Deutsche Bank analyst Brian Modoff said that based on a survey conducted in 60 stores including 20 stores of AT&T Inc. (NYSE:T) and 40 stores of Verizon Communications Inc. (NYSE:VZ), the results were broadly poor.
Modoff described the first weekend sales of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)'s BlackBerry Q10 as the “most negative survey result” computed by the research firm among the five surveys it completed. According to him, the result of the survey aligns with the research firm’s longer-term view for the Canadian smartphone manufacturer.
Sales Reps Are Not Well Trained
Modoff stated that based on the observations of sales representatives, some of the loyal customers of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) upgraded their old BlackBerry smartphones. Fifty percent (50 percent) of sales representatives who responded to the survey believe that the sales of the BlackBerry 10 were the same with the BlackBerry Z10. The other 50 percent said customers prefer the Z10, which is contradictory to the common notion that the Q10 would record a better sales performance.
Modoff discovered that sales representatives were not well trained and some have no knowledge about the features of the BlackBerry Q10, and they are recommending other brands such as Samsung Galaxy SIII/1V, iPhone 5s, and HTC One.
Modoff emphasized that the negative results of the survey bring added pressure for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) to perform well in other geographies to compensate it poor performance in the United States, which is the biggest challenge for the company.
BBRY Could Still Surprise Us
On the other hand, the analyst believes that Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) results this week could bring an upside surprise over the near term. The company is expected to report a decent unit volume due to extensive channel fill. For this reason, the research firm maintained its hold recommendation for the stock of the company with a price target of $8.00 per share.
Modoff explained that the research firm’s price target is a DCF analysis using 11% discount rate and 3 percent growth rate, consistent with the industry’s longer-term average growth rate. He added, “Upside risk for our price target include the potential for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)'s new product, the Playbook to outpace our expectation.” Furthermore, he said that a better than expected consumer adoption on the existing products of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) could increase sales higher than the research firm’s expectation.