew of others to come, so AT&T's "treatment" here is, at-best, a red herring measure: BFD!

[U][B]6: Fence-Sitters[/B][/U]
There's probably a LOT of fence-sitters waiting for that "ONE" App they wanted (like the guy who took it back 'cause he couldn't be bothered to research or side-load that ONE app!), or to see what else is coming. Or, as said above, the querty-keyboard Q10 ...

If and when it becomes clear that:
1) the next droid device or OS won't offer anything substantially better ,
2) that the next iPhone will either be only a slightly better iP5 OR demand yet another expensive accessories replacement, and/or
3) that data security IS more important - and better on BB10 - than everyone is sweeping under the rug (everyone should have a powerful distrust of giving Google ANY access to their personal data),
THEN the additional fence-sitters should recognize the right thing to do & get off the pot.

[U][B]7: Obsessing over the head-scratcher indicator?[/B][/U]
The dumbest measure I keep hearing re-hashed is "lack of line-ups" in-store for the device. The initial 3 or 4 AAPL launches were marked by days-long lineups by students and slackers in the sunny South or during the warm months of the year. There's a reason AAPL doesn't launch devices between November 1st and March 30th.
BUT, NO-ONE really knows how many Z10s were "pre-ordered and shipped" [B]vs.[/B] "store pick-up" and whether the reported "2-3 & fewer than 10" per store sales includes or excludes these pre-orders.
I fully expect most BBRY users are TOO dam# busy working and being productive to stand in a long lineup "today" for something they can still get on Thursday night, Friday afternoon, or Saturday morning. Without wasting precious & valuable time.
Besides, WHEN was the lack of visible or huge lineups EVER an indicator of poor sales for ANY Samsung, Windows/Nokia or HTC phone? Samsung themselves mocked the phenomenon in their AAPL-mock-advert.

[U][B]X: Counterpoint[/B][/U]
The egg on BBRY's face is not ensuring that its First Launch carrier partner was prepared and fully committed to maxxing-out the sales potential. And for having one of the lamest launch-marketing support campaigns.... E V E R.
As a professional Marketing expert, I WILL unequivocally state that BBRY still hasn't learned a thing - that's right, not a single thing! - about Marketing, creating exciting targeted messages, and getting consumers fired-up en-masse. Maybe that's due to Thorsten's ultra-conservative image or that the new CMO is NEVER heard from; who knows? Whatever the/ir reasons, I - personally - would read the whole Marketing division (from the CMO down to the mid-level managers) the riot act. ANY success the Z and Q10 have will happen despite, not because, of BBRY's Marketing ... just saying.
And "YES!" I AM available to join/run the Marketing "team" (and - again - yes, I AM in BBRY-town!).

What it ALL adds up to is this: BBRY CANNOT physically log 1 million device sales in US-weekend #1 to please ANY analyst; simply factoring-in locked contracts alone makes that logistically improbable.
While that doesn't automatically mean that sales are "disappointing" or even "disastrous" it DOES potentially bode well for robust ongoing & future sales ... IF the competitive device landscape remains relatively unchanged.
The fact is, ONLY BBRY and the carriers/resellers KNOW the actual facts, and analysts are merely making lucky-guesses based on a flawed process and data set, possibly even hidden stock-holdings motives.
Should be easy to predict that even IF BBRY sold a million units since Feb 1st vs. market expectations of 900,000, it'll still be called a flop by the pundits. If so, the deck is stacked against BBRY and they can't win at any cost, but you can bet there will be much $$ made on short-selling the stock (hmmm, [I]"why else roll out most-likely-fictitious negative news after a significant recent rise in the stock price ....???")[/I]

Personally, when my "upgrade penalty" period ends in November, I expect the pre-Christmas incentive season to be in full swing AND, possibly, those other 3-4 promised devices to be available - a Torch(9800/10)-style SLIDER, PLEASE!!!! - and mmost or all of these issues to be resolved.
There might also be another 50,000 apps which I won't need, but the rest of the sheep are soooooooo focused on (I'd be happy when Skype appears, but it's not a deal-breaker).

In short, there was no "thinking" behind the Goldman report & downgrade; more like a choreographed sketch by 2 of the 3 major players (Analyst/s, AT&T) to put a pie in the face of the third (BBRY). If it were at all funny, it might qualify for Three Stooges status ... Unfortunately, no-one's laughing today, except the main villains (AAPL, SAMS, MSFT, NOKI, GOOG).

