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Down sharply in two months, Apple shares under siege

These are stories Report on Business is following Thursday, Dec. 6, 2012.

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Apple in spotlight
Apple Inc. shares turned around and headed higher after an early dip that followed yesterday's rout, which erased some $35-billion (U.S.) in market value.

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Having slumped yesterday by almost 6.5 per cent,  the stock is still down sharply over the last couple of months since its 52-week high of over $700 in late September.

Analysts cite concerns over the heated competition for wireless devices, and a move by China Mobile to sell Nokia phones. Apple, of course, has the wildly popular iPhone and, at this point, rules the tablet market.

But Samsung, in particular, is a formidable challenger. Indeed, researcher IDC noted Apple is falling in the Chinese smartphone market.

(Amid all this, Research In Motion Ltd. is preparing to launch its new BlackBerry 10 devices.)

"This is not going to be a short-term trend," Brian Battle, director of Trading at Performance Trust Capital Partners, told Reuters.

"This is a management test, of how well they can perform without Steve Jobs," he told the news agency.

"They need another new product that hits it out of the park. Without that, they could get a gradual grind-down in confidence."

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Loblaw to launch REIT
Loblaw Cos. Ltd. is taking advantage of the land on which it sits to launch a real estate investment trust, unveiling a plan that sent its stock soaring today.

The big Canadian grocery chain plans to sell units of the REIT via an initial public offering, The Globe and Mail's Bertrand Marotte reports, and plans to initially kick in more than $7-billion worth of property.

It plans to hold a majority stake.

Loblaw said its real estate is now some 47 million square feet, valued at $9-billion to $10-billion. It will sell about 35 million square feet of that to the REIT, and then lease the property on a long-term basis.

"It will be a vehicle to manage and enhance our real estate portfolio with the potential for future expansion through incremental vending in of our own real estate and external investment opportunities," said executive chairman Galen Weston.

The REIT landscape is changing rather quickly. Just yesterday, a consortium of bidders said it plans to take a hostile run at Primaris Retail Real Estate Investment Trust and break up the properties.

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TD in deal for asset manager
Toronto-Dominion Bank has struck a deal worth $668-million (U.S.) for Epoch Holding Corp., an American asset manager, The Globe and Mail's Tara Perkins reports today.

The U.S. firm is young, just eight years old, with 65 employees, but will add some $24-billion in assets under management to the more than $200-billion already under TD's control.

The deal was announced as the Canadian bank posted just a tiny gain in fourth-quarter profit, to $1.6-billion (Canadian) or $1.66 a share from $1.59-billion or $1.68 a year earlier.

Chief executive officer Ed Clark cited a "strong" 2012, but added that "we remain concerned about the low interest rate environment as well as a weak global economic recovery and ongoing regulatory uncertainty."

CIBC profit climbs
Canadian Imperial Bank of Commerce posted a 13-per-cent gain in fourth-quarter profit, driven by its wholesale banking and wealth management business, The Globe and Mail's Grant Robertson reports today.

Canada's fifth-largest bank by assets earned $852-million or $2.02 a share, compared to $757-million or $1.79 a share a year earlier. It topped the estimates of analysts.

Separately, National Bank of Canada became the only one of the major six banks to boost its dividend.

Lululemon profit, revenue climb
Lululemon Athletica Inc. posted hefty gains in third-quarter profit and revenue, tweaked its outlook for the year, and said it is now looking to open a new store in Hong Kong while testing markets in up to 15 countries over the next couple of years.

The yoga wear retailer said today it earned $57.3-million (U.S. or 39 cents a share in the quarter, up from $38.8-million or 27 cents a year earlier.

Sales climbed 37 per cent to $316.5-million, while same-store sales, the key measure in the industry, rose 18 per cent.

Lululemon said it expects earnings per share of 71 cents to 73 cents in the fourth quarter, and revenue of $475-million to $480-million.

For the year, it projects earnings per share of between $1.81 and $1.83 and revenue of $1.36-billion to $1.365-billion.

In September, its projections for the 2012 called for earnings per share of between $1.76 and $1.81 and revenue of $1.345-billion to $1.36-billion.

Central banks hold firm
The euro zone and Britain may be in deep trouble, but their central banks aren't changing their key lending rates.

Both the European Central Bank and the Bank of England held firm today amid deteriorating outlooks for their economies, though the ECB said it discussed the possibility of cutting its benchmark at its meeting.

Just yesterday, Britain's Office for Budget Responsibility projected an over all contraction of the economy of 0.1 per cent this and cut its forecasts for the next two years.

Today, a fresh reading by Eurostat showed the economy of the 17-member euro zone slipping by 0.1 per cent in the third quarter of the year, and that of the wider 27-member European Union up 0.1 per cent.

As The Globe and Mail's Eric Reguly reports, the ECB also cut its growth forecasts for both this year and next.

It expects a contraction of 0.4 per cent to 0.6 per cent this year, with anywhere from a contraction of 0.9 per cent to an expansion of 0.3 per cent next in 2013. In 2014, the growth estimate ranges from 0.2 per cent to 2.2 per cent.

"He remains downbeat on the growth outlook with activity expected to be weak into next year," senior economist Benjamin Reitzes said of ECB chief Mario Draghi.

"Economic risks remain on the downside, which shouldn't surprise anyone," he said in a research note.

"During the Q&A, in response to a question about potential rate cuts, Draghi said there was a 'wide discussion' but the consensus was to keep rates unchanged. He also noted that negative deposit rates and the potential repercussions were discussed. These statements highlight that further rate cuts remain possible."

Just sayin'
Clever thought of the day, from Bloomberg: "Three bears seek signs of Goldilocks economy as U.S. outperforms," news agency says, referring to comments by David Rosenberg of Gluskin Sheff + Associates, Mohamed El-Erian of Pimco and David Levy of Jerome Levy Forecasting Center.

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