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New BlackBerrys fail to impress Wall Street as concerns linger

While the new BlackBerrys are a big improvement, there is some level of disappointment among investors, causing the stock to continue its weeklong tumble.

RIM CEO Thorsten Heins unveils the BB10's final features, BlackBerry Z10 and BlackBerry Q10.
CNET/Sarah Tew

BlackBerry's splashy launch of two well-received smartphones wasn't enough to halt a weeklong slide in its stock.

Shares are down 6.7 percent to $12.86 in morning trading. In total, BlackBerry has lost more than a quarter of its market value over the last four days.

While there seems to be universal acknowledgement that the newly introduced BlackBerry Z10 and Q10 smartphones represent a massive improvement over old BlackBerrys, there remains some disappointment with yesterday's announcement. More importantly, there also is a persistent concern that BlackBerry may have arrived too late with its last-ditch effort to get back into the smartphone game.

"We believe the new devices will do more to retain existing BlackBerry subscribers than to lure new subscribers," S&P Capital IQ analyst James Moorman said in a downgrade of the stock's investment rating.

It may be only natural for BlackBerry to see a retreat in its stock after its torrid run over the past six months. The stock has doubled in that period on anticipation and excitement over the announcement, and this week may have represented a sell-on-the-news situation.

But there definitely was some disappointment too. In particular, the fact that the U.S. carriers wouldn't start selling the Z10 touch-screen phones until mid-March was a negative, considering that many had expected a February launch.

The news that the Q10, which has the physical keyboard, won't launch until at least a month later was also disappointing, since many traditional BlackBerry users may gravitate toward that device. And while BlackBerry has done a good job attracting developers, many key apps are still missing from its BlackBerry World app store.

There is also lingering concern that the platform may not have what it takes to cut through the dominance of Google's Android and Apple's iOS operating systems, which collectively made up 92 percent of smartphone sales worldwide last quarter. That dominance has led to flourishing application ecosystems, where BlackBerry still lags far behind.

"We continue to believe that BB10 faces a daunting uphill battle against iOS and Android," William Power, an analyst at Robert W. Baird, said in an investors note, adding that the launch reminded him of Palm's ill-fated WebOS.

While it may do well with the traditional BlackBerry users, the company will need to attract iPhone and Android users if it wants to sustain itself for the long term. Some aren't convinced.

"While we were impressed with the features of the new OS, we believe RIM has only closed the gap with more mature smartphone OS platforms and offered limited differentiating services or features to win back customers from more mature ecosystems," Canaccord Genuity analyst Michael Walkley said in an investors note.

While BlackBerry did do a good job of getting the Z10 out in the market early in some regions, including in the U.K. and Canada, the lack of full distribution right away has some worried that the current quarter would continue to be disappointing. Moorman, for instance, believes that the company will again lose subscribers, something it did for the first time last quarter.

Financially, BlackBerry will likely have a tough quarter as it ramps up spending for its big marketing campaign for BlackBerry 10. And the company likely won't have a true indication of BlackBerry 10's performance for another quarter or two.

Updated at 6:38 a.m. PT: with an updated stock quote after the market opened.