TSX off triple digits after GDP drop November 3, 2009
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The volatility on markets continued Friday with the Toronto stock exchange selling off after a report showing the Canadian economy contracted slightly in August.
The S&P/TSX composite index closed down 164.5 points to 10,910.8.
TSX telecomms sub-index 3-month chart
The drop followed a 270-point rise Thursday on news the U.S. economy grew at an annualized rate of 3.5 per cent in the third quarter, fuelled mainly by government spending.
The energy sub-index was off two per cent as December crude on the New York Mercantile Exchange fell $2.87 to close at $77 US.
However, the telecom sector rose 1.3 per cent a day after the federal broadcast regulator ruled Toronto-based Globalive doesn’t meet Canadian ownership requirements and denied it a licence to compete with Canada’s three existing cellphone networks.
Gold and the Canadian dollar also fell.
The December bullion contract on the Nymex finished off $6.70 to $1039.70 US an ounce. The loonie ended down 1.29 cents to 92.43 cents US.
In New York, the Dow Jones industrial average settled 249.85 points lower to 9,712.73 after running up 200 points on Thursday.
The Nasdaq composite index ended down 52.44 points to 2,045.11 while the S&P 500 index finished 29.92 points to 1,036.19.
Autoworkers confident after meeting with Chrysler October 17, 2009
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Canadian Auto Workers president Ken Lewenza has high praise for Chrysler CEO Sergio Marchionne after the two men met Thursday at Chrysler headquarters in Auburn Hill, Mich.(Chris Young/Canadian Press)
A meeting between representatives of the Canadian Auto Workers and the Chrysler Group LLC late Thursday has given union president Ken Lewenza new confidence about the future of the struggling automaker.
The meeting at Chrysler headquarters in Auburn Hills, Mich., was scheduled to last three hours. Instead, it lasted six hours and ended only after Chrysler CEO Sergio Marchionne took the autoworkers out for dinner at a local fish restaurant.
Marchionne spent much of the time “expressing his confidence in the corporation” and the future of its products, Lewenza told CBC News.
“I left there feeling a sense of confidence for the first time in a long time,” he said. “This is a guy that’s focused and determined to turn the corporation around, not just for the short term but for the long term.”
Turning Chrysler around won’t be easy.
Sales of Chrysler vehicles in the United States were down 42 per cent in September from the year before, and down 32 per cent internationally. The company laid off 12 percent of its United States workforce, or 360 employees, from its field offices and headquarters on Oct. 1. And it is scheduled to begin talks with U.S. congressional leaders who want the company to reverse its recent termination of 789 dealerships.
‘The existing products that we have in the pipeline at our Canadian plants are incredibly important to the company.’?Ken Lewenza, CAW president
Chrysler has fared slightly better in Canada. The company rehired 1,200 workers at its Dodge Grand Caravan assembly plant in Windsor in August due to increased demand, and sales of the minivan rose six per cent in September over the year before.
Still, the next nine or 10 months will be “a very difficult time for Chrysler workers and CAW members,” Lewenza predicted.
But Marchionne “clearly indicated that the existing products that we have in the pipeline at our Canadian plants are incredibly important to the company,” he added.
‘A worker’s CEO’
Thursday’s was the first formal meeting between Lewenza and Marchionne, who took over as CEO from Robert Nardelli on June 10.
The two men spent much of the day “getting to know each other,” Lewenza said, and he liked what he saw.
Marchionne has streamlined Chrysler management team, improved communication between departments in the area of product quality and improved plans to get vehicles to market quickly, Lewenza said.
“He’s a worker’s CEO,” Lewenza said. “He puts in the hours that are necessary, he empowers his leadership team, and he certainly made the CAW leadership yesterday feel very, very comfortable with the presentation he gave.”
A spokesperson for Chrysler refused to comment on the meeting, calling it private.
Marchionne and other senior executives will outline the company’s strategic plan to economists and the media at its annual meeting on Nov. 4.
Airlines’ outlook worse than after 9/11: report September 16, 2009
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The financial outlook for the airline industry is worse today than it was in the aftermath of the Sept. 11 attacks, a group representing the industry says.
