TORONTO – Shares of BlackBerry slipped about 8 percent on Thursday as analysts questioned whether the handset maker's turnaround plan would succeed in the brutally competitive smartphone market.
Discounting of the Z10, its recent handset meant to take on the likes of Apple Inc's iPhone and Samsung Electronics Co Ltd's Galaxy line, has also raised concerns, according to one trader.
BlackBerry launched its latest handsets based on its much delayed BlackBerry 10 operating system in January, but they started selling in the United States only in March.
Investors have been skeptical about the company's prospects of regaining its lost glory and stealing back market share in the U.S. market. The stock has lost a quarter of its value since hitting a 52-week high in January.
"(The) recent optimism surrounding the ability of the new BlackBerry 10 products to get BlackBerry back to long-term profitability will ultimately prove unwarranted," Pacific Crest analyst James Faucette wrote in a research note.
"We see a combination of market maturity, more aggressive pricing from competitors and smaller resources than those of competing ecosystems frustrating the comeback attempt," added the analyst, who has an "underperform" rating on the stock.
This followed a Credit Suisse note, which suggested that the surprisingly strong gross margins that BlackBerry reported last month may have been driven more by lower amortization levels and less by operational improvements.
The weakness in BlackBerry came amid the backdrop of a broad selloff in the technology sector, led by Microsoft Corp and Hewlett-Packard Co, after an influential tech research firm said personal computer sales plunged the most in two decades.
Options on the stock were busy as well, with 107,000 puts and 87,000 calls traded so far on Thursday afternoon, according to options analytics firm Trade Alert.
The weekly $13.50, $14 and $14.50 strike puts expiring on Friday after the close are among the most active contracts in BlackBerry, on concerns that the recent drop in the stock will continue, WhatsTrading.com options strategist Frederic Ruffy said.
BlackBerry shares were down at C$13.84 on the Toronto Stock Exchange. Its Nasdaq-listed shares were down 7.8 percent at $13.53 in afternoon trading.
(Reporting by John Tilak and Euan Rocha in Toronto, and Doris Frankel in Chicago; Editing by Bernard Orr)