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That sinking feeling: RIM's stock performance v. Apple

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Of Apple and RIM Looking at the stock performance of Apple Inc. and Research In Motion Ltd. can only give shareholders of the BlackBerry maker a sinking feeling.

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RIM's decline is almost mirrored by Apple's surge, picking up after the trouncing of the Waterloo, Ont.-based tech company in the market after its disastrous first-quarter earnings report last week. RIM not only missed revenue estimates, it also slashed its outlook and unveiled an unspecified number of job cuts amid heightened competition from Apple, maker of the popular iPhone, and Google Inc. , whose Android operating system has been doing exceptionally well.

Today, RBC Dominion Securities cut its price target on RIM shares, though it described the BlackBerry maker as "bloody, but not (yet) broken."

"Although it's possible RIM fails to turn itself around, that outcome may be premature, given sustained positives like 68 million [subscribers] service growth, enterprise leadership, #1 share in several markets, healthy margins, cash flow. Our [fiscal 2012]estimates become $21.4-billion revenue and $5.60 [earnings per share]" said RBC analyst Mike Abramsky.

That's down from RBC's previous projection $23.7-billion (U.S.) in and earnings per share of $6.50. Mr. Abramsky slashed his price target to $35 from $45, but held his rating at "sector perform."

To compare the stocks over five years, as of about noon ET today, see the accompanying infographic or click here.

Euro ministers hold off on Greece Finance ministers of the embattled euro zone failed again today to take any decisive action on Greece that would calm anxious markets, punting a decision on the next tranche of the country's bailout money.

Meeting yesterday and into the early hours of today, the politicians said they would wait until Athens passes its next round of austerity measures before handing over the funds.

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There were some soothing words as they discussed two bailout packages. On the first, where they're debating releasing the next €12-billion payment, they want to see further action from the government. On the second, a new rescue program, they're waiting until next month.

They continue to meet today, a day before George Papandreou's government faces a crucial confidence vote called by the prime minister to back up his call for unity on cutbacks, which would involve gutting the public service and hiking taxes. RBC Dominion Securities said today it expects the government to win the vote.

On Friday, there was some movement on the issue of whether private bondholders will share some of the pain. German Chancellor Angela Merkel and French leader Nicolas Sarkozy announced the debtholders would be urged to "voluntarily" share in the burden, which appeared to ease some of the concerns of the European Central Bank, which is opposed to any type of debt restructuring.

"Talk of some form of private sector voluntary restructuring of debt for senior bondholders had soothed some market concerns of an imminent default, though it is hard to see why any investor would voluntarily accept a 'debt haircut' while others could refuse," said CMC Markets analyst Michael Hewson.

"In any case there is now some speculation as to whether this is still on the table, while battle lines have been drawn between EU ministers and the IMF on the one hand, who want Greece to accept further austerity in return for the next tranche of funds, and Greek ministers who in order to deflect the anger of the voters have proposed a referendum on political changes to the constitution," he said in a research note today.

"As things stand European ministers have weighed withholding half of the next €12-billion tranche as they seek to defer the day of reckoning and keep the country solvent, even as Greek ministers begin a three day debate in the Greek parliament, followed by a vote on the new austerity measures. In signs of stress within the European banking system some banks have started to reduce the amount of unsecured lending they are prepared to make available to euro zone banks, raising the prospect of a new credit crunch for the European banking system."

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In Toronto today, Canada's Finance Minister Jim Flaherty said the debt troubles in Europe pose a threat to other economies, The Globe and Mail's Tara Perkins reports.

"There is a real danger of contagion stemming from the situation in Europe," he told a conference of international insurance professionals.

RBC unveils U.S. deal Royal Bank of Canada today announced the expected sale of its U.S. retail banking operations to PNC Financial Services Group Inc. .

The sale of the banking and related credit card operations is worth $3.62-billion (U.S.) in cash and up to $1-billion in PNC shares.

As The Globe and Mail's Tara Perkins and Grant Robertson report, RBC will still have a big, profitable investing banking and wealth management operation in the United States.

RBC said today the deal will mean an estimated loss of $1.6-billion (Canadian) under Canadian accounting rules, including a writeoff of $1.3-billion after tax expected in the current quarter.

"RBC remains fully committed to the U.S. market and this transaction allows us to focus our U.S. efforts on continuing to grow our two largest U.S. businesses, RBC Wealth Management and RBC Capital Markets," said chief executive officer Gordon Nixon. "In addition, we will maintain our existing cross-border banking platform for current and future clients with a targeted suite of cross-border products and services to meet their needs."

