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May 2008 Archive I think we're alone now
Posted by Niall McGee on May 30, 2008
I had a massive crush on pop princess Tiffany for about four weeks during the late '80s. How could anyone not? How cute was she in the video I Think We’re Alone Now? But today I'm thinking about her namesake, luxury retailer Tiffany. The company made more profit and sold more high-end jewels than analysts predicted in the first quarter. Tiffany is doing well in Europe and Asia. And even sales in the U.S. are holding up, thanks to tourists jetting in to take advantage of the weak U.S. dollar. Sales at its flagship Manhattan store rose 16 percent. Tiffany also raised its full year profit forecast and says it plans to expand aggressively abroad. Tiffany’s first Dublin store will open this fall. The stock has been on a tear recently. Since mid-January shares are up more than 40 percent. So whatever happened to the other Tiffany? According to Wikipedia, she recently completed work on her first feature film. She stars as an adrenaline junkie who takes matters into her own hands when she gets trapped in a cabin during a blizzard. Sounds gripping. The narrow rally
Posted by Kim Parlee on May 29, 2008
How much faith do you have in the TSX rally? I kept hearing from analysts how "narrow" it was, so I decided to sit myself down in front of the Bloomberg terminal and do a little digging of my own. Here’s what I found out: over 4 months, the TSX has rallied from a 52 week low of 12,132 on January 21st to 14,688 on May 28th. That’s 2,556 points or 21%. If that’s not a headline grabber, how about this: One single stock accounted for 8.3% of that rally: Potash Corp. But wait – it gets better: Look at the list of stocks that have carried the TSX up to its current level and how much of the TSX gains they are responsible for: Percentage of TSX gains over past 4 months: Potash Corp.: 8.3% (212 points) So a mere five stocks are responsible for 1,000 points of upside, almost 40% of the gains on the TSX. An academic exercise, perhaps – but it does raise the question … what happens if those five stocks falter? A double-double and a Honda Civic to go, please
Posted by Niall McGee on May 29, 2008
Analysts use words like "abysmal" and "moribund" when describing the U.S. auto market. And why wouldn’t they? Last month, U.S. auto sales fell to their lowest level in 10 years. And Americans who are buying are increasingly choosing smaller, more fuel efficient vehicles. Good for the environment. Bad for auto makers who make drastically less money from selling these svelte vehicles. However, in Canada the environment could hardly be more different. Canadian auto sales actually rose 6% last month and Scotia Economics says 2008 is on track to be a record year for vehicle sales in Canada. What’s going on? Critically, the average price of a new car is actually coming down in Canada ($25,000 vs. $26,000 a year ago). Unlike the price of a cup of coffee, GST cuts actually make a measurable difference when buying a car. Cars are also cheaper than ever in Canada indirectly because of high oil prices. High oil prices helped drive the loonie to par against the greenback. And eventually car manufacturers cut Canadian sticker prices as a result of the glaring divergence between U.S. and Canadian prices. Another reason Canadians continue to buy cars in this environment is that Canadians haven’t been as directly impacted by high gas prices as Americans because Canadians don’t drive as many gas guzzlers. The best selling vehicle in Canada? Honda Civic. Best selling vehicle in the U.S? Ford F-150 truck. More »Weighing in on Celestica
Posted by Andrew Bell on May 28, 2008
In what may be another sign that battered Celestica Inc. has finally turned the corner, the bond-watchers at Gimme Credit changed their credit score on the contract electronics manufacturer this morning to "stable" from "deteriorating." "After suffering revenue declines in two of the last three years, we are projecting a slight increase this year," analyst Dave Novose says in a report. "Free cash flow turned positive in 2007 after being negative in three of the prior four years." Celestica stock has jumped more than 60% this year to trade around $9.50 US on the NYSE. On April 24, RBC hiked its price target on the shares to $9 from $6 after the company’s first-quarter cash flow swung to a positive $47 million from a negative $101 million a year ago. But analyst Amit Daryanani stuck with a Hold on the stock, citing a "challenging macro environment." Upside may be limited for now because Bloomberg says analysts have an average target price of just $9.38 and the vast majority call Celestica a Hold. More »Potty propyl propionate prices
Posted by Niall McGee on May 28, 2008
First gasoline. Then diapers. Now ethylhexoic acid. And pentyl propionate. And propyl propionate! Baskin says the government isn’t directly to blame for the lack of oil resources in the U.S. but it is to blame for not doing more to curb consumption of fossil fuels e.g. the lack of tougher regulation on car companies to make vehicles more fuel efficient, and no punitive tax on gasoline like they have in Europe. Guest blog: Traders and investors
