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Apple steals the show With the launch of its PlayBook tablet, this was supposed to be the big week for Research In Motion Ltd. . But with its blockbuster earnings report, it turns out that Apple Inc. stole the show.
Unlike the iPad and its successor iPad 2, the PlayBook went on sale with not much in the way of lineups. Of course, it's not the same for RIM because we don't know the extent of corporate sales, which are much more important to the BlackBerry maker, compared to Apple's popularity among consumers.
Analyst Mike Abramsky of RBC Dominion Securities, for example, estimated PlayBook sales of some 50,000 on Tuesday, but he projects RIM can do about 500,000 in its current quarter. More than 10 per cent of the stores offering the tablet were believed to have sold out.
Analyst Tavis McCourt of Morgan Keegan, in turn, sees the potential of the PlayBook in terms of its quality, and he doesn't put too much focus on initial sales, according to Barron's.
While there were favourable reviews, there hasn't been a universal endorsement for the PlayBook, which drew some downright dismal press.
For Apple, though, it was a show-stealing moment.
As Globe and Mail technology writer Omar El Akkad reports today, Apple late yesterday reported second-quarter results that handily topped analysts estimates, with revenue of $24.67-billion (U.S.) and a 95-per-cent jump in profit to $5.99-billion or $6.40 a share, sending its stock higher yet again.
Just about the only thing you could call a downside is that iPad sales were lower than expected because it's so popular that Apple can't keep up with demand. Or, as Apple's chief operating officer so colourfully put it, the company is grappling with "the mother of all backlogs."
Consider this, too: Verizon Communications Inc. today disclosed in its first-quarter earnings how the iPhone has bumped up its wireless subscriber base, but yesterday said it's still deciding whether to offer the PlayBook.
Apple stock climbed today and UBS analyst Maynard Um, for example, boosted his target on the company's stock to $495, up from $465, saying the iPhone continues to shine and investors can "expect continued growth when iPad supply meets demand."
- Apple shines as profit nearly doubles
- RIM puts its PlayBook in motion
- Omar El Akkad's review: PlayBOok tries to chart path between work and fun
- With plenty of upside, RIM shares look enticing
- RIM makes a play for its future
Apple buoys markets Global stock markets climbed today, buoyed by strong earnings from the likes of Apple, which followed other companies yesterday in reporting stellar results.
"In the past couple of days the U.S. earnings season has enabled investors to shrug off the euro woes and budget deficit concerns that dogged the early part of the week," said Yusuf Heusen, senior sales trader at IG Index.
"Intel's strong figures yesterday, followed closely by Apple's blockbusting results, seem to have ignited risk appetite once more and investors will be looking for more of the same before the Easter break."
Along with Apple this week, others, such as IBM Corp. and Intel Corp. , have also come in with strong quarters. Other major companies also reported today.
"While the earnings headlines are good, note that 75 per cent of the S&P 500 companies so far to report Q1 results have beaten expectations, which is pretty average by recent standards," said BMO Nesbitt Burns economist Robert Kavcic.
- GE profit, revenue top Street view
- Xerox's quarterly profit, sales rise
- Morgan Stanley profit drops nearly 50%
- McDonald's profit rises 11%
- Celestica profit, revenue rise
- iPhone boosts Verizon subscriber numbers
Greenback slumps As Scotia Capital's Camilla Sutton puts it, it's "anything but" the U.S. dollar today.
The U.S. currency continues slump, having trended lower all year. Here are six reasons cited by Ms. Sutton:
- Markets are focusing again on the U.S. fiscal mess given the budget fight in the U.S. and the outlook downgrade by Standard & Poor's.
- Expectations that the Federal Reserve will keep interest rates at historic lows while many other central banks have either hiked or are poised to hike.
- Loose monetary policy is "likely fuelling rising commodity and risky asset prices," meaning it's less likely the Fed will be able to boost rates.
- A "massive and co-ordinated run" away from the U.S. dollar and toward "almost anything else."
- The greenback has breached many technical levels, adding fuel to the fire.
- There are widespread rumours that the yuan will be revalued, along with speculation of a Greek debt restruction.
How low can the currency fall?
"Over the last three years, when the USD has materially moved lower, it has generally fallen between 9 per cent and 10 per cent before temporarily stalling before it can build enough momentum for the next leg lower (there are a few exceptions, notably a stunning 11.4-per-cent drop in the fall of 2008)," Ms. Sutton said in a report today.