Happy Unboxing and Playing with your Z10s ... Cheers from a loyal - and holding on & out - 9800 user!

Chris, you claim years of experience as an analysis yet you have to rely upon a third-party to obtain a research note or whatever it's called about Goldman Sachs - a Government Saved Our Assets Investment Bank - revised rating on BlackBerry? Respectfully, I am curious about how circumstances which prevented you obtaining a copy directly from GS.

Posted via CB10 from the BlackBerry Z10

Thursdays release means nothing more than just closing the old days. One should look at two quarters from now.

Posted via CB10

Let's not overlook that this could be a classic pump and dump by GS. Anyone know what their short position was in BBRY when they downgraded it?

It seems most analyst that is covering Blackberry(i don't care from which investment house)are doing this as high school assignment.
They read the findings on Google news and come to a conclusion,This information is now publish with great fan fair,huge headlines ans 2 second spot on TV.
Most of these analyst works as shopping cart collectors at your favorite box store and write at night for the extra cash.
There are never any stats publish about someone who switch phone or stores running out of phone due to strong demand. Why only the US market have problems and not the rest of the world? Why US analyst are speaking for the rest of us?
I have never know Blackberry fan to line up for phone.Unlike iPhone which use to be release to a (1) major store in some cities causung a bottle neck.

When Goldman (or anyone for that matter) calls these various stores and asked how many BB10 phone they've sold, who are they talking to? The first person who answers the phone or the store manager? How hard are the numbers that are being represented? Are these actual sales or some top of mind reply? Do the sales numbers represent "walk in" sales only or do they include pre-orders? How statistically valid is it to call 20 stores, when AT&T has some 2200 stores?

The Q10 launch will be HUGE. My example, I prefer the Z10, but I cannot up-grade untill my wife can do the same with a Q10 (same plan, expiry etc).
Also does anyone think that the U.S.release delay of 6 weeks may well have been due to pressure on carriers from big brothers at Apple and Adroid? Thoughts anyone!!!

Thanks Chris. Good stuff as always. Glad you put in the # of AT&T stores. If AT&T has 2200 corporate stores as well as additional reach into Best Buy and Radio Shack (for fun, let's say a combined additional thousand stores), a "check" of 20 stores may be a barometer but the sample size is very small and at more risk for error.

Useless article Chris. Doesn't make sense. I personally went to ATT stores--5 of them,. ATT has given the boot to BB. Boulben has done a horrible job. So has Alec Saunders. Alicia Keyes is a waste of shareholders' money but hey when did BB ever care about shareholders. They get big fat paychecks, Crackberry is doing well.... BB shorts are doing well, .. the only people who are eating crow and totally F&&&&D are the shareholders. Heins is at best a mediocre, under him, stock has gone down and it was already down 90%.

Go ahead blame and hurl insult at me... but BB shareholders are the ones who should be mad. How can this board give $7 mill to Jim and Mike who destroyed this company? Yes they got 25 million shares for building it but then why give for destroying it? Crony capitalism, perverse incentives . Chris how come you dont write about that... maybe by being a little objective, Crackberry can attract more than the BB equivalent of isheeps.

As always, the amount of insight is great. I can't wait to find out the earnings even though I'm not an investor or stockholder of any kind. :)

"They checked over 20 stores which consist of company-owned stores as well as Best Buy and Radio Shack stores..." I just left Best Buy and Radio Shack and neither store as the Z10 on display and don't plan to display it. Best Buy even said that it will not get displayed unless BlackBerry "pays for displaying the device which is something they are not going to do." If the Best Buy statement is true, that is VERY unfortunate that BB is not trying to put and keep the Z10 in the mind of the public. As a Black Berry lover, I am very disappointed that I've only seen about 2-3 Blackberry commercials since it's Superbowl revealing but I see iphone and Android based phone commercials at least 2-3 times in one television program.

I really do hope BB start promoting these and the Q10 better. I've heard statements on the forum about "target consumer" and "dumb commercials" from Apple & Samsung. But they are getting exposure - the thought of the phone is in the mind of the consumer. I met a few people who did not know that BB was still making phones. (sorry for ranting).

The Verizon sale rep that I spoke was really excited about the phone but added, "no one knows about it." Please don't take the "no one" literally but for what's it's worth A lot of people know about the Galaxy III and even the Galaxies that are out & coming but not the Z10.

I hope BB realize that they HAVE to invest more advertising this incredible product.