RIM drags TSX to seventh losing week in past 10

By John Morrissy, Financial Post June 17, 2011

 

The S&P/TSX composite index shed earlier gains Friday — dragged lower by a meltdown in shares of Research In Motion — to post its seventh losing week in the past 10.

Photograph by: Tyler Anderson, National Post

The S&P/TSX composite index shed earlier gains Friday — dragged lower by a meltdown in shares of Research In Motion — to post its seventh losing week in the past 10.

Toronto stocks closed down 63.18 points, or 0.49 per cent, to 12,789.95.

On a day when most global indexes posted solid gains in the wake of better news on the Greek debt front, the performance of the TSX was hurt by BlackBerry maker RIM, which plunged 21.54 per cent, or $7.48, to $27.24 after reporting lower profit and guidance after the markets closed Thursday.

Since hitting a peak of $149.90 in June 2008, when the company's market cap totalled $78.5 billion, the value of its shares now totals just over $14 billion.

"I think RIM set the tone for Canada pretty much," John Kinsey, portfolio manager at Caldwell Securities, told Reuters. "They disappointed pretty much everybody and it's certainly showing in the stock performance."

U.S. oil prices also continued to fall, losing $1.94 U.S. a barrel to $93.01 U.S., the lowest point in about five months and resulting in a 0.51 per cent decline in the TSX's energy subindex.

Friday's weak performance kept the TSX in 10 per cent correction territory, having fallen 10.38 per cent from its peak April 5.

Gains in Royal Bank of Canada, which was rumoured to be on the verge of selling its ailing U.S. retail unit, helped counter the fall in the energy and technology sectors.

Royal Bank rose 64 cents, or 1.19 per cent, to $54.33. The financial sector eked out a gain of 0.03 per cent as several other of the country's big banks posted small gains.

Ottawa's Bridgewater Systems jumped almost 28 per cent, or by $1.77, to $8.10 after the Ottawa-based maker of network management technology was acquired Friday by Missouri-headquartered telecom software firm Amdocs Ltd. for $211 million.

The $8.20 per share cash deal represents a 33 per cent premium on the value of Bridgewater shares on the Toronto Stock Exchange as of market close on Thursday.

The Canadian dollar, meanwhile, gained 31 basis points to $1.0202 U.S. and gold gained $9.20 U.S. to $1,539.10

European shares got a lift from news that German Chancellor Angela Merkel had retreated from demands that bondholders to forced to shoulder a "substantial" share of a rescue, suggesting a plan was afoot to avoid Greece defaulting on its debt.

U.S. shares rose as well, despite the International Monetary Fund downgrading its forecast for U.S. economic growth.

But gains were trimmed after Moody's placed Italy's credit ratings on review for a possible downgrade, a move that came after European markets had already closed for the week.

The Dow Jones industrial average rose 42.84 points, or 0.36 per cent, to 12,004.36, while the Nasdaq shed 7.22 points, or 0.28 per cent, to 2,616.48.