Posted by David Baskin on May 28, 2008
Yesterday’s market put the difference between traders and investors into sharp focus. Oil dropped by over $3 and the traders sold off all the Canadian energy stocks, with Talisman taking the biggest hit. I guess maybe the Chinese aren’t buying it after all. From an investor’s point of view, the major oil producers are being valued with an assumed price of oil at under $100, so every day above that price is just extra cash in the bank. Companies like Petro-Canada and Talisman are screaming buys with oil at $110, much less $130. The banks were also interesting. Bank of Nova Scotia fell in spite of raising its dividend and producing a return on equity of 21%. Where else are you going to find a business with that kind of ROE, a dividend yield of over 4% and a forward P/E ratio of around 10? Maybe traders were reacting to the headline number: 97 cents for the quarter, a miss of a few cents. Investors should be focusing on the dividend increase. Clearly the management and the board have a pretty good idea that the second half will be stronger. Finally, the BCE show continues as traders feverishly speculate in legal futures. I suspect that the Supreme Court will decide to hear the case, and will strain to render a decision prior to June 30. But wouldn’t it be more sensible for the BCE board to settle this thing and get the deal done? For the record, we own Talisman, Petro-Canada, Bank of Nova Scotia and BCE, and we didn’t sell a share of any of them yesterday. Comments may be sent to davidbaskin@baskinfinancial.com. (David Baskin is president of Baskin Financial Services Inc. in Toronto) More »A good day for Bridgewater
Posted by Andrew Bell on May 27, 2008
Bridgewater Systems Corp. (BWC - T), an ill-fated IPO that limped onto the market at the end of 2007, has popped almost 40% today to trade around $2.98 after TD Securities started coverage of the stock with a Buy. Analyst Scott Penner says the Ottawa company, whose software lets cellphone providers such as Verizon, Sprint and Bell keep track of their customers, has been trading at little more than the value of its cash despite four consecutive years of profitability. He expects earnings to double this year, to 26 cents a share, and has a one-year price target of $5.50. Penner says he's the only analyst to have published on the stock but "management believes that there are two other dealers with near-term [i.e. next couple of months] plans for coverage." He says lockup restrictions expire in June and December, which will improve the float to 22 million shares. The company was started in 1997 by two Newbridge Networks employees and the chairman is former Newbridge CEO Terry Matthews. More »Guest blog: U.S. land values lead to losses
Posted by David Baskin on May 26, 2008
Everyone knows about the housing crisis in the U.S., but there is much less talk about the meltdown in raw land values. Tens of thousands of lots slated for development have plummeted in value and the banks that loaned money against them are way underwater. This is not an issue that affects homeowners directly, but it will surely result in the failure of a number of small local banks like PFF, and maybe some bigger ones. Since last December major homebuilders have taken writeoffs in the billions on their land holdings as it became clear that it made no sense to build houses that nobody wants or can afford. It's likely that dozens of small and mid-sized builders will go under this year, and some will take their banks with them. The small banks don't get the headlines, but as lenders to local businesses they are in some ways more important than the Citibanks and Wachovias. Widespread failures will affect the availability of credit in many communities and will lead to a deeper and longer recession. In other words, we are far from being out of the woods. Comments may be sent to davidbaskin@baskinfinancial.com. (David Baskin is president of Baskin Financial Services Inc. in Toronto) Nobody beats the Wiz
Posted by Niall McGee on May 26, 2008
Is Wal-Mart always cheaper than Loblaws? Some might find the question a bit silly. Like the "Nobody beats the Wiz" guy in Seinfeld, nobody beats Wal-Mart on price. Right? Well, when it comes to food, not exactly. His findings? Fresh fruit & vegetables … no difference. Loblaws is just as competitive as Wal-Mart. And the explanation? Wolfe says Loblaws and Wal-Mart buy fresh fruit and veg from the same source: open markets where Wal-Mart has no special clout. However, on packaged goods Wal-Mart has real clout with suppliers, according to Wolfe. So it can afford to offer lower prices. More »Diaper duty
Posted by Niall McGee on May 23, 2008
New dads beware: Kimberly-Clark plans to hike prices on everything from diapers to tissues to training pants by as much as 8%. Ouch! I have no idea what training pants are but apparently you need them by the truckload when you have a kid. I will soon be a new dad, so all this is just a wee bit depressing. So why do consumers demand a better product at a lower price from a car company when they’ll pay more for the same old Pampers or Huggies? Check out my diaper segment with Michael Kane on Lunch Money. What's BCE worth?
