Mobile manufacturer, Research In Motion (NASDAQ:RIMM) stated it would record a pre-tax provision in Q3 of $485 million, $360 million after tax, related to its inventory valuation of BlackBerry PlayBook tablets. The charge is expected to be largely non-cash. As previously disclosed, RIM has a high level of BlackBerry PlayBook inventory.
The company now considers that an increase in promotional activity is required to drive sell-through to end customers.
Therefore, RIM will record a provision that reflects the recent market environment and allow it to expand upon the aggressive level of promotional activity recently employed by the company in order to drive PlayBook adoption around the world. RIM believes this strategy will accelerate adoption of its QNX-based platform by consumers and enterprises.
During the third quarter RIM sold approximately 150,000 BlackBerry PlayBook tablets and sell-through to end customers, based on RIM's internal data, was higher than this amount.
Research In Motion (NASDAQ:RIMM) has potential upside of 50.9% based on a current price of $18.58 and an average consensus analyst price target of $28.03.
U.S. stocks opened higher after the U.S. unemployment rate unexpectedly dropped, adding to encouraging headlines suggesting European leaders and central bankers were more willing to tackle the region's debt woes, according to the Wall Street Journal.
The Dow Jones Industrial Average rose 77 points, or 0.6%, to 12100. The Standard & Poor's 500 stock-index rose nine points, or 0.7%, to 1254, while the Nasdaq Composite gained 19 points, or 0.7%, to 2645.
Leading the gainers were financials stocks, with J.P. Morgan Chase and Bank of America leading the advancers with gains of 2.6% and 1.8% respectively.
The gains came after German Chancellor Angela Merkel called a proposal to create national funds to administer excessive debt in euro-zone nations an "interesting idea", her spokesman said Friday. Ms. Merkel and French President Nicolas Sarkozy are also finalizing a plan to strengthen euro-zone stability rules, including implementing European Union treaty changes.
Meanwhile, European Central Bank President Mario Draghi signaled the bank could ramp up its role battling the debt crisis. Bloomberg News reported that European officials are considering a proposal to channel as much as $270 billion in loans from the ECB through the International Monetary Fund to fight the debt crisis.
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U.S. Unemployment Dropped 0.4% According to the Labor Department
The U.S. economy created 120,000 jobs in November and the unemployment rate fell to 8.6%, its lowest level in more than two and a half years, the Labor Department said Friday.
The reduction in the jobless rate, which stood at 9.0% in October, stemmed in large part from a decline in the size of the labor force. Some 315,000 people stopped looking for jobs last month, according to Market Watch.
However, the decline in the labor force is contradicted by other evidence showing that companies continue to add workers at a modest pace.The economy has gained an average of 131,000 jobs over the past year, or an even higher 143,000 in the past three months. The employment figures are drawn from a survey of several hundred thousand business establishments
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Verizon Wireless to Buy Advanced Wireless Spectrum from SpectrumCo for $3.6 Billion
SpectrumCo, a joint venture between Comcast Corporation (NASDAQ:CMCSA), Time Warner (NYSE:TWC), and Bright House Networks, announced it has entered into an agreement pursuant to which Verizon will acquire its 122 Advanced Wireless Services spectrum licenses covering 259 million POPs for $3.6 billion.
Comcast owns 63.6% of SpectrumCo and will receive an estimated $2.3 billion from the sale. Time Warner Cable owns 31.2% of SpectrumCo and will receive approximately $1.1 billion. Bright House Networks owns 5.3% of SpectrumCo and will receive approximately $189 million.
Verizon Communications (NYSE:VZ) has potential upside of 3.6% based on a current price of $37.85 and an average consensus analyst price target of $39.23.
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AOL (NYSE:AOL) to Focus On Mobile Ad Sales for Growth (potential upside of 26.7%)
Bloomberg reported that advertising on mobile devices makes up a "tiny" percentage of AOL's (NYSE:AOL) total ad sales, according to CEO Tim Armstrong, but his goal is to increase ad revenue for the company's mobile segment to 10% or more of overall sales.
Armstrong, who took the helm in 2009 said, "We're very, very small right now in mobile. The opportunity is there, and we've got to get really organized around it."
Shares of the company have fallen 41% this year alone.
AOL (NYSE:AOL) has potential upside of 26.7% based on a current price of $14.03 and an average consensus analyst price target of $17.77.
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Google Delivery Service Unlikely to Impact Amazon (NASDAQ:AMZN) (potential upside of 21.9%)
Piper Jaffray does not believe a Google (NASDAQ:GOOG) delivery service, as reported yesterday by the Wall Street Journal, will have an impact on Amazon (NASDAQ:AMZN) sales. They also believe a quick delivery service by Google would not address the most important elements for e-commerce buyers, namely convenience, price and selection.
The firm has an Overweight rating on Amazon shares with a $256 price target.
Amazon.com (NASDAQ:AMZN) has potential upside of 21.9% based on a current price of $197.13 and an average consensus analyst price target of $240.29.
