Blackberry seeks probe into 'false report of high returns'

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By Noel Young, Correspondent

April 13, 2013 | 3 min read

Blackberry is asking securities regulators to investigate a report that its new phones have high return rates.

The Blackberry Z10

The “false” information may have been released in a deliberate attempt to manipulate its stock price says the smartphone maker, according to Bloomberg.

Detwiler Fenton & Co., a financial-services firm in Boston, had said 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, said Bloomberg.

Ontario-based BlackBerry, says sales are meeting expectations - and returns 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.”

It is worth quoting Blackberry's denial in full:

"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."

The phone went on sale in the UK before the US . British commentator Michael Collins wrote in Seeking Alpha : " Having personally visited over 50 stores in London over a two-month period, one comment that stood out was the comment that they had very little problems with the phones post sales."

He ridiculed the Detwiler Fenton comment that "the return rate exceeds the sale rate for the Z10." His headline wondered: How Can Returns Possibly Exceed Sales?

BlackBerry hopes the new Z10 phone -- and the Q10 soon to arrive -- will revive its fortunes, according to Bloomberg

Its stock has more than doubled since September but some short sellers are betting that the comeback will fail.

Anne Buckley, a spokeswoman for Detwiler Fenton, didn’t immediately return a message from Bloomberg seeking comment.

The stock finished last night at $13.64 in New York - slightly up on the day.

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