Posted by Andrew Bell on May 22, 2008
BCE stock may be down more than 12% after the Quebec Court of Appeal ruled that the proposed takeout of the company for nearly $52 billion (including debt) is unfair to bondholders. But after an initial plunge, the stock has held remarkably steady today at just under $32.50. In fact, it was moving up around lunchtime. Sure, there’s room for a further plunge in the short run (BMO analyst Peter Rhamey says $27 is distinctly possible) if the deal to take over the company at $42.75 falls apart. But at $32 and change, it's pretty close to the fundamental value that analysts ascribe to the stock if the takeover turns out to be toast. But remember that the privatization isn’t dead yet. Maybe those bond investors can be appeased. RBC says there's room to give them a $1.3-billion payoff, which would reduce the takeover price that shareholders get by about $1.64 to $41.11. And Telus could yet swoop in. Genuity analyst Davai Ghose says the rival telco might pay $35 to $39, although that deal probably would include stock and would attract a lot of anti-monopoly scrutiny. For the record, Desjardins puts the fundamental value of BCE at $30, rising to $34 if you include the $3.2-billion proceeds from the sale of Telsat. Credit Suisse sees a "sustainable level of $32 to $33" for BCE if the deal dies. Scotia sees the shares at $32.50 if there's no takeout (although analyst Warren Hastings cautions that the stock could slide to $28 for a while). UBS puts the fundamental worth at $31. Then there are the gloom merchants. BMO sees the stock trading between $27 and $30. And Haywood sees the fundamental value at only $29, absent any takeover speculation. Genuity’s also in the $29 camp. More »Guest blog: What next for BCE?
Posted by David Baskin on May 22, 2008
Imagine that Big Brown had fallen down coming into the home stretch at the Preakness, allowing a 25-to-1 also-ran to win. Bettors on the favourite would feel pretty much like BCE shareholders feel this morning. The Quebec Court of Appeal judgment was a long-shot victory which appears to go against settled law. If allowed to stand it will make future takeovers of Canadian companies vastly more difficult. For that reason alone, here’s hoping it gets appealed to the Supreme Court. In the meantime, with BCE shares down 13%, what are we shareholders (and we hold a good number of shares) to do? Our crystal ball is not working too well, or we would have sold yesterday, but here is a guess on possible outcomes, with ball park probabilities: Everyone shakes hands and walks away – 10% chance. BCE gets an extension from the buyers and goes to the Supreme Court; this might require the consent of the bankers, who are dying to get out of the deal. It's highly unlikely that the court would render a decision by June 30, but the deal gets extended to say Sept. 30 – 20% chance. BCE bites the bullet and drops the price paid to shareholders by $4 or so per share to the $38.50 range, with the $3.5-billion savings going to buy out the longer bonds. This would require another vote by the shareholders as well as the acquiescence of the banks – 60% chance. Telus shows up with a suitcase full of cash – say, $38 per share – sweet-talks its way around the Competition Tribunal, and becomes Canada’s telecom king – 10% chance. In the meantime, we’re not selling, at least not yet. (David Baskin is president of Baskin Financial Services Inc. in Toronto) Guest blog: Time for hard questions
Posted by David Baskin on May 21, 2008
