Thursday May 08, 2008
REPORT ON BUSINESS FRONT PAGE 
To Texas by sea? Enbridge revamps pipeline plans
Delays in the oil sands are forcing Enbridge Inc. to rethink its proposed $2.6-million pipeline to the U.S. Gulf Coast, as oil producers wrestling with technical hurdles hesitate to commit to the pipeline.
Potash CEO rides boom in food prices
Five years ago, William Doyle was already a wealthy man, earning a good salary of $780,000 (U.S.) a year to head Potash Corp. of Saskatchewan Inc., plus holding stock options worth $7-million at the end of 2003.
Insider trading probe focuses on U.S. law firm
Securities regulators in the United States and Ontario have launched a major insider trading investigation that centres on 11 Canadian takeovers during the past two years and the U.S.-based law firm that advised companies involved in each of the deals.
BARRELLING AHEAD
Record oil prices are creating a $1-trillion (U.S.) gusher of revenues into the treasuries of OPEC, and the wealthy Arab states of the Persian Gulf region are using their petro-profits to transform their economies into global powerhouses.
INSIDE
Stronach at work,it's a sight to beholdIt's pretty hard to make money in a Frank Stronach enterprise these days. Unless you're Frank Stronach. How does he do it?
THE MARKETS
(Down)SandP/TSX14,371.53-42.77(Down)Dow12,814.35-206.48(Down)Nasdaq2,438.49-44.82(Down)Dollar99.30-0.41(Down)
COLUMNISTS
Ad campaign leaves a bad aftertaste
The corn dogs of my youth entered my consciousness - and stomach - precisely once a year when the midway came to town. It all ended badly one summer with a turn on The Spider. It didn't matter that I'd been told a hundred times: I learned the hard way that breaded wieners fried in fat were best not consumed before the ride.
Loblaw can always bank on its credit card business
It won't sell more groceries, or get products onto the shelves faster. But analysts predict a bit of financial engineering could help boost Loblaw's beleaguered stock price.After U.S. retailer Target unveiled a credit card partnership with JPMorgan Chase on Tuesday, veteran Desjardins Securities retail analyst Keith Howlett noted the value of Loblaw's credit card operations.
Timminco investors deserved more
Eric Sprott may know what he's doing but plenty of retail investors in Timminco don't have the faintest clue what they've gotten themselves into.I base this claim on a cascade of e-mails that landed in the inbox a couple of weeks ago after this space discussed how Timminco's biggest shareholder and, effectively, its CEO, sold a lot of stock at prices well below where the shares trade now.
How many new jobs are we talking about here?
Those 500 new jobs at a high-tech centre Morgan Stanley is setting up in Montreal? Turns out it's at most 300 - or possibly only 100. Late last week, at a high-fanfare press conference, a ''jubilant'' Quebec Premier Jean Charest announced that the investment bank's arrival in Montreal would ''create'' 500 positions, heavily subsidized by the province through tax credits worth $20,000 a year for each job for six years. Two other senior government ministers, Monique Jerome-Forget from Finance and Raymond Bachand from Economic Development, were there for the hoopla, which was broadcast live on Quebec TV. The next day, the government's investment agency took out full-page newspaper ads proclaiming: ''All Quebec is proud of the arrival of Morgan Stanley. This great player in world finance will create up to 500 jobs right here thanks to a $200-million investment.''
Enbridge impresses again
Looking for a company that delivers consistent earnings growth, raises its dividend regularly, has billions of dollars of projects coming on stream and whose stock has returned 13 per cent annually over the last half century?
Stronach in the saddle ... a sight to behold
How does he do it? How does Frank Stronach get away with it - the arrogance, the bullying, the opportunism?This is Canada. We're a nation of immigrants. We like to celebrate self-made success. And so we listen to the tale of how Mr. Stronach came here and set up his business in a garage in Toronto, and how Magna grew and grew, and how it was rescued from the brink of death in the early 1990s, and so on. It's a good story. But can we just set aside the legend of Frank the Great Entrepreneur for a moment?
Give your retirement savings a potential boost: Look into an IPP
If you're like many, you're probably looking forward to retirement. You'll have more time on your hands to do what you want.Consider Leo Hill of Lakewood, Colo. Mr. Hill decided to spend time in retirement as an amateur consumer advocate. He became suspicious of toilet paper manufacturers and concluded that there were fewer sheets per roll in a 12-pack than in a four-pack. He counted 60 rolls, sheet by sheet, and concluded that he was being short-changed by one sit-down session per roll in the 12-pack. He took his findings to the media, where a reporter tested his theory, but did not come to the same conclusion, even after testing nine brands.