The International Air Transport Association says global airline losses will total $11 billion US in 2009. That’s $2 billion worse than the agency’s last estimate.
The first commercial A380 flight touches down at Sydney International Airport in Australia in 2007. Despite hype over new planes like the A380, the global industry will rack up more than $11 billion in losses in 2009, IATA says.(Rob Griffith/Associated Press)
With combined losses in 2008-09 of $27.8 billion, “the bottom line of this crisis ? is larger than the impact of 9/11,” IATA CEO Giovanni Bisignani said.
Worldwide, the airline industry lost $24.3 billion in 2001-02 after the attacks in New York and Washington.
Industry revenues for the year are expected to fall by $80 billion, or 15 per cent, to $455 billion compared with 2008 levels.
The body also revised the amount that the industry lost last year. Total losses for 2008 are now listed at $16.8 billion, worse than the previous figure of $10.4 billion.
The agency blames an increase in fuel prices and a decrease in demand for the mounting losses. But government focus on environmental issues and a reluctance to allow mergers are contributing to the losses, it said.
Regional discrepancies
Passenger traffic is expected to decline by four per cent for 2009 as a whole.
Regionally, Latin American and Middle Eastern carriers are expected to hold up comparatively well, breaking even in most cases or eking out small profits.
But carriers in Europe and North America are now forecast to double the losses that were anticipated for the year.
“The global economic storm may be abating, but airlines have not yet found safe harbour. The crisis continues,” Bisignani said.
Suncor trims 1,000 jobs after merger September 8, 2009
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Suncor Energy’s CEO Rick George (left) shakes hands with Petro-Canada’s CEO Ron Brenneman on a March 2009 merger deal to create Canada’s largest oil company.(CBC)
Suncor Energy Inc. expects to shed 1,000 jobs by next month as a result of the company’s recent merger with Petro-Canada, the firm reported Thursday.
The Calgary-based company said last March that it would save $300 million in operating expenditures and $1 billion in capital expenditures annually following the merger with Petro-Canada.
“Unfortunately, bringing two large businesses together has also meant that some of the efficiencies are necessarily through workforce reductions,” said Suncor’s president and CEO Rick George. “It?s been difficult, but we’ve said from the start that this would be the case and worked hard to keep employees informed and to move quickly to build the new organization.”
In a statement issued Thursday, Suncor said it expects about 1,000 people will leave the company by mid-October through layoffs, retirements and discontinuation of contract positions. “The majority of these layoffs have already occurred and Suncor has committed to inform employees of their status, including movement into new jobs and confirmation of existing positions, by mid-September,” the company said.
Most of the job losses among the 13,000 employees will be contract positions and head office jobs in human resources and IT, a spokesman said. “At this point most people have either been offered a new role in the organization or confirmed in their existing role,” said Suncor spokesman Brad Bellows. “Or if they’re leaving the organization they know that as well. Most people that are leaving have already left.”
Suncor and its U.K. subsidiary have proposed that responsibility for managing the company?s international and offshore business will move to Calgary from London. “This proposal and resulting staffing decisions are subject to a consultation period of up to 90 days as required by United Kingdom legislation.”
?We expect the benefits of this merger to become increasingly clear to our shareholders, business partners and Canadians,? the company said.
The merger with Petro-Canada closed on Aug. 1.
Suncor says it has been reviewing its portfolio of potential growth projects to determine the best opportunities and optimal timing of projects to be developed based on expected rates of return, near-term cash flow potential and business risk.
Magna suspends dividend after Q1 sales plummet May 7, 2009
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Magna 12-month trading on the TSX
Parts company and auto assembler Magna International Inc. said sales crashed 46 per cent in the first quarter, compared with the same quarter in 2008.
The sales drop for the company was just over $3 billion US.
It has suspended the dividend on its A and B shares, Magna said in releasing its results Wednesday. It declared an 18-cents-a-share US dividend on Feb. 23, and paid a total of $1.08 a share in 2008.