What a day to start a blog! The TSX takes a header and falls 250 in spite of oil going to the moon. Even mighty EnCana and Talisman, yesterday’s darlings, stink the joint out. What’s going on here? Obviously, there was some heavy-duty profit taking today, and not just in the oils. The whole commodity complex was hit hard with the recent big winners like Potash and Agrium in agribusiness and Teck Cominco and Cameco in the metals showing big drops. But it wasn’t just profit taking, and it wasn’t just here. Release of the Federal meeting minutes confirmed that interest rates are not going down any more, and what’s worse, inflation is due to accelerate. Combined with the pretty scary U.S. Producer Price Index numbers from yesterday, this caused visions of stagflation to dance in the eyes of Wall Street traders who sent the Dow down big for the second day in a row. Toronto simply couldn’t stand the heat of a 400-point Dow meltdown. For money managers like us, the hard question remains. Where do we get a safe return with T-bills yielding less than inflation and five year Canadas stuck around three percent? The dividend yields on some of the Canadian blue chips look pretty good about now. If you have comments, please email me at davidbaskin@baskinfinancial.com More » HP to Palm: 'No thanks'
Posted by Jon Erlichman on May 21, 2008
Palm's most recent financials were quite telling. The company lost more than $30 million US in its third quarter, reversing a profit from the previous year. Revenue sank almost 25 percent. On top of that, Palm said it would stop providing guidance for future quarters. Certainly it's been a struggle to compete with the success of iPhones and BlackBerries. But analysts also point to competition from heavyweights like Motorola and Samsung. All that said, Palm's been fighting this survival battle for some time. It spent roughly a year weighing its options -- a period during which Palm approached Hewlett-Packard about a possible sale. That's according to a BNN source. HP turned Palm down, as did others. So, ultimately, Palm turned to private equity. Last June, it announced Elevation Partners would acquire a 25-percent stake. As part of that deal, Palm brought in a former Apple executive, Jon Rubenstein, who became chairman. Some have called him the "podfather," given his success running Apple's iPod unit. Palm investors initially cheered that news. But fast-forward almost a year, and the excitement has died down. Needham & Company's Charles Wolf says Palm has lost its way. Despite decent sales for its Centro smartphone, Wolf said in a recent research note, "Palm is likely to operate, at best, at break-even for at least the next two quarters, and perhaps longer." Against that backdrop, note that a source tells BNN Palm has contacted HP about a possible sale since the Elevation deal. HP, again, said 'no,' as it becomes increasingly confident in the technology behind its iPaq smartphone. Palm did not respond to a BNN inquiry. Sources also tell BNN Palm could soon exit the retail market for selling personal digital assistants, more commonly known as PDAs. There was, of course, a time when Palm Pilots were all the rage. But such products have become dinosaurs, as smartphones have taken over. Earlier this year, Palm announced plans to close most of its retail stores, as well as its airport shops. As for its plans for PDAs, Palm did not respond to BNN's inquiry. Since the deal with Elevation Partners was announced, Palm shares have sunk nearly 70 percent. Over that same stretch, Apple is up more than 50 percent, while RIM is up 150 percent. You'd think Palm's poor performance would attract at least some buyers, especially given its brand recognition. But RBC's Mike Abramsky wonders if a buyer would pay what Elevation did (Palm would likely want at least that amount). Also, if a deal is coming, why would one of Palm's founders (Jeffrey Hawkins) sell 20,000 shares less than a month ago? Those on the Street who give Palm the benefit of the doubt point to its new Linux-based operating system. Long overdue, it's expected near the end of this year. The challenge, though, will be battling Google, which is behind the much hyped "android" operating system. Ultimately, many observers argue Palm desperately needs an iPhone-like hit. A Hail Mary, as Mike Abramsky puts it. Risks remain for BCE buyout: analyst
Posted by Andrew Bell on May 14, 2008
