These are stories Report on Business is following Thursday, April 25, 2013.
Apple vs. RIM
As investors focus on the declining fortunes of Apple Inc., Research In Motion Ltd. is making quiet gains on the back of strong reviews for its new BlackBerry models.
Apple shares closed just about flat yesterday after an up-and-down day driven by a first-quarter earnings report that marked the first year-over-year decline in profit in about 10 years.
The stock rose today, but that follows a rash of cuts to price targets by analysts.
That comes despite a 15-per-cent increase in its dividend unveiled with its results late Tuesday, and a boost to its stock buyback program to as much as $60-billion (U.S.).
Analysts at RBC Dominion Securities, for example, today cut their price target on Apple shares to $475 from $550.
“Bulls will point towards better capital allocation and new product launches, while bears will focus on declining gross margins and delays in new launches,” the RBC analysts said.
“We believe the stock is stuck in a trading range ($375-$425) til we witness the launches in ‘fall’ time frame.”
Apple shares have tumbled by more than 40 per cent since peaking last September at more than $700, posting a 52-week high of $705.07 and a 52-week low of $385.10, just shy of today’s mark.
RIM, which has rebranded itself as BlackBerry but whose legal name is still Research In Motion, is trying to regain its past glory, with new BB 10 models.
RIM shares closed yesterday at $14.90 on Nasdaq, up by 4 per cent, and rose up above $15 today before slipping marginally.
RIM stock, too, has bounced around, with a 52-week high of $18.32 in the U.S., but is now well above its 52-week low of $6.22.
The shares are up this week after good reviews for the new keyboard version of the latest BlackBerry. The touchscreen model has been out for a few months.
- Apple rolls out cash as profit sags, analysts cut targets
- Omar El Akkad's review: With near-perfect keyboard, Q10 a better BlackBerry than Z10
- Scott Barlow in ROB Insight (for subscribers): Four tech stocks without Apple's declining margin problem
Britain's economy picks up slightly
As one observer put it today, the difference between no growth and low growth is “fairly trivial.”
As The Globe and Mail’s Eric Reguly reports, Britain managed to eke out first-quarter economic growth of 0.3 per cent, according to the latest measure from the Office of National Statistics, thus avoiding what would have been its third recession in five years.
That’s good news for the government, given that markets had feared the worst, but it’s no great shakes.
It highlights the troubles of this post-crisis era, particularly in Europe, parts of which are hobbled by recession and staggeringly high unemployment.
A new reading today in Spain, for example, showed unemployment at a record 27.2 per cent, with more than 6 million people out of work.
“It’s certainly nice to avoid a triple-dip recession although the difference between ‘no growth’ and ‘low growth’ is fairly trivial in reality,” said Guy Foster, the head of portfolio strategy at Brewin Dolphin.
“Consumption has been weighed down by deleveraging as households continue to pay down mortgage debt and boost savings in preference to spending,” he added in a research note.
- U.K. dodges triple-dip recession, but Spain unemployment tops 6 million
- Linda Nazareth's Economy Lab: Population drop in Spain a bad omen for Europe
Potash gives up on ICL
Not that it was going to win the fight, but Potash Corp. of Saskatchewan has officially abandoned its quest for Israel Chemicals Ltd.
Still, as The Globe and Mail’s Pav Jordan writes, things are looking up for the world’s biggest fertilizer company.
Political opposition to what would have been a huge takeover of ICL sent Potash Corp. packing, ironically just like BHP Billiton was sent packing in 2010 when it battled for control of the Canadian company.
Potash Corp. today also posted a first-quarter profit of $556-million (U.S.) or 63 cents a share, topping the $491-million or 56 cents of a year earlier.
Chief executive officer Bill Doyle was optimistic as he released the report:
“We had significant growth in our potash performance as global buyers returned to the market in earnest after taking a brief pause late in 2012. This environment enabled us to deliver earnings near the top end of our guidance and laid the foundation for what we believe will be a successful year.”
Precision Drilling profit slips
Precision Drilling Corp. posted a lower first-quarter profit today, with an earnings report that highlight the issues in Canada’s energy patch.
The company, a big provider to the industry, earned $93-million or 33 cents a share in the first quarter, compared to $111-million or 39 cents a year earlier, The Globe and Mail’s Bertrand Marotte reports.
Drilling activity slipped 23 per cent.
“North American drilling activity was down this quarter versus the prior year quarter as a result of continuing low natural gas prices, oil transportation bottlenecks resulting in regional oil price discounts, and general global economic uncertainty persisting for much of the quarter,” the Calgary-based company said.
Verizon said to eye control
Verizon Communications Inc. may be poised for a massive cash-and-stock bid that would see it gain full control of Verizon Wireless, the biggest such carrier in the United States.
Reuters reports today that Verizon has hired advisers on a potential $100-billion (U.S.) deal with Vodafone for the 45 per cent of the wireless carrier it doesn’t already hold.
Sears could sell more assets
Sears Canada Inc. is still looking at selling off non-strategic assets, The Globe and Mail’s Marina Strauss reports.
At the retailer’s annual meeting in Toronto today, chief executive officer Calvin McDonald said he has no plans to quit more store locations, but would certainly look if the opportunities to “create value” arose.
“We’re here to remain in Canada to trade and become a relevant retailer,” he said.
“In that there are non-strategic assets that we own today, if the opportunity is right to create value through those, we will explore those opportunities.
Streetwise (for subscribers)
ROB Insight (for subscribers)
- Why Marchionne should fold Fiat into Chrysler
- Four tech stocks without Apple's declining margin problem
- Imperial Oil profit falls 21 per cent
- Shoppers Drug Mart sales grow on drug, food, cosmetics gains
- Facebook says six-month review shows privacy practices sufficient
- Colgate profit matches forecasts
- For Toronto office tenants, bidding wars increasingly common: report
- EU antitrust body seeks views on Google concessions