Agrium jumps on outlook Shares of Agrium Inc. climbed today after the agricultural products company substantially boosted its earnings outlook.

Agrium said late yesterday it now expects earnings per share of between $4.10 (U.S.) and $4.40, diluted and on continuing operations, in the second quarter of the year, up from a previous call of $3.38 to $3.88. That would bring fist-half results to between $5.12 and $5.42.

"The strength in our earnings outlook is due to excellent performance from all three of our business units, which is particularly impressive given that the North American spring planting season has been hampered by excessively cold and wet weather this year," said chief executive officer Mike Wilson.

"Record global crop prices are driving demand for all crop inputs, and Agrium's strategic investment across the global agricultural value chain is capturing the benefits from the strength in these underlying fundamentals."

Bombardier strikes deal Bombardier Inc. bolstered its meagre order book for the new C Series jet with 10 new sales but was disappointed by a decision by Qatar Airways, one of the world's fastest growing carriers, to defer a purchase decision on the same plane, The Globe and Mail's Eric Reguly reports today from Paris.

On the first day of the Paris Air Show, Bombardier disclosed firm orders for 10 of the C Series to an undisclosed buyer, with options for another six. If the options are converted to firm orders, the total value of the deal would be $1-billion (U.S.) based on list prices. Since discounts of 30 per cent or more are routine, the true value of the contract is probably hundreds of millions of dollars less.

"This order brings total firm orders to 113 planes plus 109 options," said National Bank analyst Cameron Doerksen.

"Importantly, the order brings the total C Series customers to six airlines and leasing companies - a broader base of customers means greater potential for follow-on orders as well as greater interest from leasing companies," he said in a research note.

"On the negative side, it appears that Qatar Airways has once again deferred an expected order for the C Series. This will be viewed negatively by the market as Qatar's CEO had recently sounded more serious about making an order in Paris. Although Qatar is apparently still interested in the C Series, it is difficult to consider it a potentially serious customer given the repeated deferrals."

New domain names Where Internet domain names are concerned, anything goes.

The Internet Corporation for Assigned Names and Numbers, or ICANN, said today its board approved a plan "to usher in one of the biggest changes ever to the Internet's domain name system" by markedly increasing the number of name endings.

There are now 22, including .com, .ca, .org, etc. These are known as general top-level domains, and today's decision allows Internet addresses to end in almost any word and language, the group said.

ICANN went a bit over the top today in announcing the change. Reading the statement, you'd have thought they'd created the wheel.

"ICANN has opened the Internet's naming system to unleash the global human imagination," said chief executive officer Rod Beckstrom.

"Today's decision respects the rights of groups to create new Top Level Domains in any language or script. We hope this allows the domain name system to better serve all of mankind."

Teck updates coal outlook Teck Resources Ltd. now expects coal shipments in its second quarter to be at the low end of its previous forecast of 5.5 million to 6 million tonnes because of the mid-March devastation in Japan.

"As a result of the February earthquake and tsunami in Japan, some of Teck's coal customers have deferred shipments due to reduced steel production requirements," the miner said today, also cutting its projection for average prices.

"Teck expects average selling prices for the second quarter of 2011 to be approximately US$270 per tonne compared to its existing guidance of US$280 to US$290 per cent," the company said. "This is due to changes in the sales mix related to the deferred shipments to Japan."

Production costs are expected to be higher.

"We view these results as negative for the company's [second-quarter] financial results, and our existing C$1.30/share earnings estimate for the quarter is under review," said Desjardins analyst John Hughes.

"... However, we note that [third-quarter]contract prices for coal shipped on the seaborne market (Teck's market) remain high and are indicated by market trade publications at US$315/tonne for high-quality coal (vs US$330/tonne in [the second quarter]and US$225/tonne during [the first quarter]."

UBS Securities Canada analyst Brian MacArthur cut his 12-month price target on Teck shares to $62 from $64, and and his earnings-per-share estimate for the year to $5.42 from $5.72 "to reflect the lower sales volumes, higher unit mining costs and a lower average realized price."

In Economy Lab today The federal government should boost funding to Statistics Canada, Stephen Gordon argues.

In International Business today If Japan's May export numbers are any guide, the unglamorous stalwarts of old technology will be vital to the country's economic recovery, The Financial Times reports.

From today's Report on Business

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