Friday May 09, 2008
REPORT ON BUSINESS FRONT PAGE 
PROBE TARGETS CLASSMATES
Stan Grmovsek and Gil Cornblum have been close friends ever since they met at Osgoode Hall Law School 17 years ago. Although their careers took different directions, they have remained in close contact, attended each other's weddings and frequently socialized with their families.
Tims eats humble pie to avert PR catastrophe
Tim Hortons Inc. has squelched what could have become a PR disaster over the Timbit Affair. At the same time, the company has been served a stinging lesson on how following franchise rules too zealously can stifle the ability of front-line workers to keep the customer satisfied.
Onex eyes move into gambling
Onex Corp. is ready to place a bet on the U.S. gambling industry, with struggling casino icon Tropicana Entertainment LLC a potential target for Gerald Schwartz's buyout firm.
Manulife's retiring CEO waves the Maple Leaf
It will break Dominic D'Alessandro's heart if Manulife Financial Corp.'s next chief executive, possibly an American, shifts the company to the United States.Like many immigrants (he was born in Italy), Mr. D'Alessandro is passionate about his adopted country - Canada - because things worked out rather well for him here and because he never bought into the notion that London and New York had a lock on global companies. B-team Toronto could have its corporate champions, too.
GLOBE INVESTOR
A miraculous recoveryThe TSX is teasingly close to a record set last July, proving that bailing when things get rough isn't always the best strategy.john heinzl. Page 10
THE MARKETS
UpSandP/TSX14, 607.99+236.46UpDow12,866.78+52.43 UpNasdaq2,451.24+12.75DownDollar98.32-0.98Up
COLUMNISTS
New money signals sea change at Seamark
With all the interest in institutional fund managers - three have been acquired in as many months and Sprott Asset Management commanded heady valuations in its IPO - it's worth taking note of a turnaround at Seamark Asset Management.
The big myth about Big Oil
Quick quiz: Name the top three oil-producing countries in the world.For some reason, few people get this one right. The supplementary question is why? Could it be that popular mythologies make the correct answer appear impossibly wrong?
This recovery hasn't been equal opportunity
A measly 17.77 points.That's all that separates Canada's benchmark stock index from its record close of 14,625.76 reached last July, before the credit crisis and mounting economic worries sent global markets tumbling into the abyss.
INTERNATIONAL BUSINESS
Learned from my mistakes, Leeson says
The rogue trader who caused the collapse of British merchant bank Barings PLC in 1995 says none of it might have happened if he had done one thing differently the first time he made a mistake and lost money on a trade.
Deutsche Telekom's profit doubles on media unit sale
Deutsche Telekom AG, Europe's largest phone company, said yesterday that first-quarter profit doubled on a gain from selling a unit and from lower interest costs - to €924-million ($1.44-billion) from €459-million a year earlier. The Bonn-based company said in a statement that sales slipped 3.1 per cent to €15-billion euros, missing analyst estimates, as fixed-line customers defected, prices declined and the U.S. dollar fell against the euro. Deutsche Telekom sold its media and broadcast unit to TDF SA of France in January, and booked a gain of about €500-million in the first quarter. DYE (Frankfurt) rose 27 euro cents to €11.78.
Unilever shares climb as profit beats estimates
Unilever, the world's second-largest maker of food and detergent, reported profit yesterday that beat analysts' estimates and said revenue will exceed its forecast for the first time in six years on increased prices and sales of Dove soap and Lipton tea. Unilever jumped the most in a year in London trading. First-quarter profit rose 33 per cent to €1.34-billion ($2.1-billion) after a €517-million gain, mostly from selling the Boursin cheese unit, London- and Rotterdam-based Unilever said. Chief executive Patrick Cescau raised prices 4.8 per cent in the quarter, helping to offset higher costs for soybean and palm oil. Latin America, Asia and Africa led revenue growth as sales in Germany declined. ULVR (London) rose 90 pence to & 17.52 ($34.80).
ECB, Bank of England leave rates steady
The European Central Bank and the Bank of England both held their official interest rates steady yesterday as rising inflation outweighed concerns about slowing economic growth across the European Union. But the two banks are expected to take different paths next month when the ECB is likely to again keep its borrowing rate at 4 per cent to fight inflation, while many economists expect the British central bank to cut its own rate by a quarter percentage point from the current 5 per cent. Soaring food and energy prices have made the European banks reluctant to follow the U.S. Federal Reserve in cutting interest rates to shore up consumer confidence and economic growth.
Hong Kong investors eye south China plant closings
Hong Kong investors may close 10,000 factories in southern China because of falling U.S. demand and higher costs, according to a local industry association. Operators of labour-intensive businesses such as textiles, shoes and electronics are among those most severely affected by increasing costs from China's new labour law and appreciation in China's currency, Stanley Lau, deputy chairman of the Federation of Hong Kong Industries, said yesterday. Factories seeking to close or cut operations employ a total of more than one million workers, he said. Hong Kong, the largest contributor of foreign direct investment in China, operates about 70,000 factories in the Pearl River Delta in southern China, Mr. Lau said.