“We are facing the worst industry conditions in decades, particularly in our primary markets,” said Vincent J. Galifi, executive vice-president and chief financial officer.
The decline occurred in “North American, European and rest of world production sales, complete vehicle assembly sales, and tooling, engineering and other sales,” the company announced.
The loss for the three months ended March 31 was $200 million ($1.79 a diluted share), compared with profit of $207 million ($1.78) a year earlier.
Sales were $3.57 billion, compared with $6.62 billion a year before.
Magna A shares rose 29 cents to $43.41 in TSX trading.
Magna is based in Aurora, Ont., north of Toronto.
RIM shares rise almost 20% after profit beats forecasts April 5, 2009
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Three-month trading in RIM stock on the TSX
Shares of Research In Motion Inc. jumped almost 20 per cent Friday, leaving the company’s stock price at about half the peak it reached in the past year.
RIM shares surged as high as $14.45 in early trading on the TSX Friday, before losing some of the early gains to close $11.81 higher at $72.80, a 19.4 per cent rise.
The increase followed the BlackBerry maker’s much higher-than-expected profit, reported after the markets closed on Thursday.
The share price gain takes the company stock back to almost half the 52-week peak, $150.30, reached on June 19, 2008. The 52-week low is $44.23, hit on Dec. 3.
Waterloo, Ont.-based RIM reported profit of $518.3 million US (90 cents a share) for the three months ended Feb. 28, compared with $412.5 million (72 cents) for the same quarter a year earlier.
Analysts were expecting RIM’s profit to be about 84 cents a share, according to Thomson Reuters.
TSX slips on day, up on week
RIM’s strength didn’t help the broad market. The S&P/TSX composite index fell slightly, losing 7.38 points to close at 9,065.76.
But it rose 244.78 points, or 2.8 per cent, over the week, leaving the index at the highest weekly close since Jan. 9.
Vancouver expects to lose $18M after cruise line changes base March 18, 2009
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The Carnival Spirit typically brings around 20,000 passengers a year through Vancouver.(CBC)
An estimated $18 million will sail out of Vancouver next year after Carnival Cruise Lines decided to shift most of its Alaska cruise business to Seattle, Tourism Vancouver said Monday.
Steve Pearce, vice-president of Tourism Vancouver, said the dwindling economy worldwide seemed to be the reason behind the decision, because most Carnival customers are from the United States and flying in and out of Seattle is cheaper for them.
“Nine sailings, I believe, are going to Seattle, which is unfortunate,” Pearce told CBC News on Monday.
“Each sailing for us is about $2 million economic activity, and [that] is an $18-million hit in the sector.”
The U.S. cruise line announced last week that its 2,124-passenger ship, Carnival Spirit, will sail from Seattle beginning in May 2010 on seven-day round-trip cruises to southeast Alaska.
Steve Pearce, vice-president of Tourism Vancouver, says there will still be more than 260 cruise ship sailings out of Vancouver next year, which is expected to bring in half a billion dollars. (CBC)
“It’s usually a cheaper experience overall, departing out of Seattle than it is out of Vancouver, but it is a very different cruise experience, as well,” Pearce said.
“They think that their customers are looking for deep discounts and they think they can offer those kinds of opportunities better out of Seattle than they can out of Vancouver.”
But Pearce said he is not overly worried because there will still be more than 260 cruise ship sailings out of Vancouver next year, which is expected to bring in half a billion dollars.
“I don’t see it being a long-term strategy,” he said of Carnival Cruise Lines’ shifting of business to Seattle. “I see this being a short-term tactic to take advantage of the circumstance.”
CIBC stock drops after bank issues notes paying 10% March 7, 2009
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One-month CIBC trading in Toronto
Shares of the Canadian Imperial Bank of Commerce fell sharply Thursday after it announced it was raising $1.6 billion of new capital by issuing notes paying nearly 10 per cent interest on one series and 10.25 per cent on another.
The bank’s stock was down 4.5 per cent, falling $1.77 to $37.86 in trading on the TSX.
The bank is not the only one to issue high-priced debt. The Toronto-Dominion Bank raised $1 billion in January with interest rates of 9.523 to 10 per cent.