BCE shares have been holding above $39 today – still shy of the $42.75 that its prospective buyers have agreed to pay – after Clear Channel's private equity purchasers agreed to pay $36.00 US for the media giant, down 8.2% from the original deal. BCE has climbed to its highest levels since January as credit conditions ease somewhat. And Desjardins analyst Joseph MacKay says today the BCE deal has a better chance of going through now that the Clear Channel takeover has survived. Three of the banks in Clear Channel – Citigroup, Royal Bank of Scotland and Deutsche Bank – are also lenders to the BCE transaction. But MacKay adds that "the probability of the BCE privatization being repriced has also increased, in our opinion. If the same level of reprice as Clear Channel were to occur, the BCE transaction would be revised to $39.25 [Cdn], providing minimal return from current levels." Repricing would require a new shareholder vote … and there's always the ongoing legal challenge from those pesky BCE bondholders. MacKay has a Buy on BCE but warns that if the stock does get to $42.75, it will generate a return of only about 9%: "We believe that caution is warranted on BCE at current price levels." (BCE holds a minority stake in CTVglobemedia, which owns BNN) More »TSX Group gets props from U.S. media watcher
Posted by Kim Parlee on May 13, 2008
It's not often I hear a "media guy" pick the TSX Group (X-T) as a stock star. It's even rarer when that stock picker … is an American. But that's what happened on Stars and Dogs last night. Porter Bibb, a great guest who has more than 40 active years of I-banking experience in media and entertainment (ahem … not to mention he's a former White House correspondent for Newsweek, the first publisher of Rolling Stone magazine and former corporate development director for The New York Times Company), snubbed the Nasdaq and NYSE and picked the TSX group as his “star”. Porter cited the following: And because of that Porter sees a flood of mid-cap companies listing in Toronto soon. Energy and resource companies, but also biotech, tech and a lot of small media and internet companies. And he should know. He's bringing a few IPO candidates to Toronto himself very soon. More »Abby's Road
Posted by Jon Erlichman on May 13, 2008
What a year it's been for Abby Joseph Cohen. Heading into 2008, Wall Street's perennial bull forecast the S&P 500 would rise 14%, suggesting a year-end level of 1,675. Whoops! In January, the S&P suffered its biggest monthly plunge since 1990. The Stock Trader's Almanac likes to say, "As goes January, so goes the rest of the year." Still, Abby Jo stuck to her forecast. By mid-March, the S&P had shed another 7%, pushing it below 1,300. Cohen was replaced by David Kostin, who shared a much more bearish. Of course, since those March lows, the market has risen roughly 10%. As for Abby, she'd been keeping to herself – until today. Reuters quoted her as saying the S&P will hit 1,500 by year's end. That ain't 1,675, but it suggests another 7% of upside. You've got to wonder how that makes Kostin feel. A Goldman spokesperson told me today that, indeed, he's the one who now provides year-end predictions – not Abby. More »Einhorn ain't foolin' with Stronach
Posted by Jon Erlichman on May 9, 2008
Hedge funds are mysterious to most average investors. But in a new book, one of the industry's youngest and brightest stars has shared a very personal look inside his world. His name is David Einhorn and he runs Greenlight Capital. Einhorn started his fund in 1996, with roughly $1 million. It's now a multibillion-dollar fund, which routinely makes investors (including Michael J. Fox) smile. Those less inclined to smile are the executives at companies he targets. In his new book, Fooling Some of the People All of the Time (www.foolingsomepeople.com), Einhorn explains in great detail his long running battle with Allied Capital – a stock he's still shorting. Of course, in Canada, Einhorn's been battling Magna's Frank Stronach. Greenlight Capital is the third-largest investor in MI Developments, which essentially holds Magna's real estate assets. After much pressure, Stronach recently proposed a transaction that would see MI get rid of its money-losing Magna Entertainment assets. But the structure of the deal has irked some investors, including Einhorn, who recently said Stronach effectively put a gun to the head of MI's shareholders. In