These are stories Report on Business is following Wednesday, Jan. 25, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Apples a day ... People like to play with numbers and point out neat things after Apple Inc. reports every quarter. Today's no different given its stellar first-quarter results late yesterday. Here's a roundup from various sources:
- Apple sold an average of almost 750,000 iPhones, iPads, iPods and Macs every day.
- Apple's profit was $13.06-billion (U.S.) in the quarter alone. The market cap of Research In Motion Ltd. as of yesterday's close - its stock rose today - was $7.95-billion (Canadian).
- Best estimate is that about 370,000 babies are born each day around the world. Apple's daily average iPhone sales were just shy of 380,000.
- Apple's cash hoard of almost $100-billion (U.S.) is just shy of Angola's economic output. The cash alone is bigger than the market caps of some 95 per cent of the companies that make up the S&P 500.
- Apple's quarterly revenue was $46.33-billion, which topped estimates by $7-billion. That $7-billion surprise topped RIM's total revenue in its last quarter.
- Based on their combined market cap of some $70-billion (Canadian), Apple has enough to buy Canada's major phone companies, and give us all a break on fees. But for Canadian ownership restrictions, of course. It could also buy, say, two major Canadian banks, and give us all a break on fees. But for the ownership restrictions, of course.
Apple's profit climbed in the quarter to $13.87 (U.S.) a share, from $6-billion or $6.43 a year earlier. Revenue surged from $26.74-billion a year earlier.
Apple sold 37.04 million iPhones, up 128 per cent, 15.43 million iPads, up 111 per cent, 15.4 million iPods and 5.2 million Macs. It forecast second-quarter revenue of $32.5-billion and earnings per share of $8.50.
- Apple profit doubles, thanks largely to 37 million iPhone sales in three months
- Apple again passes Exxon as most valuable company
- RIM's marketing challenge: Revive the 'CrackBerry' addiction
Fed to hold tight through late 2014 The Federal Reserve signalled today that it expects to hold its key rate near zero until late 2014, marking a stunning extended period of emergency lows.
"Clearly, the Fed will do whatever it takes to reboot economic activity, particularly housing," said Sherry Cooper, chief economist at BMO Nesbitt Burns. "Now, let’s see if the ECB will have the guts to follow suit."
The Federal Open Market Committee, the central bank's policy-setting panel, held its rate steady today, and said the economy has expanded modestly despite the slowdown in global growth, The Globe and Mail's Kevin Carmichael reports from Washington.
"While indicators point to some further improvement in overall labour market conditions, the unemployment rate remains elevated," it said in its statement.
"Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed."
The Fed's actions show it hasn't seen anywhere near of the improvement in the economy that it wants. Its biggest concerns are jobs, housing and overall growth, said senior currency strategist Camilla Sutton of Scotia Capital, and "they're potentially failing on all three."
Here's the key line from the Fed statement: "In particular, the committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
That changes the timeline from mid-2013, and pushed the Canadian dollar up as the U.S. currency weakened and on further suggestions that the Bank of Canada will act on rates before the Fed moves.
"Markets had anticipated that the Fed would shift the timing into 2014, which is consistent with our own call for no hikes through at least 2013, but we will get more detail later today when it releases individual FOMC views on the appropriate start time and pace for hikes," said chief economist Avery Shenfeld of CIBC World Markets.
House prices slip Home prices in Canada dipped 0.2 per cent in November from a month earlier, according to a new measure, marking the first drop since the fall of 2010.
Prices fell in eight of the regions measured by the Teranet-National Bank index, notably in Calgary, where prices slipped 1.6 per cent, and Vancouver, down 0.9 per cent.
Prices also dropped in Vancouver, Toronto, Quebec City, Ottawa, Winnipeg and Hamilton, though rose in Edmonton, Montreal and Halifax.
"The simultaneous monthly declines in Toronto, Hamilton and Winnipeg are noteworthy in that these three markets are considered tight," said Marc Pinsonneualt, senior economist at National Bank of Canada, adding that November's showing was the first decline since "a brief correction" in September, October and November of 2010.
On an annual basis, though, prices were up across the board, though varied depending on the city. Toronto, at 10.8 per cent, and Vancouver, at 9.1 per cent, led the pack, followed by Winnipeg (7.5 per cent), Montreal (7.2 per cent), Quebec City (6 per cent), Hamilton (4.4 per cent), Ottawa (4.2 per cent), Halifax (2.8 per cent), Hamilton (1 per cent) and Calgary (0.5 per cent).
