Mixed Reports Weigh on Canadian Market

Mixed Reports Weigh on Canadian Market

Friday, January 28, 2005, 4:15 PM EST: (Thomson Financial Corporate Group): Bay Streetbuilt on earlier declines, led by energy, mining, financial and telecom issues. A strong bounce from yesterday's tech declines kept that sector higher, despite a mixed report from Celestica. Deal reports were also in focus, as Molson shareholders approved that firm's proposed deal with Adolph Coors, while Procter & Gamble is set to buy Gillette in a deal worth US$57 billion. Despite strong results from Microsoft, a host of other mixed earnings and a weaker GDP report pressured U.S. stocks.

* The S&P/Toronto Stock Exchange Composite Index receded 32.63 points, or
0.36%.

* On the economic front, the Industrial Product Price Index rose 0.3% to
108.5 in December from a revised 108.2 in November. December's result
matched analyst expectations. Prices were up 3.8% from a year ago. Also,
the Raw Materials Price Index fell 4.3% in December to 126.3 from a
revised 132.0 in November. Economists expected the Index to remain
unchanged. South of the border, gross domestic product rose at a 3.1%
annual rate in the fourth quarter, down from the third-quarter's growth
of 4.0% and the second-quarter's 3.3% gain. Economists had forecast
fourth-quarter growth of 3.6%.

* A rebound in Sierra Wireless and Zarlink Semiconductor, after those
issues posited disappointing reports yesterday, helped boost the tech
sector. Orion upgraded Zarlink to "overweight" from "underweight."
Still, Celestica plunged, after it reported a substantially wider
fourth-quarter loss of US$3.59 a share, including a number of charges,
from US$0.80 a share last year. On an adjusted basis, the contract
electronics manufacturer earned US$0.19 a share, reversing last year's
loss of US$0.04 a share, and landing ahead of the mean Thomson First
Call estimate of US$0.15 a share. The firm also said it will cut about
5,500 workers, and as a result, take an additional restructuring charge
of between US$225 million and US$275 million in 2005.

* In the U.S., Dow member Microsoft reported a sharply higher
second-quarter profit from a year ago on revenue that climbed to US$10.8
billion from US$10.2 billion. The firm also raised its fiscal 2005
earnings forecasts.

* Among chipmakers, Novellus Systems and Broadcom reported higher
fourth-quarter earnings that beat Wall Street forecasts. Still, some
analysts voiced concerns over Novellus' margins and Broadcom's outlook.
Meanwhile, PMC-Sierra recorded higher fourth-quarter earnings despite a
drop in revenue. On a non-GAAP basis, earnings met Street forecasts.
Elsewhere, Sanmina Holdings' earnings, on a non-GAAP basis, missed the
average analyst forecast by a penny.

* Telecom issues moved lower. BCE Inc.'s BellCanada signed a four year
C$84 million deal with Bank of Montreal to implement an integrated
network based on Internet Protocol Communications and switch bank
branches to IP Virtual Private Network across Canada.

* Within the staples group, Molson shareholders voted in favour of merging
with Adolph Coors. Coors shareholders are scheduled to vote on the deal
on February 1. The merger would create the world's fifth largest brewer.

* Cott Corp. slumped. The firm's fourth-quarter earnings per diluted share
fell to US$0.16 from US$0.23 a year ago, partly due to lower
manufacturing efficiencies in the U.S. Sales, however, advanced to
US$369.3 million from US$344.6 million. For the year, the firm's net
income landed beneath the mean Thomson First Call estimate.

* Oil prices tumbled, as some traders speculate that OPEC will not cut
output at their meeting in Vienna this weekend. The highly anticipated
general elections in Iraq continued to warrant attention. Meanwhile,
gold shares and the yellow metal declined, as the dollar moved higher
against the euro. Traders are awaiting next week's U.S. FOMC meeting and
their decision on interest rates. In research, Iamgold advanced, after
Paradigm raised its rating to "buy" from "hold."

* Sherritt International is planning an issuer bid for 10 million shares
and will redeem C$200 million of its 6% debentures. Turning to research
reports, RBC cut its price target on LionOre Mining International to
C$8.50 from C$9.50. Also, CIBC downgraded Methanex to "sector
underperform" from "sector perform."

* In industrial reports, WestJet Airlines rallied, after Raymond James
noted that rival Jetsgo may go bankrupt amid a flawed business model,
amongst other problems. Elsewhere, CP Ships reduced its 2004 earnings
forecast and warned that it will record a special charge of US$5 million
to pay for financial restatements.

-- Linda.Shea@thomson.com; Thomson Financial Corporate Group



This is Thomson Financial Corporate Group's Canadian Commentary, which is updated twice daily. The information herein is believed to be true and accurate, we take no responsibility for inaccurate information and reserve the right to update our reports. For more financial information at your fingertips, please visit http://www.irchannel.com/.

PRNewswire -- Jan. 28


Source: Thomson Financial Corporate Group

Web site: http://www.thomsonfinancial.com/
http://www.irchannel.com/


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