Apple's iPad 2.EMMANUEL DUNAND/AFP / Getty Images
The mobile gadget industry will dominate investor chatter this week, and not just because Research In Motion Ltd. is releasing its long-awaited tablet computer.
On Wednesday, a day after RIM puts its BlackBerry PlayBook on store shelves in North America, Apple Inc. will release its fiscal second-quarter results. Analysts expect the company to post earnings per share of $5.35 (U.S.), compared with earnings of $3.33 during the same quarter a year ago, according to a Reuters survey.
The results will present investors with a small but telling first sign of just how well Apple's iPad 2 is doing. The company launched the second generation of its best-selling tablet in mid-March, and the iPad line continues to dominate the next-generation tablet market. A recent Gartner research report predicted Apple will continue to control a majority of the tablet market until 2015, when a slew of tablets running on Google's Android operating system will finally narrow the gap.
But investors will also be looking to see how much of a halo effect Apple's mobile devices have on the rest of the company's product lines. In recent years, Apple has settled into a predictable and profitable cycle of product upgrades, with yearly updates to its iPhone and iPad lines. In turn, consumer adoption of those products has helped push sales of more traditional Apple offerings, such as desktop computers.
Investors will also look for clarity on the effect the Japanese natural disaster has had, and will have, on the company's supply chain. A number of major tech firms have lowered guidance or suspended some production as a result of the disaster. But analysts are not certain Apple will suffer production declines as steep as some of its competitors.
"Based on strong sell-through trends for both iPhone and iPad, and due to Apple successful leveraging of its leading market position to secure component supply through the Japanese tragedy, we believe Apple will maintain dominant value share of both the tablet and smart phone markets," Canaccord analyst T. Michael Walkley said in a research report earlier this month.
This week will be largely dominated by tech stock news, as a number of heavyweights report quarterly earnings. Among the companies scheduled to report are International Business Machines Corp., Intel Corp. and Yahoo Inc.
In face of increased competition, Sears not standing still
It's been a year since its U.S. parent tightened its grip on Sears Canada Inc. by raising its majority control to more than 90 per cent. The Canadian retailer was expected to have been taken private by now - but it still hasn't happened.
And so Sears Canada shareholders will head into Thursday's annual meeting looking for insights into how chief executive officer Dene Rogers plans to bolster the business amid rapidly intensifying competition.
Mr. Rogers' low-key staging of the meeting underscores his push for efficiencies - and keeping a low profile. The gathering is scheduled for 8 a.m. at the retailer's head office, which is actually on the fifth floor of its flagship store in Toronto - two hours before the outlet opens. The only way to get in the store at that hour is through an employee entrance, tucked away down a laneway along the west side of the store.
The CEO's bigger task is to woo back customers. With a stronger loonie, they're being lured across the border by cheaper prices, even as rivals here sharpen their game. The U.S. owner of key competitor, Hudson's Bay Co., is contemplating taking it public later this year to help raise funds for its revitalization efforts. By 2013, discounter Target Corp. will open its first stores in Canada, and other foreign chains are preparing to set up shop here.
But Mr. Rogers isn't standing still, either. To try to stem the flow of cross-border shopping, Sears is lowering prices and pumping up promotions, spokesman Vincent Power said. A blazer that cost $59.97 a year ago is now $49.97, 16.7-per-cent less, he said. The chain has cut prices after pushing its suppliers to drop their wholesale rates. It has run two storewide promotions to match U.S. prices in the past five months.
At the same time, the price rollbacks have taken their toll on Sears' bottom line. Last year, its profit tumbled 36 per cent to $150-million as sales fell 4.7 per cent to $4.9-billion. Big-ticket appliances and electronics are among the products whose margins were shaved.
The company pointed to other factors for the weaker 2010 results, including tighter consumer discretionary spending from the new HST in Ontario and British Columbia, rising interest rates, high unemployment, unseasonable weather, as well as the expiry of the home renovation tax credit early last year.
On other fronts, Mr. Rogers is investing in select areas to improve merchandise offerings. His team is revving up Sears' apparel lines, including re-launching its private label Attitude to cater to a style-conscious, younger clientele. The retailer stocks them in new in-store "modern shops" whose brands' sales grew 32 per cent in 2010 from a year earlier, it said. Its stalwart Jessica label, a top seller in Canada designed for an older classic-styled woman, enjoyed a 5.9-per-cent sales lift in 2010.
Sears has added luxury mattress brands, among them Stearns & Foster and Simmons Beautyrest, and new furniture lines, including Natuzzi's Italsofa.
And it's racing to cash in on its leading e-commerce site at a time when other major chains are selling little, if anything, online. In 2010, Sears.ca carried 150,000 products, up from 90,000 a year earlier, Mr. Power said.