India halts futures trade in staple foods, rubber
India's government halted trading yesterday in futures contracts for key staple foods and for rubber as it battles to avoid an election drubbing due to high inflation. The government suspended futures trade in basic foods such as lentils, soya and potatoes for four months, saying the move was aimed at stopping price rises driven by speculators. It also halted futures trade in rubber. The ruling Congress party-led coalition said further efforts were also under way to fight inflation, as cement producers yesterday joined steel makers in pledging price cuts. The Congress party is desperate to wrestle down inflation to avert a voter backlash in general elections that are due to be held by next May.
Unilever scrambles to retouch Dove's image
Not nipped, tucked or sucked, but possibly retouched?Facing a public relations onslaught, beauty products giant Unilever and advertising shop Ogilvy and Mather moved into damage control yesterday, insisting allegations of photographic corruption in Dove's ''Real Beauty'' campaign are not true.
Ex-Nintendo head cashes in on Wii revolution
After a few million waves of magic Wii wands, Hiroshi Yamauchi suddenly finds himself transformed into the richest man in Japan.The former chairman of video game maker Nintendo Co. Ltd., Mr. Yamauchi's net worth ballooned by an estimated $3-billion (U.S.) to about $7.8-billion in 2007, allowing him to blow past property magnate Akira Mori and claim the top spot on the Forbes.com list of Japan's 40 Richest people.
U.S. economy puts brakes on Toyota
Toyota Motor Corp. has spent billions of dollars over decades to develop ''American'' credentials. Now the auto maker is finding out just how difficult it is to be American.Toyota, duking it out with General Motors Corp. for the title of the world's largest auto maker, issued a grim outlook yesterday, forecasting that profit will plunge by as much as 30 per cent this fiscal year, driven down in part by a slump in the U.S. market it has spent so much money and effort to conquer.
Movie Marvel switches gears
If Stan Lee is the father of the modern comic book superhero, then Avi Arad is the godfather of the modern superhero movie - at least those that were adapted from Mr. Lee's creations for Marvel Comics.
Discounters' sales rise as U.S. economy falters
Caught in the maelstrom of higher gas and food prices, Americans - even more affluent ones - are seeking shelter in wholesale clubs and discount apparel chains.Low-price operators Costco Wholesale Corp., Wal-Mart Stores Inc. and TJX Cos. reported better-than-expected sales yesterday, while traditional apparel chains J.C. Penney Co. Inc. and Limited Brands Inc. struggled.
CANADIAN BUSINESS
Boeing delay hinders Air Canada expansion plans
A two-year delay in getting delivery of fuel-efficient Boeing 787 Dreamliners will crimp Air Canada's international expansion plans.The Montreal-based airline will seek compensation from Boeing Co. for the disruption to flight scheduling, Air Canada chief executive officer Montie Brewer said yesterday. He made the announcement after the carrier disclosed that, amid surging oil prices, it lost $288-million in the first quarter, including a $125-million provision related to allegations of cargo price-fixing by an array of global airlines.
D'Alessandro heading down home stretch
With one year to go as chief executive officer of Manulife Financial Corp., Dominic D'Alessandro says he has no burning desire to do a final takeover, but he is still kicking himself over one deal he couldn't pull off.
Biovail's future lies in niche drugs: CEO
Just a week after taking the hot seat at the top of struggling pharmaceutical maker Biovail Corp., Bill Wells launched the company yesterday on a new trajectory that he, and investors, hope will lead it back to health.
Desmarais sons add new titles at Power
The departure of Power Financial Corp. executive chairman Robert Gratton is the culmination of a carefully plotted succession strategy at the financial services powerhouse that ensures continuity and a smooth changing of the guard, top officials say.
Barrick, CIBC settle ABCP dispute, raising hopes restructuring will pass
Barrick Gold Corp. and Canadian Imperial Bank of Commerce have settled their squabble over asset-backed commercial paper, removing another key roadblock in the $32-billion plan to restructure the ABCP market.
Couche-Tard inks deal to run stores at Irving gas stations
Alimentation Couche-Tard Inc., North America's second-largest convenience store operator, has struck a deal with Irving Oil Ltd. that will see the two companies team up in 252 Irving gasoline stations in Atlantic Canada and New England.
Vick ordered to repay loan after RBC bares its teeth
A U.S. federal judge yesterday ordered imprisoned quarterback Michael Vick to repay more than $2.4-million (U.S.) to Royal Bank of Canada for defaulting on a loan.