"From the January high in the USD we have dropped 9.3 per cent," she sadded.
"Historical returns are difficult to project into the future and the current trend is too strong to fight, however chart patterns suggest that there are likely new lows to be achieved in the USD, but a period of rest is likely a percentage point or two away. A period of rest does not always equate to a significant retracement, but it usually does lead to some give back. We expect the USD to trend lower over this year and next and are accordingly USD bears."
Greece probes market chatter Greece has launched an investigation into the market talk speculating the country could soon opt for a debt restructuring.
Greece has denied any such move, and its finance ministry said on its website that it has asked the Athens public prosecutor to investigate in connection with movements yesterday on the Athens Stock Exchange and the price action on government bonds, whose yields have spiked.
"The ministry has sent to the prosecutor an e-mail from traders of an international investment bank that refers to the supposed restructuring of Greek government debt over Greek Easter weekend," the government said.
"Such rumours are of course devoid of any substance and verge on the ridiculous. Nevertheless, since the dissemination of such false 'news' can create concerns among the public at large, the ministry of finance will use all legal means available in order to identify and pursue those responsible."
Greek officials did not name any bank, though The Financial Times reports today that there was an e-mail sent by a Citigroup employee that simply speaks of apparently "increasing noise" about a potential restructuring.
Citigroup says there has been no wrongdoing by the bank or any employee, and it is co-operating with officials.
Nokia profit better than expected Nokia today posted better-than-expected first-quarter profit but warned the next quarter would be difficult as the war with rival phone makers such as Apple Inc. heats up.
In the quarter to the end of March, the world's biggest cellphone maker posted a 1.4-per-cent dip in profit to€344-million on sales that rose 9.2 per cent to €10.4-billion, Globe and Mail European correspondent Eric Reguly reports. Many analysts had expected profits of less than €200-million for the quarter.
CP profit falls Canadian Pacific Railway Ltd. cited unusually harsh winter weather as it posted a drop in first-quarter profit today.
The railway earned $33.7-million or 20 cents a share, diluted, compared to $101-million or 60 cents a year earlier. Revenue was just about flat at $1.2-billion. Operating profit fell to $109.2-million from $206.6-million.
"The first quarter was an extremely difficult winter with weather-related outages significantly constraining our capacity and our service to our customers," said chief executive officer Fred Green.
"We remain committed to delivering our two- to four-year target of a low 70s operating ratio and providing a quality service offering."
Retail sales rise Canadian shoppers put a bit of a bounce back into retail sales in Feburary, but not quite enough to undo January's decline.
Sales rose 0.4 per cent in February, Statistics Canada reported today, and 0.7 per cent when autos are excluded.
"More relevant for growth, retail volumes were up 0.4 per cent, but likely not strong enough to fully offset the earlier-reported steep declines in real manufacturing and wholesaling," said CIBC World Markets economist Krishen Rangasamy. "February GDP is so far looking flattish at best."
Toronto-Dominion Bank economist Francis Fong said the report drives home the point that consumer spending won't be "the same driving" force that it has been, which helped drive the recovery.
"High household indebtedness, a soon-to-be rising interest rate environment, and rising costs of living will moderate the spending capacity of Canadian households going forward."
TD boosts Potash outlook TD Newcrest today boosted its outlook for shares of Potash Corp. of Saskatchewan, as well as its projections for earnings, speculating that the company itself will raise its guidance when it reports its first-quarter results.
Analyst Paul D'Amico raised his 12-month price target on the stock to $61 (U.S.) from $55, though kept his "hold" recommendation.
"We are increasing our potash price forecasts due to better than expected market receptivity and overall higher crop price environment," he said.
Mr. D'Amico also increases his earnings-per-share forecast to $3.46 this year from $3.06, above what the company has projected, which was $2.80 to $3.20, but "we speculate guidance will be raised with the Q1/11 report."
In Economy Lab today
Economist Stephen Gordon takes an in-depth look at why the Bank of Canada won't be overly worried by the March spike in inflation.
In Personal Finance today
Dianne Maley offers tax-saving tips for owners of rental properties, cottages and real estate in the U.S.
If you use your vehicle for any aspect of work, you'll likely qualify for some tax relief, writes Tim Cestnick.
Rental car insurance is for suckers, right? Not always, argues Home Cents blogger Shelley White.
From today's Report on Business