These are stories Report on Business is following Thursday, June 28, 2012.
How bad will RIM earnings be?
Investors are waiting to see the damage when Research In Motion Ltd. reports what is expected to be a quarterly operating loss after markets close today.
The BlackBerry maker has already warned of the loss, but, since it stopped providing detailed forecasts, it's anyone's guess as to how far the Canadian technology company has fallen.
RIM is in the midst of a massive turnaround, with a new chief executive officer.
As The Globe and Mail's Iain Marlow writes in today's Report on Business, analysts will be watching to see how deep the company is cutting, already having announced layoffs, and whether RIM will take another inventory hit as unsold devices pile up.
RIM is also expected to report that its cash reserves have climbed from the more than $2-billion it held at the end of its last quarter.
The company is pinning its hopes on new models, but analysts are awfully downbeat on the stock, which is now below $10.
Just this week, Morgan Stanley analysts slashed their price target on the shares to $7 (U.S.), warning that "the fundamental story at RIM is essentially broken" and that the next six to nine months "are likely filled with the competing factors of rapidly deteriorating fundamentals on the one hand and stories of potential strategic options on the other, leaving the stock pushed and pulled strongly in both directions."
- Analysts to focus on layoffs, inventory when RIM releases results
- Samsung raises stakes in global smartphone battle
- 5 years of the iPhone: 250 million shipped, $150-billion revenue
Petronas strikes deal for Progress
Malaysia's Petronas has struck a $5.5-billion deal for Progress Energy Resources Corp., and is bending over backwards to pledge a strong base in western Canada.
The two companies announced today that the Canadian subsidiary of the Malaysian oil and gas concern is offering $20.45 a share, a hefty premium to the closing price of Progress on the Toronto Stock Exchange Wednesday, The Globe and Mail's Carrie Tait reports.
The companies pledge to keep the head office in Calgary, with a liquid natural gas office in Vancouver.
"This development will generate substantial economic benefits for the provinces and local communities, as Petronas' access to capital will help to bring Canada's abundant and clean-burning natural gas resources to global markets, leveraging our well-established and extensive network of customers worldwide," said Datuk Anuar Ahmad, an executive vice-president at the Malaysian company.
As Streetwise columnist Boyd Erman notes, the deal is also a win for the Canada Pension Plan Investment Board, which bought into Progress two years ago for $350-million, or $12.60 a share.
- Petronas to buy Canada's Progress Energy for $5.5-billion
- Boyd Erman's Streetwise: CPPIB wins big on Progress sale
Don't expect much from summit
There's much ado being made today about the EU leaders summit in Brussels, but observers expect nothing of substance.
There was a brief flurry of excitement when people believed Germany's finance minister was suggesting his government was prepared to bend on the idea of a common euro zone bond, but what he actually said was that that wouldn't happen until there is a common fiscal policy.
"We have to be sure that a common fiscal policy would be irreversible and well co-ordinated," Wolfgang Schäuble told The Wall Street Journal ."There will be no jointly guaranteed bonds without a common fiscal policy."
To me, that set the stage for the two-day meeting, which is aimed at easing the crisis in the euro zone, as it highlighted Germany's repeated opposition to new measures, such as a euro bond and banking union, and its demands for fiscal discipline throughout the 17-nation currency union. There appears to be no softening on Germany's part.
"If anything the German Chancellor appears to be tiring of being constantly blamed for the ills of the European continent and as such it would appear that positions are now starting to become entrenched," said senior analyst Michael Hewson of CMC Markets.
The other countries are pressing Germany and its chancellor, Angela Merkel, to bow, but she won't, and has said there are no easy fixes here.
"A sour mood has descended on financial markets this morning as investors await the beginning of the latest EU summit," said analyst Chris Beauchamp of IG Index in London, referring to the two-day gathering in Brussels, which is beginning today.
"Eighteen such previous summits have had no discernible effect on the crisis, being full of sound (and the occasional bit of fury) but ultimately signifying little. A pre-summit meeting between the two ‘big beasts’ of the euro zone, Germany and France, failed to produce anything of substance, and it will probably be the same story with this get-together. Yesterday’s better U.S. data is now a distant memory; the markets' march higher was accompanied by a steady rise in Spanish and Italian yields, whose upward move has continued today."
One might be best to set aside the hints from Germany, at this point, at least, because there are no signs the euro zone is moving toward a resolution.
"Tensions are running high in the currency union, and even comments from Germany about being open to negotiation of euro bonds were not sufficient to lift sentiment," Rupert Osborne, a futures dealer and Mr. Beauchamp's colleague at IG Index, said of the market reaction.
"They might be willing to discuss the topic, but they still want tighter EU control of national budgets first; something they're not likely to get any time soon."
Competition chief steps down
Canada’s competition commissioner is leaving her post two years ahead of schedule, The Globe and Mail's Steve Ladurantaye reports.
Melanie Aitken will step down in September, according to the Competition Bureau. She was appointed to a five-year term in 2009, and promptly made a name for herself as an aggressive watchdog who wasn’t afraid to take on some of Canada’s largest industries.
News Corp. to split
Rupert Murdoch's News Corp. confirmed today that it plans to split into two publicly traded companies, separating its media and entertainment operations.
"There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corp.'s businesses to grow to new heights, and enable each company and its divisions to recognize their full potential – and unlock even greater long-term shareholder value," Mr. Murdoch said in a statement.
One company would hold News Corp.'s media properties, including newspapers in Australia, Britain and the United States, among other assets. The other would hold its broadcast and cable operations, and its movie and TV production business.
- Barrie McKenna's Economy Lab: Canadian, U.S. CFOs grow glum on economic outlook
- U.K. mired in recession, central bank poised to act
- JPMorgan trading losses may reach $9-billion: Report