Media firms reject federal rules
Cable and satellite companies say the government has no place telling them which TV channels to carry, even after Shaw Communications Inc. sparked an industry-wide dispute this week by dropping a number of local stations across the country from its StarChoice satellite service.
Quebecor printing woes drag on results
Publishing and media group Quebecor Inc. reported its delayed fourth-quarter results yesterday, posting a huge loss because of the woes at its Quebecor World Inc. commercial printing unit.Quebecor said it lost $962.6-million or $14.99 a share in the three months ended Dec. 31. That compared with a loss of $80.8-million or $1.26 in the same period a year earlier.
Wireless fuels Telus profit hike
Telus Corp. reeled in more cellphone subscribers than its rivals in the first quarter, but two trends that surfaced last year continue to plague its wireless unit: a rise in customer turnover and subscribers spending slightly less each month on cellphone services.
Ottawa eases restrictions on LIF withdrawals
The federal government has followed through on a commitment in the February budget to make it easier for people in financial difficulties to withdraw funds from life income funds, or LIFs.
Canadian Tire to launch new store concepts
Potash contradicts UN report on supplies
Potash fertilizer will be in short supply for the next five years, contrary to recent forecasts of the UN's Food and Agriculture Organization, the chief executive officer of Potash Corp. of Saskatchewan Inc. said yesterday. Bill Doyle told shareholders at Potash Corp.'s annual meeting in Saskatoon that he disagreed with a February FAO report that said production of potash and other fertilizers would outstrip demand during the next five years. ''I read that report, and what I would tell you is we think potash is going to be tight over the next five year period,'' said Mr. Doyle, CEO of the world's largest fertilizer producer. ''We don't think there's going to be surplus supplies.'' POT (TSX) gained $2.95 to $202.65. POT (NYSE) rose 24 cents (U.S.) to $199.01.
Detroit-Windsor bridge details expected in June
Long-awaited plans to build a government-backed bridge between Windsor and Detroit are edging closer to fruition, with a mid-June announcement scheduled to confirm details. A group called the Detroit River International Crossing, or DRIC, comprises the governments of Ontario, Canada, Michigan and the United States. Along with private-sector participation, DRIC wants to build a new bridge located southwest of the existing Ambassador Bridge, a 78-year-old structure owned by Michigan businessman Manuel (Matty) Moroun. The new government-backed bridge is expected to cost about $2-billion and could create spinoffs of 12,000 jobs. Environmental hurdles have yet to be cleared, Transport Canada spokesman Mark Butler said in an interview yesterday.
CNQ profit soars despite lower output
Canadian Natural Resources Ltd. said its first-quarter profit was $727-million or $1.35 a share, almost triple compared with a year earlier, buoyed by high oil and natural gas prices. However, production fell 5 per cent to 583,500 barrels a day, largely because of reduced natural gas drilling due to low prices last year and higher royalties. The company's $8.6-billion Horizon oil sands mine is nearly complete and first oil is still set to be produced by the end of September, with full production of 110,000 barrels a day coming in the winter. CNQ (TSX) rose $4.19 to $96.
Ruling on Kearl mine permit due next week
A decision in a Federal Court hearing that pits Imperial Oil Ltd. against the federal government will come next week, Mr. Justice Douglas Campbell said yesterday. In two days of hearings in Calgary, concluded yesterday, Imperial Oil was fighting to regain a key authorization to continue preliminary work on its $8-billion Kearl oil sands mine. The federal government in February granted the permit but declared it void on March 20. The government did so because of a separate federal court ruling in early March found that the overall approval of Kearl to be partly incomplete. IMO (TSX) rose 77 cents to $59.19.
Housing starts sag, but no meltdown seen
Housing starts in Canada fell more than expected in April after a strong first quarter. Canada Mortgage and Housing Corp. said yesterday that 213,900 new homes were put under construction last month, a 12-per-cent decrease from its seasonally adjusted annualized rate in March. The figures for March were revised down to 243,000 units from an originally reported 254,700. Analysts had expected a rate of 222,500 starts in April. ''This is still a strong number, but it fits our view that new-home construction will cool this year,'' said Derek Holt, an economist for Scotia Capital.
Edmonton airport slated for $1.1-billion overhaul
Edmonton International Airport has announced it plans to develop a new five-year, $1.1-billion expansion program that provides more office space, restaurants and services at the facility. In addition, a new air traffic control tower complex will replace the existing building, while a new concourse will also be built, the EIA said yesterday. When completed in 2012, the airport, will be able to serve up to nine million customers a year, from six million currently. Financing has been secured from the Alberta Capital Finance Authority, a non-profit lending group operated by the province, an EIA spokesman said.
GENERAL BUSINESS
Oh, mom, how you messed with my career
You've always shared a close connection with mom - maybe too close.Your childhood was shaped by her advice on everything from the right ways to behave to who would be your best choice of friends. She might have even kept you on a leash when you shopped at the mall.
