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Facebook shares sink as Barron's pegs value at just $15

These are stories Report on Business is following Monday, Sept. 24, 2012.

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Facebook sinks after Barron's report
Shares of Facebook Inc. fell sharply today after the influential publication Barron's said the stock is overvalued amid mounting uncertainty for the operation.

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Facebook shares have tumbled from their May IPO price of $38 (U.S.), and, at their current value, are still trading "at high multiples of both sales and earnings," Barron's said Saturday.

It suggested that the stock, now trading at 47 times Facebook's projected profit of 48 cents a share this year, or well above the levels of Google Inc. and Apple Inc., is worth "perhaps" just $15.

"That would be roughly 24 times projected 2013 profit and six times estimated 2013 revenue of $6-billion, still no bargain price," Barron's said.

"Wall Street's consensus estimate for 2013 shows earnings rising 31 per cent, to 63 cents a share," wrote Andrew Barry.

"That pro forma number is generous because it ignores Facebook's very significant stock-based compensation. The company has been issuing gobs of restricted stock to engineers and other key employees in the hot Silicon Valley job market to prevent them from being lured away to the next hot tech startup -- the next Facebook."

Facebook, Barron's said, must determine how to capitalize on its fast-growing mobile shift.

The popular loonie
Futures traders are mighty keen on the Canadian dollar, to the point where it's a bit too popular.

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"Bullish sentiment towards CAD is notably high," said senior currency strategist Camilla Sutton, referring to the currency by its symbol and citing numbers released Friday by the U.S. Commodity Futures Trading Commission.

"Friday's CFTC data highlight that net long CAD positions are at record levels ($12-billion) and are still being added to; while risk reversals suggest that the options market is also positioning for further CAD strength," she said in a research note today.

What that means is that futures traders are betting more than ever before that the Canadian dollar will appreciate further.

The loonie, as the Canadian currency is known, has been holding a few pennies above parity with the U.S. dollar for some time now, though it's down today as the greenback strengthens on general concerns related to the euro zone.

Ms. Sutton noted that the Bank of Canada is now the "lone hawk" among the major central banks, citing some form of stimulus from the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England.

"This divergence in monetary policy is having a major impact on CAD, one we expect to continue to support the currency into year-end," said Ms. Sutton.

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Sébastien Galy of  Société Générale said positioning in the Canadian currency is now "extreme."

"Relative to three-year maximum positions sizes, the CAD position is now the biggest it has been (a currency I like but which I will leave alone until it's less popular)," added his colleague Kit Juckes, SocGen's chief of foreign exchange.

Canaccord cuts deep
Canaccord Financial Inc. is cutting deeply into its advisor force amid a market slowdown, Streetwise columnist Boyd Erman reports.

Canaccord, one of Canada's biggest independent securities dealers, is closing 16 branches and keeping 16.

It's also cutting loose 35 advisory teams in the offices that remain. Toronto-based Canaccord lost about $6.5-million in the most recent quarter handling accounts for individuals, but will now "operate in a near break-even basis in current market conditions," the firm said.

India eyes oil sands
India is looking to get into Canada's oil sands in a big way.

According to Dow Jones today, a consortium of state-owned companies is eyeing assets up for sale by ConocoPhillips, valued at about $5-billion (U.S.).

An executive with ONGC Videsh Ltd. Told reporters in New Delhi that the company, along with Oil India and Indian Oil Corp., has bid on the ConocoPhillips interests.

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