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RIM shares surge: Could we see $20 before crucial BB10 launch?

These are stories Report on Business is following Monday, Jan. 21, 2013.

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RIM surges
Shares of Research In Motion Ltd. surged again today, at one point passing the $18 mark just nine days ahead of the launch of its new BlackBerry 10 models. It closed up almost 11 per cent at $17.41 in Toronto.

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The buzz around BB10 has helped put the shares on a fantastic run, and they were pushed further by an optimistic report last week from an influential U.S. analyst.

Also playing into the market today were fresh comments from chief executive officer Thorsten Heins, who told the German newspaper Die Welt that the company is keeping the door open to new alliances. That includes the potential sale of its hardware business and the licensing of its software. Mr. Heins has previously outlined the BlackBerry maker's strategic review, and that these options remain on the table.

"The main thing for now is to successfully introduce BlackBerry 10," Mr. Heins told the paper, according to a translation by Reuters. "Then we'll see."

As The Globe and Mail's Darcy Keith reports, the shares have climbed more than 170 per cent since last September.

On Friday, analyst Peter Misek of Jefferies & Co. lit a fire under the stock with an upgrade in his recommendation to "buy" and a boost to his share price target to $19.50 (U.S.) from $13.

Mr. Misek also said that RIM plans to enable corporate e-mail on Apple Inc.'s iPhones and the devices powered by Google Inc.'s popular Android system. That, he said, is either a little known fact, or one that's not well understood.

App developers are showing greater-than-expected support for BB10, he added, with a target of 70,000 when it launches next week. Carriers, too, have shown more support than projected.

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Mr. Misek now gives BB10 a 30 per cent chance of success, up from 20 per cent earlier.

Should the BB10 not be successful, however, Mr. Misek sees two scenarios, one of which is a sale, the other one "no acquisition, and continued cash burn leads the stock toward $0."

Analysts at Byron Capital Markets also issued an optimistic report on RIM today, saying BB10 "looks solid" and almost all the reviews from app developers are positive ones.

"Do you really want to be zero weight on Research In Motion Ltd. (RIM) going into the BB10 launch?" they said.

"On Jan. 30, RIM launches its first major product cycle in years into one of the fastest growing consumer markets," they added.

"There are several emerging data points that suggest this may be a more successful product cycle than many expected."

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Major U.S., Canadian and British carriers all plan to offer BB10 devices as soon as possible, the analysts noted, beginning with a touch-screen model and followed with a keyboard offering.

"We also expect RIM to launch the mother of all marketing campaigns," the Byron analysts wrote, though they added there are still risks, noting a decline in services and the "need to find some earnings."

Rona in board shakeup
Rona Inc.'s board of directors is getting a major overhaul, The Globe and Mail's Bertrand Marotte reports today.

Robert Chevrier, chairman of Quebec's Richelieu Hardware Ltd., is replacing Robert Paré at Rona, while four other new faces join the board. Its stock climbed in response.

Caisse de dépôt et placement du Québec and Invesco Trimark Ltd., Rona's two major shareholders, are supporting the full slate of director nominees at the next shareholders' meeting in May.

10 reasons to be happy on the most depressing day of the year
Today is semi-officially "Blue Monday," said to be the most depressing day of the year because it's dark, cold, and you realize you've yet to pay your holiday shopping bills, and all those New Year's resolutions are out the window.

"The markets have only been open a few hours but already we can tell it's going to be a long day," said market analyst David Madden of IG in London.

"There is little in the way of economic data this side of the Atlantic, and with the U.S. markets shut for Martin Luther King Day we're expecting low volumes and even less volatility."

So, just to be a bit controversial, we went looking instead for reasons to be happy, besides markets being generally up.

1. There's a debate playing out on Twitter today about which central banker is more handsome, Mario Draghi of the European Central Bank or Mark Carney of the Bank of Canada.

2. It's the home opener for the Toronto Maple Leafs today after the long lockout. To give starving fans a preview, a group of figure skaters got into a brawl at the Delta Meadowvale Hotel and Conference Centre in the Toronto area.

3. According to The Guardian, the so-called troika that's bailing out Greece has decided to give Athens six months during which they won't ask for a new austerity plan. (We'd also thought we might be able to point out that Greece had gone a few days, at least, without a strike or demonstration. But, no, the farmers are protesting today.)

4. Europe's finance ministers are indulging in their favourite pastime, meeting. While they won't really do anything, they won't screw anything up, either.

5. The Canadian dollar started the day down a wee bit, almost back to parity with the U.S. currency and down by well more than a penny in the past 10 days. For Canadian exporters - and NDPers - fretting about Dutch Disease, every little bit helps.

6. No one was hurt when a wheel fell off an Air Canada Jazz plane after landing in Toronto this morning.

7. For those who may have missed it, the Republicans in the United States are proposing a three-month debt limit extension. So we can have a spring crisis instead of a winter crisis.

8. Bank of America forecasts today that oil prices will sink to $50 a barrel over the next two years. Great news for motorists, but not so much for Alberta producers whose Canadian oil is selling at a huge discount to world benchmarks. So, maybe our oil will be worth $10?

9. Iceland's Finance Minister, Katrin Juliusdottir, said her country must join the euro zone and share the common currency, stressing, in an interview with The Wall Street Journal, that it would be "working with other sovereign nations on our future, working together to raise the standard of living." Right. How's that working so far? The good news is that they won't be wanting the Canadian dollar, as some have urged, meaning they won't be coming to us for the next bailout.

10. For anyone who bought RIM shares at their low of $6.10, you're up big time. For anyone who bought at over $120, well, at least it's going in the right direction.

Bonus: Something I learned today from the Canadian Federation of Independent Business: Red tape in French is paperasserie.

What to watch for this week
The big event will be Wednesday's policy announcement by the Bank of Canada and the unveiling of its monetary policy report, which, for the first time, will be released at the same time.

The central bank won't change interest rates, of course, and isn't expected to change its signal either. That currently points to the next move in the benchmark overnight rate being up, not down, from its current 1 per cent.

Governor Mark Carney and his colleague's on the Bank of Canada's policy panel may also trim their near-term outlook for economic growth.

"The Canadian economy struggled through the second half of last year, and it looks as though real GDP growth would do well to come in north of 1 per cent in Q4, following the prior quarter's 0.6-per-cent print," said senior economist Benjamin Reitzes of BMO Nesbitt Burns.

"The softness will prompt the Bank of Canada to downgrade its growth forecast likely through to the current quarter. Expect some upgrades to late-2013 or early-2014 projections to provide some offset, but the closing of the output gap will probably be pushed into 2014."

There will also be an interesting two-day meeting of the Bank of Japan, which releases its decision tomorrow and is under intense pressure from a new government to do more to juice the economy.

"It is widely expected to result in further policy easing," said Derek Holt of Bank of Nova Scotia.

"Governor [Masaaki] Shirakawa's term is up in April and Prime Minister Shinzo Abe has been pressuring the BoJ to raise its inflation target to 2 per cent from 1 per cent. If Shirakawa doesn't deliver, his government-appointed successor likely will."

For investors, several major companies will report quarterly results, including Apple Inc., Google Inc., Microsoft Corp., Canadian National Railway Co., McDonald's Corp., Johnson & Johnson and Celestica Inc.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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