What's a mom's work worth? Try six figures
What's a mom's work worth these days? A tidy annual $126,593 for those who stay at home, and $74,101 for those who work outside the home, according to Salary.com Inc.
Canadians more positive, but not more motivated, than Americans
Canadian employees are much more positive about their managers, co-workers and pay than their U.S. counterparts - but all that satisfaction doesn't make them more likely to go the extra mile, a new analysis finds.
ET CETERA
''They replace even the Pope. Life goes on.''Dominic D'Alessandro of Manulife Financial Corp. will retire after 14 years as CEO. Page 4
GLOBE INVESTOR
How PEG discounts compare with the composite
WHAT ARE WE LOOKING FOR?Today, let's look at the stocks trading at the greatest price-to-earnings growth, or PEG, discounts. We'll stick to companies in the SandP/TSX composite for the screen and we'll use Thomson ONE's Stock Reports Plus. This is the stock ideas feature we've been using all week that is inside Thomson Reuters' portfolio management tool used by institutional investors.
New money signals sea change at Seamark
With all the interest in institutional fund managers - three have been acquired in as many months and Sprott Asset Management commanded heady valuations in its IPO - it's worth taking note of a turnaround at Seamark Asset Management.
DundeeWealth steps into spotlight
It's show-me time these days at DundeeWealth Inc.Shares of the wealth management company lost altitude when it took itself off the auction block four months ago.The loss of a potential takeover deal upset investors who knocked the stock from its $22 perch. It rose 9 cents to $13.80 yesterday on the Toronto Stock Exchange.
This recovery hasn't been equal opportunity
A measly 17.77 points.That's all that separates Canada's benchmark stock index from its record close of 14,625.76 reached last July, before the credit crisis and mounting economic worries sent global markets tumbling into the abyss.
Flaherty closes in on new PPN rules
Finance Minister Jim Flaherty is close to releasing new regulations to close loopholes that have allowed banks and securities dealers to sell a class of securities now worth more than $20-billion, while telling investors little about what they were buying.
Contract upgrade, report boost Timminco shares
Timminco Ltd., which has faced skepticism about the viability of its process to produce solar-grade silicon, hit back at critics yesterday, announcing a contract upgrade and a report it had commissioned suggesting its method has the potential to transform the solar industry.
Emerging market firms becoming major deal makers
When Brazil's Companhia Vale do Rio Doce beat out several competitors to take the prize of Inco Ltd., it was just doing what other emerging market firms have been doing more and more the last several years - scooping up developed market assets.
Fertilizer stocks may see growth stunted
Today's closely watched U.S. government report on global agriculture could dump a little cooling rain on overheated fertilizer stocks, as analysts see a risk that plantings of fertilizer-intensive corn crops could come in lower than expected.
Slowing job growth may spur rate cut
The Canadian economy is cooling down and the employment data scheduled for release today are expected to show new jobs continue to be created, although at a much slower pace.
EYE ON EQUITIES: STOCKS THAT SHOULD BE ON YOUR RADAR SCREEN
PAINTED PONY PETROLEUM: (PPY.A-TSX-VEN)Yesterday's close $7, up 61centsPainted Pony Petroleum Ltd. has a substantial amount of land in the Bakken area of southeastern Saskatchewan and its light oil exposure makes it a takeover target, said Michael Harvey, an analyst with RBC Dominion Securities.
COMMODITIES
Rice futures surged on worries that devastation to Myanmar's rice-growing heartland could lead to widespread shortages, worsening the global food crisis. Other commodities traded mostly higher, with corn futures rising to a record and gold also gaining. Crude oil retreated.
TIP SHEET
If you believe what you hear, everyone saw the technology bubble coming and everyone saw the U.S. housing bubble as a balloon just waiting to go pop. But the rise of crude oil, up more than 500 per cent over the past six-and-a-half years and showing few signs of slowing down, still leaves commentators debating its staying power. Is it a bubble or a sane reflection of the world's growing thirst for energy?
THURSDAY'S MARKETS: WHAT HAPPENED
(Up)Canadian stocks advance on oil pricesThe SandP/TSX composite index rose 1.7 per cent to its third-highest close, as record prices for oil and better-than-expected profit from Yamana Gold Inc. bolstered expectations energy and mining companies will increase earnings. Suncor Energy Inc. and EnCana Corp. rose to records, pacing gains among oil and gas producers.
BONDS
Canadian government bond prices ended slightly higher after a day of narrow trading. There was an absence of major economic data, and investors turned their attention to new non-government bond supply.
FOREIGN EXCHANGE CROSS RATES
The dollar fell sharply - buffeted by a wave of negative sentiment after its failure to break above parity with the U.S. currency on Wednesday. Meanwhile, the greenback edged lower against the euro and the pound after central banks in Europe left interest rates unchanged.