an interview today, I asked Einhorn if he'll be voting against the deal. "I think that’s fair," was his response. Einhorn is also unconvinced Stronach will have his way. "They need to have two-thirds of the vote and they signed up 53% before they announced it. As best I can tell, that's what they have at this point." As for the independent directors charged with reviewing the fairness of the transaction: "Personally, I don't have a lot of confidence in that group because they were hand-picked by Mr. Stronach and they've made a lot of decisions so far that have been rather questionable. But nonetheless, the ball is in their court." Meanwhile, Einhorn continues to battle Stronach in court, claiming he oppressed minority shareholders. "MI Developments lawyers effectively advanced an argument that our purpose was just to effectuate a short-term bump in the stock, which is ironic because we've now been shareholders in the company for five years." You’d think he'd get tired of the back and forth bickering, but Einhorn isn't ready to exit his position. "As a general matter, I expect we'll be sticking with this one for a bit." One battle in Canada's enough, though. Einhorn isn't planning any other investments north of the border. Oh – and for all you poker nuts, Einhorn will be back at the table for this year's World Series of Poker (he placed 18th in the 2006 tourney). Click More to watch the whole interview. More »Why Microsoft buying Facebook makes sense
Posted by Michael Hainsworth on May 9, 2008
Seventy million people are registered users of Facebook and that's all Microsoft needs to know. Rumours the company is looking to expand the $240-million US investment in the world's second-largest social networking site made last year follow CEO Steve Ballmer's decision to walk away from the $44.6-billion hostile bid for Yahoo. The Yahoo acquisition wasn't about putting Microsoft on the map in the search engine game. A successful acquisition would have given it little more than 30% of the market. This was about targeted advertising. And it's easy to argue buying Facebook makes even more sense. Unlike Yahoo, Facebook knows a lot about its users. Members provide incredibly detailed information about who they are, including their age, location and education. It even knows if you're married, single, or if "it's complicated." The company's behind-the-scenes demographic number-crunching software has been targeted by critics as poking too much into the personal life – and activities – of its massive membership. But there's no denying there's a revenue generating opportunity on a previously unheard of scale. Tell Facebook you're a single white male under 30, and chances are the "sponsored item" that appears in your Facebook News Feed (that details the activities of those on your friend list) will include a promotion for the upcoming action flick. Are you a married Calgarian who recently changed her status to "single"? Advertisements for singles bars in your neighbourhood can pop up. Facebook's revenue stream also comes from "virtual gifts." You get one free. After that? $1 per gift, or 10 for six bucks. Actual money is being spent on virtual gifts to give to friends publicly, privately and anonymously (no surprise many of the gifts are naughty). Not only is Facebook making big bucks selling such intangibles, but also by offering free gifts sponsored by the car companies, Hollywood and the like. Meantime, Facebook is cleaning up its affairs ahead of a possible takeover offer. Associated Press reports it's adding more than 40 new safeguards to protect young members from bullying and online predators. And in a move that will favour celebrities and popular politicians, the 5,000 friend limit has just been removed. Buying Facebook will barely make a dent in Microsoft's coffers. After all, it was willing to shell out almost $45 billion (but not the $53 billion demanded) for Yahoo. With the October 2007 investment, Facebook would likely cost Microsoft little more than $15 billion. For Steve 'n Bill, that's walkin' around money. More » Canadian banks eyeing Citi assets?
