RIMM Completes a Week of Gloomy Outlooks — Friday’s IP Market Recap

by Kyle Woodley | December 16, 2011 4:30 pm

Friday was a fitting capstone to a week where headlines were dominated by a swath of disappointing quarterly earnings reports, most marked with gloomy forecasts of things to come.

Research In Motion (NASDAQ:RIMM[1]) continued its seemingly year-long descent down the sadness spiral after the bell Thursday with an anticipated poor third-quarter report[2], unexpectedly low guidance for the fourth quarter and a final bomb: the announcement that the release of its BlackBerry 10 phones would be pushed back to the end of 2012. RIMM shares plummeted 11% on Friday to $13.44 — the stock’s lowest finish of the year and down 75% from the start of 2011.

Third-quarter earnings of $1.27 per share were seven cents better than expected by Wall Street analysts, but the $265 million total still was down 71% from the same period a year ago. Revenues of $5.2 million also slightly missed expectations. RIM’s fourth-quarter revenue guidance was set around $4.6 billion to $4.9 billion, while Wall Street expects $5.2 billion.

The real kicker, however, was that announcement about BlackBerry 10 phones being delayed. Co-CEO Mike Lazaridis said the company had to push back the launch because it’s still waiting for LTE-capable chipsets. Investors took the news poorly because it means RIM must continue to languish with its lackluster BlackBerry 7 OS.

Earlier in the week, other major players saw bad things in their crystal balls. Intel (NASDAQ:INTC[3]) lowered its fourth-quarter revenue estimate[4] from $14.7 billion to $13.7 billion on Monday, with the company citing disruptions from massive flooding in Thailand, which has rocked numerous sectors[5], including hard-drive makers. Best Buy (NYSE:BBY[6]) was hammered on Tuesday[7] after saying it expected profit margins to fall by about 0.5% across 2012, in addition to announcing 13% drop in fiscal Q3 profit. And First Solar (NASDAQ:FSLR[8]) started a solar-sector avalanche after lowering fiscal year guidance[9] for the third time in 2011.

Here were some of the other big financial headlines of the week:

Gold Breaks 200-Day Moving Average

Gold has been one of 2012’s biggest winners, but this week the yellow metal found itself dragging against a relative bottom. Gold prices cracked the $1,600 point Wednesday, and more important, breached its pivotal 200-day moving average[10] for the first time in almost three years. The major investment trusts took one on the chin this week, with the SPDR Gold Trust (NYSE:GLD[11]) and iShares Gold Trust (NYSE:IAU[12]) shedding almost 7% in the past five days.

The biggest question on the minds of many investors is “Where will gold go next?” While fundamentals actually point to a continued downtrend into the $1,400s, many predict that a continued lack of confidence in financials and the European recovery will produce a rebound[13] sooner than later.

Big Moves in Big Pharma

Pfizer (NYSE:PFE[14]) made a pair of announcements earlier this week specifically designed to enrich its shareholders[15]. The company expanded its share repurchase program by $10 billion — with plans to buy back about $5 billion worth in 2012 — and also announced a 10% boost to its quarterly dividend. Pfizer now will pay out 22 cents per share for a supple 4% dividend yield.

On Thursday, health care device and supply company Covidien (NYSE:COV[16]) announced it would spin off its pharmaceuticals business[17] — this comes off the heels of Abbott Laboratories’ (NYSE:ABT[18]) similar move in October. Not only was the announcement well-received by COV investors, who carried shares up 3.5% Thursday, but also for shareholders in Sanofi (NYSE:SNY[19]), GlaxoSmithKline (NYSE:GSK[20]) and Novartis (NYSE:NVS[21]) — all of which could be breakup candidates.

Three Up for Friday

Three Down for Friday

As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Check out our list of previous IP Market Recaps[28].

Endnotes:
  1. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  2. an anticipated poor third-quarter report: http://investorplace.com/2011/12/rim-dont-expect-things-to-get-better/
  3. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  4. lowered its fourth-quarter revenue estimate: http://investorplace.com/2011/12/intel-earnings-warning-toyota-dupont/
  5. has rocked numerous sectors: http://investorplace.com/2011/11/thai-flood-western-digital-tech-stocks-automakers/
  6. BBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBY
  7. hammered on Tuesday: http://investorplace.com/2011/12/best-buy-bby-third-quarter-earnings-retail-stock/
  8. FSLR: http://studio-5.financialcontent.com/investplace/quote?Symbol=FSLR
  9. lowering fiscal year guidance: http://investorplace.com/2011/12/sun-might-be-setting-on-solar-stocks-fslr-tan-ldk-spwr-stp/
  10. breached its pivotal 200-day moving average: http://investorplace.com/2011/12/gold-is-sick-but-hardly-dead/
  11. GLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GLD
  12. IAU: http://studio-5.financialcontent.com/investplace/quote?Symbol=IAU
  13. produce a rebound: http://investorplace.com/2011/12/gold-prices-silver-prices-precious-metals-gld-mining-stocks
  14. PFE: http://studio-5.financialcontent.com/investplace/quote?Symbol=PFE
  15. enrich its shareholders: http://investorplace.com/2011/12/pfizer-delivers-early-holiday-gifts-to-shareholders/
  16. COV: http://studio-5.financialcontent.com/investplace/quote?Symbol=COV
  17. spin off its pharmaceuticals business: http://investorplace.com/2011/12/covidien-follows-abbott-with-a-pharma-spin-off/
  18. ABT: http://studio-5.financialcontent.com/investplace/quote?Symbol=ABT
  19. SNY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNY
  20. GSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSK
  21. NVS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NVS
  22. VRTX: http://studio-5.financialcontent.com/investplace/quote?Symbol=VRTX
  23. ADBE: http://studio-5.financialcontent.com/investplace/quote?Symbol=ADBE
  24. DFS: http://studio-5.financialcontent.com/investplace/quote?Symbol=DFS
  25. SHLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHLD
  26. NOK: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOK
  27. ACN: http://studio-5.financialcontent.com/investplace/quote?Symbol=ACN
  28. IP Market Recaps: http://investorplace.com/hot-topics/investorplace-market-recap/

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