RIM caps dismal year with another profit warning

RIM caps dismal year with another profit warning

Stock Market Predictions

TORONTO (Global Markets) - Research in Motion booked a huge charge to write down inventories of its unloved PlayBook tablet on Friday, capping a dismal year with a steep profit warning that sent its shares tumbling almost 10 percent.

Waterloo, Ontario-based RIM, the company whose now ubiquitous BlackBerry created the concept of on-the-go email, said it no longer expects to meet its full-year earnings forecast due to weak sales, the PlayBook writedown and a charge related to a damaging service outage in October.

"This is a classic falling knife stock," said Eric Jackson of Ironfire Capital, who has previously bet on RIM's share price dropping but does not currently have a position in the stock.

"Although people keep wanting to buy into the belief that RIM has found a bottom, I see at least six more months of pain as they keep transitioning their business."

RIM, which Canada's industry minister on Friday described as a "Canadian jewel," has fallen out of favor with investors as it struggled to keep pace in a fast-changing smartphone market. In recent years, Apple's iPhone and Google Android devices have gobbled up RIM's once mighty market share.

RIM badly needs the PlayBook, launched to scathing reviews in April, to be a success as it plans next year to launch new smartphones based on the same QNX-based operating system used in the tablet.

PlayBook is a half-baked latecomer to a market segment where Apple's iPad has established an overwhelming dominance. Yet the poor reception it has received is just one of a string of problems facing the one-time technology darling.

The company has infuriated investors with several product missteps and profit warnings and RIM faced an embarrassing global outage in October, when customers were left without email and the popular BlackBerry messaging service for several days.

And if RIM cannot convince developers to build apps for the languishing PlayBook, its new smartphones will struggle to gain traction against the iPhone and Android devices that already boast huge libraries of applications.

Bernstein Research analyst Pierre Ferragu said RIM's latest warning was not a surprise itself. But he was alarmed that management apparently fails to see the writing on the wall for its products and for its corporate structure.

"What is more worrying, of course, is the profound denial the tone of the release reflects. Although it appears obvious to us that RIM's current strategy is bound to fail rapidly, the company continues to support it vehemently," he said.

"We can only hope that this increasing dissonance will accelerate necessary changes at the top of the company."

An activist shareholder said in October that some 8 percent of RIM investors back his call for RIM's board to replace its co-chief executives and consider a break-up or sale.

PLAYBOOK PRICE CUTS

Seeking to boost anemic PlayBook sales, RIM recently slashed prices on the device and plans to expand the promotion. It sold only about 150,000 tablets in the quarter to November 26, down from 200,000 in the previous quarter - a tiny fraction of the 11 million iPads that Apple sold in its latest quarter.

"RIM is continuing to suffer from its Playbook endeavors," said CCS Insight analyst Geoff Blaber. "It hurt RIM initially by diverting focus, but muted demand is now becoming clearly visible in the financials."

RIM's Nasdaq-listed shares fell 9.7 percent to $16.77 by the close. In Canada the shares fell 9.2 percent to C$17.08.

The shares have shed some three-quarters of their value since a February peak, a meltdown that has actually prompted some analysts to raise their ratings on RIM. Goldman Sachs said last month that the current valuation already fairly captures the fundamental concerns.

Speculation has also been rife that RIM could be the target of a strategic buyout.

Canada's Industry Minister Christian Paradis declined to comment on that speculation in an interview with Global Markets in New York, but he said Canada had to support RIM. Any takeover of a Canadian company of RIM's size can be blocked by the government if it decides the deal would not bring a "net benefit" to the country.

"RIM is a Canadian jewel," Paradis said in the interview, which was conducted in his native French. "First of all what I hope for is that RIM be able to be on a path of prosperity. As for speculation (about a takeover), we'd have to see what happened and consider if the law would apply."

FULL YEAR EARNINGS

In its warning, RIM said it no longer expects to meet its full-year earnings forecast of $5.25 to $6 per share because of weaker than expected smartphone shipments, a $360 million after-tax writedown on PlayBook inventories and a $50 million charge related to the October outage.

Excluding the two charges, RIM now expects adjusted earnings in the third-quarter to be at the low to mid-point of its previously forecast $1.20 to $1.40 per share range.

Revenue, excluding the outage charge, is expected to be slightly below the previously forecast range of $5.3 billion to $5.6 billion, in part because of the PlayBook discounting.

RIM, which reports third quarter results on December 15, said it shipped about 14.1 million BlackBerry phones in the quarter, in line with its earlier forecast of between 13.5 and 14.5 million.

It said it was confident the PlayBook promotion will help boost sales and reduce its inventories.

"Early results from recent PlayBook promotions indicate a significant increase in demand across most channels," Co-Chief Executive Mike Lazaridis said in a statement.

But RIM also said it expects to ship fewer smartphones in the current quarter than in the recently-ended third quarter, despite having a lineup of updated devices on offer in the traditionally busy Christmas period.

"We do not see any sign that RIM's downward spiral is about to bottom out," Nomura analyst Stuart Jeffrey said in a note for clients. "The company has a number of new phones on the market, yet guidance for Q4 suggests that their momentum is already starting to stall."