CIBC announced that a wholly-owned subsidiary, CIBC Capital Trust, had agreed to sell $1.3 billion of CIBC Tier 1 Notes-Series A paying interest of 9.976 per cent. It also agreed to sell $300 million worth of Series B notes paying 10.25 per cent.
Tier 1 is a key level of capital required by bank regulators. Currently, the Tier 1 requirement is seven per cent.
CIBC said its Tier 1 level would have been about 11.5 per cent on Jan. 31 if the notes had been sold then. The actual rate on Jan. 31 was 9.8 per cent.
That 11.5 per cent ratio also includes recent sales of preferred shares.
Canadian banks have raised over $15 billion in Tier 1 capital, Mark Carney, governor of the Bank of Canada, said in January.
Blackberry Bold sales halted in Japan a week after launch February 28, 2009
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RIM announced on Feb. 20 that DoCoMo was starting to sell the Blackberry Bold.(Research in Motion)
A smartphone model launched in Japan last week by Research in Motion has been pulled from shelves after customers said the devices were hot ? but not always in a good way.
Waterloo, Ont.-based RIM confirmed in a statement Friday that it and NTT DoCoMo, the Japanese wireless service provider that had been selling the phones, were voluntarily suspending sales of the Blackberry Bold while they investigated reports that some were overheating.
The statement said a “small number” of the phones sold by DoCoMo in Japan since they were launched on Feb. 20 were getting unusually warm during charging but the temperatures “appear to have remained within the safety range of regulatory standards.”
RIM said it has already ruled out a battery problem, but is still investigating the root cause.
The problem does not affect sales of Blackberry Bold devices in other countries, the company said.
“The companies hope to renew sales in Japan soon,” the statement added.
RIM had announced last week that NTT DoCoMo, which has 54 million customers in Japan and bills itself as one of the world’s largest mobile communications operators, would begin making the Blackberry Bold available through all its corporate and retail outlets across Japan. The Japanese version included a specially designed keyboard with support for Japanese text input.
According to RIM’s website, the Blackberry Bold is sold in 29 countries around the world. The phone’s available features include built-in GPS and maps, Wi-Fi support and a video recorder.
Loonie tumbles after central bank comments August 26, 2009
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The Canadian dollar lost more than a cent Wednesday as currency markets reacted to a pointed warning from the Bank of Canada that opens the door to possible intervention.
The loonie fell 1.12 cents to 90.98 cents US in midday trading, after losing three-quarters of a cent on Tuesday.
The Canadian dollar reached parity with its American counterpart on Sept. 20, 2007 for the first time in nearly 31 years. (Paul Chiasson/Canadian Press)
In a speech Tuesday, the Bank of Canada’s deputy governor, Timothy Lane, said there was a real danger that the nascent recovery would be hobbled if the dollar continued to rise.
“A persistently strong Canadian dollar would reduce real growth and delay the return of inflation to target,” Lane said. “If a stronger dollar were to alter the path of projected inflation ? we would need to take that into account.”
The Bank of Canada has already lowered its key overnight lending rate to just 0.25 per cent, so the central bank has no wiggle room to boost the economy by lowering rates further.
Bank has ‘considerable flexibility’: Lane
But Lane pointed out that the bank still has “considerable flexibility” through the use of such measures as quantitive easing ? a process that sees the central bank buying assets like government bonds. These purchases reduce bond supplies and push up prices. That in turn drives down yields or interest rates, which makes the Canadian dollar less attractive to foreign investors.
Before the central bank’s latest warning, the loonie has been on somewhat of a tear. It was hovering around the 86-cent US level just seven weeks ago and had rebounded to 94 cents US by early August.
A high dollar makes it more difficult for Canadian-made goods to compete in foreign markets.
Analysts say the loonie has been rising recently because the Canadian economy appears to be rebounding faster than the American and oil prices have reached a 10-month high. Barring intervention by the Bank of Canada, some analysts see the loonie reaching parity with the U.S. dollar as early as the end of this year.
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