Posted by Jon Erlichman on May 9, 2008
So … Citigroup is planning to dump half a TRILLION dollars in assets over the next couple of years. But if Citi doesn’t want 'em, who will? Several folks on Bay Street told me today they think Canadian banks will – at the very least – look at what Citigroup's selling. They cited the stronger liquidity for Canadian banks and the potentially attractive asset prices. All of these analysts and money managers pointed, in particular, to Scotiabank and Royal. Recall Gord Nixon shot down rumours RBC was looking at Bear Stearns, but said in late March, "we are interested in being an opportunistic buyer." Scotiabank, meanwhile, was mentioned as a buyer for National City. Not all banks are expected to work the phones. CIBC is seen as a less interested buyer, as it focuses on getting its own house in order. And, obviously, any purchases would depend on what Citi makes available (i.e. no lemons, please). But expect a few players to do some sniffin' so they can make an educated decision. A tale of three lenders
Posted by Andrew Bell on May 8, 2008
Home Capital Group Inc. (HCG – TSX) may be a solid non-prime mortgage lender but some market players warn that investors are paying too much for its shiny reputation. Montreal money manager Sebastian Van Berkom said on Stars & Dogs this week that it’s a "short-term" pooch because of the rich valuation - and he’s not going to be buying shares until they get down to around $30. Home Capital shares are up 1% in the past year, trading at $39 today. Meanwhile, mortgage originator First National Financial Income Fund (FN.UN – TSX) has slumped 30% and lender Equitable Group (ETC-TSX) has dropped 34%. RBC analyst Geoffrey Kwan agrees that Home Capital is richly priced. He started covering the stock today with a Hold rating and target of $43. At 13 times forward earnings, Kwan says, Home Capital stock is three times more expensive than First National and 4.6 times more expensive than Equitable. The premium valuation, he cautions, "may result in greater pressure on the share price if Canada enters a housing market downturn." Home has a captive source of funding through deposits at its Home Trust unit, and 30% of the company's profit last year came from non-mortgage lending and investments. But Kwan worries that there’s little evidence to show how well the company will do in managing credit risk if loan losses soar. He still calls First National a buy, albeit with above average risk. But he started coverage of Equitable today with an Underperform rating and a target of $23, just $1 above the current price. Ontario accounts for 75% of the company’s mortgages and Equitable is a risk if the province’s economy tanks, RBC says. The company has already scaled back its growth plans and Kwan reckons profit will grow at an anemic "low single digit" rate” in 2008 and 2009. More »Come and gone?
Posted by Jon Erlichman on May 7, 2008
This was one of those troubling trading sessions. Losses accelerated, despite few fresh developments. I’m sure many of you have been sitting back, wondering when it'd be a good time to jump in again. Trader talk suggests that opportunity may have come and gone. On March 7, the S&P 500 closed at 1293. On Monday, it closed at 1418. That’s a 10% move in less than two months. "You have to ask yourself if we’ve started a whole new bull market or a counter trend rally in a bear market," says Bill Strazzullo of Bell Curve Trading. Strazzullo, who had called for the S&P to top out at around 1420, says today's drop was driven by profit taking. Dave Rovelli, who oversees U.S. trading for Canaccord Adams, agrees: "This market is well overbought." He notes bargain hunters had been gobbling up financials. Indeed, Dow components AIG, American Express and Citigroup enjoyed double-digit percentage returns in that March-May stretch I mentioned. Today, all three were down more than 4%, on tougher talk from the SEC. Rovelli was watching to see if the S&P could hold at 1395, noting the next support level is around 1370. The index finished the day at 1392. More »It's easy to speak for the ducks, but ...
Posted by Amanda Lang on May 6, 2008
I am going to begin my first-ever blog by noting that I’m somewhat anti-blog. It's not that I don't enjoy decent essays wherever they may be found, but that I harbour a mild suspicion of the genre as one that promotes self-indulgent digressions couched in run-on sentences of dubious grammatical provenance. But having said that, I will admit I'm moved to blog about the ducks. We are still talking about the ducks; the Syncrude ducks, as you may know them. Those tragic ducks, victims of that nasty anti-environmental capitalism we call the Oil Sands. Now, I’m of the mind that reasonable people can differ about the ducks. You may feel your eyes well up over the tiny feathered creatures; I may be as unmoved as I am standing in the aisle of my favourite butcher, pondering a wing versus a leg. You may consider the death of hundreds of ducks in a toxic industrial waste pond to be nothing short of horrific: a perfect symbol of how man has lost all connection with the earth, and seems bent on a path toward nothing short of its utter destruction. I might shrug and point to statistics – numbers that put the 500 ducks into a bigger context, say, compared