RIM revenue, outlook weigh on TSX; manufacturing, house data depress U.S. stocks

By Malcolm Morrison, The Canadian Press

TORONTO - BlackBerry maker Research In Motion Ltd. (TSX: RIM.TO) was largely responsible for a negative showing on the Toronto stock market Friday, after the market heavyweight delivered a disappointing earnings report.

The S&P/TSX composite index lost 67.2 points to 11,218.5 with market support coming from energy and mining stocks in particular. The TSX has dropped about 300 points over the last two days amid worries about the sustainability of this year's rally and news of an unexpected drop in sales of existing homes in August.

But markets have been resilient despite rising more than 50 per cent since the lows of early March, punctuated by short pauses for profit taking before moving higher.

"We've been of the view for a while that the market wants to go higher," said Stephen Uzielle, portfolio manager at ScotiaMcLeod Equity Advisory.

"It will have some bad days as it takes a breather, or the news isn't quite as positive as what people were looking for but it won't be sort of allowed to pull back any significant degree because there's so much cash on the sidelines, it's looking to buy (into) the dips."

RIM shares tumbled $14.77 or 16.3 per cent to $75.39 after coming up short on expectations for revenue, new subscribers and outlook.

Its revenue came in at $3.53 billion, well below the $3.62 billion that was expected and RIM signed 3.8 million net new BlackBerry subscribers in the quarter, which was less than the four million new clients that analysts were looking for. Its third-quarter revenue and earnings both missed analyst expectations.

The Canadian dollar was 0.39 of a cent lower to 91.44 cents US.

The energy sector was a bright spot, up 0.43 per cent as oil prices rose after demand concerns shaved almost $6 a barrel over the last two sessions. The November crude contract on the new York Mercantile Exchange was up 21 cents to US$66.10 a barrel. Canadian Natural Resources (TSX: CNQ.TO) was ahead 69 cents to $72.53.

Compton Petroleum Corp. (TSX: CMT.TO) shares rose 10 cents to $1.29 after it said its $150-million equity offering has been delayed, pending receipt of a "no-objection" letter from the U.S. Financial Industry Regulatory Authority.

The base metals sector was ahead 0.74 per cent as December copper added three cents at US$2.74 a pound. HudBay Minerals (TSX: HBM.TO) continued to run up sharply after announcing Tuesday it has evidence of a major new copper-gold zone near its Snow Lake concentrator in the Flin Flon area of northern Manitoba. Its shares were ahead $1.18 to $12.57, up sharply from Monday's close of $9.37.

The TSX Venture Exchange was off 2.6 points to 1,253.76.

New York markets were lower following more U.S. economic data that cast further doubt on the strength of an economic recovery.

The Dow Jones industrials index was down 22.1 points to 9,685.4 after the U.S. Commerce Department reported that orders for durable goods dropped 2.4 per cent in August, after increasing a revised 4.8 per cent in July, a far worse showing than the 0.5 per cent increase that investors had expected.

Excluding aircraft and other transportation goods, orders were flat in August, also below analysts' expectations of a 0.5 per cent rise.

And new U.S. home sales posted a tepid 0.7 per cent increase last month, which missed Wall Street expectations.

While it was the fifth straight increase and the strongest report in 11 months, sales were down 4.3 per cent from the same month last year.

The Nasdaq composite index was weighed down by RIM's earnings report, falling 12.79 points to 2,094.82 while the S&P 500 index declined 4.15 points to 1,046.65.

Investors looked past an improvement in the Reuters/University of Michigan consumer sentiment index, which rose to 73.5 in September from 65.7 in August. The index stands at the highest level since the start of 2008.

Elsewhere in the commodity sector, the December gold contract on the Nymex declined $7.30 to US$991.60 an ounce, taking the gold sector down 0.8 per cent. On the TSX, Goldcorp Inc. (TSX: G.TO) faded 90 cents to C$42.05.

Strength also came from the consumer staples sector with Shoppers Drug Mart (TSX: SC.TO) up 69 cents to $44.25 and convenience store chain Alimentation Couche Tard Inc (TSX: ATD-B.TO) rose 54 cents to $19.17.

The financial sector was up slightly. Manulife-Sinochem Life Insurance Co. Ltd., a joint venture led by Canada's largest insurance company (TSX: MFC.TO) and the China Foreign Economic and Trade Trust & Investment Co., has received regulatory approval to expand its presence in China.

The subsidiary of Manulife Financial Corp. has received approval from the China Insurance Regulatory Commission to operate in Tianjin, a province southeast of Beijing with a population of 11.8 million people. Manulife-Sinochem will now operate in 11 Chinese provinces. Manulife shares declined 26 cents to $21.74.