Many economists see Canada's real estate market cooling, and, like most, Mr. Pinsonneualt doesn't expect a collapse.
"The current period of softness in house prices follows a few months of above-normal increases," he said.
"This is the same pattern as the one that occurred from April 2010 to November 2010 ... which ended in a limited price correction," he said in a report outlining the index.
"For sure, according to the Canadian Real Estate Association, the national existing home market finished 2011 in balanced conditions ... Therefore, fears that the current trend will degenerate into a sudden and huge price correction similar to the one that occurred in the U.S. .. are premature, especially with mortgage rates at their lowest level on record. Given such low rates, we are pleased to see that home sales have increased rather moderately lately, suggesting that households do care about their debt level. In our view, the performance of the Canadian labour market does not herald a protracted period of substantial house price declines."
Europe outlook dims Britain is flirting with recession and Greece with bankruptcy as Europe's outlook darkens.
Britain's economy contracted by 0.2 per cent in the fourth quarter of last year, leaving one more quarter to go before a technical recession is declared. The numbers from the Office of National Statistics today were slightly worse than expected.
"A drop of 0.2 per cent in GDP is not exactly dire, but with sentiment still so uncertain it provided an unfortunate surprise," said Chris Beauchamp, market analyst at IG Index in London. "Manufacturing activity fell by 1.2 per cent, while the services sector saw neither growth nor contraction."
The entire euro zone is believed headed toward a recession, as well.
In Greece - and this is no surprise - there's still no deal with private creditors over the hit they'll take in a debt restructuring. Athens faces a big payment in March, and there are mounting fears that it's headed toward a messy default. Officials said today they believe they could strike an agreement this week, but I wouldn't count on that.
"There also appears to have been a change in tone from EU leaders with respect to the likelihood of a Greek default and their acceptance of just such an outcome, as they try to increase the pressure on the key players in the [private sector involvement]game of chess," said Michael Hewson of CMC Markets.
The one bright spot today is Germany, where a widely watched survey showed business confidence rising to its highest in five months.
- U.K. recession fears rise as economy shrinks in fourth quarter
- Key Greek bondholders meet to 'take stock' of crisis
- Germany's business optimism rises more than expected
- Eric Reguly: Striking truck drivers give Italians a taste of reform
- Europe's 'half measures' won't fix crisis: Soros
Labour market shifts Employment quality in Canada deteriorated last year as more people moved into self-employment and the composition of the labour market tilted towards lower-paying positions, according to a new report from Canadian Imperial Bank of Commerce.
Canada's labour market was lopsided last year, with virtually all of the country's job growth in the first half of the year. The pace slowed considerably in the last six months, and the quality of work worsened, CIBC said in its employment quality index, The Globe and Mail's Tavia Grant reports.
Japan posts trade deficit Hit by natural disasters and a strong currency, Japan's trade might is running out of steam.
Japan today reported a trade deficit, its first since 1980, of ¥2.5-trillion, or $32-billion (U.S.), hurt by the March earthquake, tsunami and subsequent nuclear crisis, as well as the mighty yen.
"But getting bearish ... on the back of a trade deficit is too simplistic," noted currency strategist Elsa Lignos of RBC in London. "It is the current account balance which matters, which is still in surplus and would need much larger trade deficits to turn."
As The Globe and Mail's Greg Keenan writes in today's Report on Business, almost everything that could go wrong for Japan last year did just that.
RBC cuts Barrick target RBC Dominion Securities has cut its price target on shares of Barrick Gold Corp. , citing "potential headwinds" as three new mines near start-up.
"We continue to believe Barrick has the potential to generate strong free cash flow and grow dividends by 25 per cent [a year]as its new mines come online," said analyst Stephen Walker as he cut his target to $62 (U.S.) from $70 and his rating to "sector perform" from "outperform."
"However, we are downgrading Barrick shares to sector perform from outperform due to relative valuation and the potential for negative surprises at its three construction/start-up projects over the next 12 months."
- The great dividend gold rush
- Tim Kiladze's Streetwise: For miners, new reserves are hard to find
- Analysts see gold retesting all-time highs in 2012