to the birds that die flying into buildings, or those struck by motor vehicles – two examples of many of the routes to death for tens of millions of birds a year. Reasonable difference is what makes life interesting. But where I draw the line – where I am moved to blog – is when the industry minister forgets his job description. It’s all very well for Prime Minister Harper to wring his hands and promise to wring necks and get to the bottom of it all – but the industry minister is supposed to advocate for, um, industry. Business. Enterprise that creates and employs and generates wealth, and along the way might just disrupt a spotted owl or two. If the industry minister can’t remember to defend the one sector in this country that is under imminent threat of decline, if he can’t recall that business doesn’t wear a black hat, that, as tragic as this outcome may be, creating and generating and employing do come with some costs, some of them environmental – and that those costs may be worthwhile – if the industry minister can’t remember that, how on earth is Canadian business supposed to defend itself against the tiny, oily ducks? Especially when any person or group that calls itself an environmentalist is somehow exempt from the same standards as anyone else – tacitly free to make wild, unsubstantiated claims with little or no backup. Note to Minister Prentice: next time someone needs to bemoan the loss of some greasy fowl, send the dossier over the John Baird. He’s minister of the environment: it’s HIS job description. More »Gildan Activewear hits the road
Posted by Andrew Bell on May 6, 2008
Shares in T-shirt and sock giant Gildan Activewear fell down behind the dryer last week – plunging $10 to trade at less than $26 – after the company warned of production foul-ups in the Dominican Republic. But RBC analyst Sara O'Brien says today that she's been spending time with CEO Glenn Chamandy and she's looking for a "stock rally over the next weeks" as executives take to the road and win a "return of investor confidence." RBC has a price target of $36 for Gildan, more than $8 above today's prices. That's aggressive… Bloomberg says the average analyst sees the shares hitting $33 or so. And political risk remains. U.S. sock makers says Montreal-based Gildan has been flooding the American market with cheap Honduran-made product. They’ve already won one six-month tariff and more duties may be on the way Iron Man
Posted by Niall McGee on May 5, 2008
The U.S. economy may be drifting barely above recessionary levels but that's not stopping Americans from indulging in their national pastime. No not baseball. Movie-going. Iron Man starring Hollywood bad boy/comeback kid Robert Downey Jr. took in $104 million US over the weekend -- the tenth-biggest opening of all time. Iron Man was also a big win for Marvel Entertainment. But Marvel spent about $150 million making it. And apparently its scrawny star, Edward Norton (The Hulk), was a pain to work with and clashed creatively with everyone on set. But movie aficionados will tell you every great Hollywood movie bred unhappy, testy sets. Apparently tension breeds brilliance. Over to you, Jerry
Posted by Jon Erlichman on May 5, 2008
I guess I should update my last blog. While you were doing errands on Saturday, Jerry Yang and Steve Ballmer were hangin' at the Seattle airport (I would have suggested a stop at Wolfgang Puck Express or the Old Seattle Deli). We've since learned the fellas couldn’t work out a deal, and today Yahoo investors promptly dumped their stock. Mark Lebovitch represents two retirement funds in Detroit that launched a class-action lawsuit against Yahoo and its board. Lebovitch told BNN: "Yahoo chief executive Jerry Yang and the board at Yahoo would stop at nothing to avoid selling to Microsoft. They have put ego and self-interest ahead of the interests of shareholders, and shareholders have seen billions of dollars destroyed. Yang and the board have a lot to answer for." Yahoo shares are trading above their pre-MSFT bid level of $19, but can the Yangster get the stock up to the $33 level Ballmer was offering? Laura Martin, an analyst at Soleil Securities, says based on execution alone, it won't happen for two years. Some say Ballmer might come back later with a new bid, but in his letter to Yang he sure sounded like a guy looking for reasons to run. Ballmer highlighted Yahoo's deal with Google, saying, "it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit." If Microsoft really wanted Yahoo, you'd think they could easily dismantle the Google deal in no time flat. BTW, I just did a search on Yahoo for the first time since my on-air look consisted of a shaved head and glasses. If you type in "Jerry Yang," there are lots of links to the guy who won the 2007 World Series of Poker Champions. A sign, perhaps that Yahoo's Yang is making a big bet? Man, it's getting intense
Posted by Jon Erlichman on May 2, 2008
In the past couple hours, there have been various reports that talks between Yahoo and Microsoft are "intensifying." I only have one thing to say. When Steve Ballmer's involved, you better bring your intensity A game. Here's an oldie, but a goodie: Steve Ballmer makes his case: http://www.youtube.com/watch?v=wvsboPUjrGc More » |
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