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BlackBerry's Grim Prospects: Z10 Launch Disappoints (Update 1)

Updated from 8:58 a.m. EST to provide analyst comments regarding earnings in the tenth paragraph.

NEW YORK ( TheStreet) -- The launch of the BlackBerry (BBRY - Get Report) Z10 didn't go as well as some were expecting. That has caused several Wall Street analysts to rethink their positions, with one research firm even downgrading the name.

Goldman Sachs analyst Simona Jankowski removed the Waterloo, Ontario-based technology firm from Goldman's Americas Buy List due to a disappointing launch at AT&T (T - Get Report); the overall consensus had moved higher on BlackBerry since Goldman added the company to the Buy List in late November. Since the Nov. 29 add, shares are up 34%, compared with a 10% climb in the S&P 500. Jankowski downgraded the stock to "neutral," and lowered the price target to $17 from $19.

The concern has been that BlackBerry 10 is going up against smartphone behemoths like Apple (AAPL - Get Report) with its iPhone, Samsung with its Galaxy S series, and Google (GOOG - Get Report) with the Nexus. The chances of outright success are limited.

"We now assign a 20% probability of success for BB10, down from 30% previously, as the disappointing launch of the Z10 at AT&T reduces our confidence that sell-through of the BB10 will be successful in the important US market," Jankowski wrote in her report.

BlackBerry has been losing market share for some time now, owning 3.2% in the fourth quarter, according to research firm IDC. The hope is that BlackBerry 10 will turn that around, but a weak domestic launch makes those prospects a bit harder.

Citi analyst Jim Suva, who rates BlackBerry "sell," noted his checks revealed "shockingly low support by AT&T with extremely limited signage & more signage for Samsung & Apple products," as well as poor product placement, a lack of knowledge on the device, and a surprising low amount of inventory.

Less than 5% of AT&T stores around the country sold out on initial stock of the BlackBerry Z10, with most stores getting a dozen or two smartphones. "In summary, the initial Z10 in the US is a disappointment and a stark contrast to the successful Europe & Canada launches," Suva wrote. He has a $6 price target on BlackBerry shares.
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