(Additional reporting by Phil Wahba in New York and Tarmo Virki in Helsinki; Editing by Janet Guttsman and Frank McGurty)

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Viterra profit jumps 80 percent on big Australia crop

Viterra profit jumps 80 percent on big Australia crop

Stock Market Predictions

WINNIPEG, Manitoba (Global Markets) - Viterra Inc (VT.TO) reported an 80 percent rise in quarterly net profit on Thursday, bolstered by brisk South Australian crop shipments.

Canada's biggest grain handler said record-high crop shipments from South Australia boosted earnings even as wet weather delayed planting in Western Canada and hurt sales of farm products like seed and chemicals.

Viterra's Australia crop-handling network of elevators and port terminals has given the company a geographic hedge against weather-related crop problems in Canada since it acquired the former ABB Grain in 2009.

"From a strategic perspective, our geographic diversification has delivered to expectations," said CEO Mayo Schmidt.

Regina, Saskatchewan-based Viterra said it had achieved its forecast C$30 million ($30.6 million) in synergies from the takeover six months ahead of schedule.

The company reported a net profit of C$33.1 million ($33.8 million), or 9 Canadian cents a share, for the second quarter ended on April 30, up from C$18.4 million, or 5 Canadian cents a share, a year earlier.

Revenue rose 33 percent to C$2.70 billion.

Analysts had expected earnings of 17 Canadian cents a share and revenue of C$2.3 billion, according to Thomson Global Markets I/B/E/S.

Viterra also declared a semiannual cash dividend of 5 Canadian cents per share, payable July 28. The company's dividend rate is currently 10 Canadian cents per year.

(Reporting by Rod Nickel in Winnipeg and Aftab Ahmed in Bangalore; Editing by Savio D'Souza and Lisa Von Ahn)

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Why stock market predictions are so often misses the

Why stock market predictions are so often misses the?
What was the oracle in ancient times , which is now the expert. To find out what happens to the economy or the stock exchanges, we rely on the knowledge of modern prophets : On Financial Market researchers , analysts and fund managers – even on those who earn their money by watching the markets.

Success makes arrogant
But how accurate are the stock market predictions of the experts? Three researchers from Germany and wanted to know Canada and compared with the old estimates of future actual values.

Cause of their study are insights from psychology : " Most people are often over- confident and to the precision of their knowledge , "write Richard Deaves ( McMaster University, Ontario ), Erik Lueders and Michael Schröder (both: ZEW Mannheim) in their study, the forthcoming in the Journal of Economic Behavior & Organization "appears. But the same goes for professional financial prophet? This question has been no research team investigated.

For its test of reality , the three scientists used the forecasts on the future development of the German stock index ( DAX ), which are requested in the same questionnaire. The expert estimates of future economic development proved to be asked for the study as too crude – the ZEW only be a basic assessment of the development: Is it up , down, or is all the same?

The DAX forecasts on the other hand much more concrete : So the experts have to specify a precise margin, are the likely the stock after half a year in their opinion is .

Hardly a respondent is the test oracle
The interesting thing : The width of the margin to select the respondents themselves . An interval of 1000 Dax – points is just as possible as one of ten. Who was more uncertain , then, how many points are in the index six months later, would , could simply indicate a greater margin – and thus in the end maybe even be right .

Nevertheless, a respondent could barely pass the test oracle : The vast majority of Dax true value was at most only seven out of ten estimates the assumed interval. 40 percent met even only a maximum of every second time the mark.

In a second study the researchers were able to demonstrate to the financial experts a typical human trait : to make success self-confidence , caution against failures . they were correct with their predictions in the previous time, then reduced the respondents the margin at the next attempt at about five percent.

they were wrong, they increased the interval by a similar amount – probably to the danger of a renewed insult reduced. The crucial question, the researchers went about was: experts with long experience better? "If they are able to learn from their successes and failures , they would have the time to make really accurate forecasts " , the researchers suspect .

But curiously, their analysis showed just the opposite : three additional years of professional experience, the forecasts deteriorate measured by an average of over one percent , noted the authors. Perhaps the motivation is to deliver good performance, with experienced veterans simply are not as big as the presumption of Deaves , Luders , and Schroder.

Experience therefore not protected against errors , but makes it more likely. Conversely, this means that true professionals do not have to be old.

For additional you can also read - Can You Dominate Your Retirement?

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Lululemon sales come up short, shares tumble

Lululemon sales come up short, shares tumble

Stock Market Predictions

TORONTO (Global Markets) - Lululemon Athletica Inc's (LLL.TO) (LULU.O) quarterly profit rose but sales of its signature yoga slightly missed analyst expectations, sending its shares down 16 percent.

It is the second quarter in a row that the chain has shown signs of faltering. Catching a wave of popularity for yoga among young professional women, its premium exercise pants and other apparel have gained an enthusiastic following. Lately any signal that its growth might slow has spooked investors.

The Vancouver-based company said on Thursday revenue rose 31 percent to $230.2 million in its third quarter ended October 30. Analysts on average had forecast $235.7 million, according to Thomson Global Markets I/B/E/S.

Sales at established stores rose 16 percent, compared with its own forecast of the low to mid-teens in percentage terms. That was lower that same-store sales growth of 20 percent in the previous quarter.

Looking ahead, the company made a low to mid-teens forecast for the current quarter.

"Lulu remains an attractive growth story, in our view; however, today's numbers likely won't be enough to keep the stock going at its current multiple," Nomura analyst Paul Lejuez wrote in a research note.

Chief Executive Christine Day said the company had not been able to meet sales demand in the quarter. Lululemon has struggled to catch up on inventory since the end of 2010, when it posted particularly strong sales. Day said the situation has improved in the current quarter.

"Our goal for Q4 was to break the inventory cycle we were in all year, and we have achieved it," she said. "We have the right mix of styles and color, and a healthy and clean inventory."

Lululemon has expanded rapidly in Canada, the United States and Australia. The company opened or acquired 18 stores in the quarter, bringing its total to 165.

Profit rose to $38.8 million, or 27 cents a share, from $25.7 million, or 18 cents, a year earlier. Analysts were expecting earnings of 25 cents.

The company forecast earnings between 40 and 42 cents in the fourth quarter, and revenue between $327 million and $332 million.

The stock was down 16 percent at C$42.63 in early trading on Thursday on the Toronto Stock Exchange.

(Reporting by Allison Martell in Toronto and Aftab Ahmed in Bangalore; Editing by Frank McGurty)

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Lululemon profit and forecast robust, shares rise

Lululemon profit and forecast robust, shares rise

Stock Market Predictions

TORONTO (Global Markets) - Yoga- and leisure-wear retailer Lululemon (LLL.TO) (LULU.O) boosted its yearly profit forecast on Friday after strong online and in-store sales helped its earnings top expectations for yet another quarter.

Shares in the company ended up 4.89 percent at C$88.00 in Toronto and up 4.41 percent at $89.94 in New York, standing out amid declines of more than 1 percent in both markets.

Vancouver-based Lululemon warned last quarter that it did not have enough product to meet strong demand for its trendy apparel, which now includes running and cycling gear, and that could limit growth in its fiscal first quarter.

But earnings per share came in 8 cents higher than analysts had forecast.

"I'm not surprised that they had a great quarter because our checks had been very, very positive," said Jennifer Milan, an analyst at Sterne, Agee & Leach. "But I was surprised at the level of the beat, given the fact that they've had inventory constraints for much of the quarter."

Inventories hit a low point toward the end of February, but arrangements for early delivery in April helped boost sales, Chief Financial Officer John Currie said in a call with analysts.

Comparable stores sales rose 16 percent in the first quarter. Currie said sales would have been up around 20 percent with more robust inventories.

Net income in the quarter to May 1 rose to $33.4 million, or 46 cents a share, up from a year-earlier profit of $19.6 million, or 27 cents a share.

Analysts on average had forecast earnings of 38 cents a share, according to Thomson Global Markets I/B/E/S. The company has consistently beaten earnings expectations, helping its shares more than double in value over the past year.

Revenue for the company, which has stores in Canada, the United States and Australia, surged 35.1 percent to $186.8 million.

Gross profit rose 48 percent to $109.7 million.

OUTLOOK STRENGTHENED

Lululemon forecast second-quarter earnings of 42 cents to 44 cents a share on revenues of $200 million to $205 million. For the full-year it forecast earnings of $2.10 to $2.16 a share, on revenue of $915 million to $930 million.

Last quarter, the company said it expected full-year net revenue of $885 million to $900 million and full-year earnings of $1.90 to $2.00 a share.

Analysts had forecast a profit of 40 cents a share in the second quarter, and $2.04 a share for the year.

"There had been some concern that sourcing costs would prove to be more aggressive than they initially thought, and they haven't been," said Sharon Zackfia, an analyst at William Blair & Company.

The revised forecast reflects the upside in the first quarter, which points to expectations by the company that input costs will remain in check, she said.

Lululemon has carved out a lucrative niche market and has become one of the few Canadian retailers that has successfully entered the U.S. market.

"This is a very, very early-stage growth company," Milan said. "They have extreme brand loyalty and given the fact that they've been inventory constrained, I don't think that we've really seen what true demand is for this company yet."

The retailer ended the quarter with 142 stores, compared to 128 a year earlier. It opened three stores in the United States and one in Australia. The company also opened an Ivivva store, aimed at the youth market, in Canada.

It plans to open six Lululemon stores in the United States and one in Australia in the current quarter.

The company also has community-oriented showrooms that offer fitness classes and incorporate local events.

Lululemon's growth has not gone unnoticed by other retailers, and long-established brands like Nike (NKE.N), Adidas (ADSGn.DE), Limited Brands Inc (LTD.N)-owned Victoria's Secret, and Gap Inc (GPS.N) have been stepping up the competition.

($1=$0.98 Canadian)

(Additional reporting by Euan Rocha and Julie Gordon; editing by Peter Galloway)

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