Finger-pointing won't make your portfolio grow
Only Hillary Clinton and Paul Maurice eclipsed the notoriety of a bank economist yesterday on the globeandmail.com website.Ms. Clinton is running for the presidency of the most powerful country in the world, and Mr. Maurice has just been fired as coach of the most important hockey team in the world. As for Benjamin Tal of CIBC World Markets, he merely told investors they were acting like a bunch of scaredy-cats by piling up record levels of money in safe places rather than investing it in the stock markets.
BAE bends on scandal, but it's business as usual in arms trade
BAE Systems' statement to Lord Woolf that in the past it had failed to pay ''sufficient attention to ethical standards and avoid activities that had the potential to give rise to reputational damage'' was an earthquake for the company. The comment was cited by the High Court judge in a report on his examination of BAE's business ethics, the latest chapter in a long saga of accusations, litigation and political scandal over the arms dealer's Middle East business.
BUSINESS TECHNOLOGY
THE TOP 10
While BlackBerry users whine about their addiction to their ''CrackBerrys,'' few would give them up. And it's not just the deviceeither; it's all the add-ons, too. But with hundreds of downloadable
Corel's X4: Comfort food in a Microsoft world
Throw a rock in any direction and you'll hit a hardliner who deplores everything Microsoft makes but won't contemplate switching to Corel's WordPerfect Office Suite.This is puzzling. WordPerfect Office, just released in version X4, is a much more mature and full-fledged office suite than just about all productivity suites touted as alternatives to Microsoft Office.
A smart tech lesson from the Air Force, in 3D
You couldn't blame Master Corporal Jason Houle for feeling skeptical about his mission.As part of a test run for new simulation software, the aviation technician at Canadian Forces Base Borden had just one day to teach nine recruits about the propeller system on the C-130 Hercules transportation aircraft.
INTERNATIONAL BUSINESS
Look, up in the sky ... it's a Flogo?
Picture the Manhattan skyline filled with Nike swooshes. Or the golden arches of McDonald's drifting over Los Angeles.A special-effects entrepreneur from Alabama has come up with a way to fill the sky with foamy clouds as big as 1.2 metres across and shaped like corporate logos - Flogos, as he calls them.
EasyJet loss triples on rising fuel costs
Budget airline easyJet PLC said yesterday that its losses in the first half more than tripled as rising fuel costs outweighed a 24-per-cent jump in revenue. The company reported a loss of & 43.3-million ($85.3-million) in the six months ended March 31, compared with a loss of & 12.7-million in the same period a year earlier. Revenue rose to & 892.2-million, including a 17-per-cent gain in passenger revenue to & 751-million. EZJ (London) rose 91/4 pence to & 3.063/4 ($6.05).
Total's results buoyed by upstream division
Total SA said yesterday its first-quarter profit jumped 18 per cent amid record-high energy prices. The world's fourth-largest oil and gas company reported profit rose to €3.6-billion ($5.6-billion) in the first quarter from €3.05-billion a year earlier. Results were driven by its ''upstream'' division - which covers the exploration, recovery and production of oil and gas. The upstream business accounted for 85 per cent of the adjusted operating profit, contributing €2.7-billion, a 39-per-cent increase from a year earlier, Total said. FP (Paris) slipped 21 euro cents to €54.30 ($84.35).
France Télécom stirs more talk of TeliaSonera bid
Bharti Airtel signs on to Britain-India cable project
Bharti Airtel, India's top mobile-phone operator, said yesterday it had joined a consortium to build a $700-million (U.S.) submarine cable system. Bharti signed a construction and maintenance agreement in London for the Europe India Gateway (EIG), the first high-bandwidth, optical-fibre cable system from India to Britain, the company said. Fifteen other firms are taking part in the 15,000-kilometre project linking 13 countries across three continents that will start carrying commercial traffic by the second quarter of 2010, it said in a statement. Bharti will operate the Mumbai landing station for the cable system that will support Internet, e-commerce, data and voice transmission. Bharti (Mumbai) fell 30.2 rupees to 816.15 rupees ($19.97).
Nippon Oil, PetroChina team for refining venture
Nippon Oil Corp., Japan's largest refiner, said it agreed to form a refining venture with PetroChina Co., expanding their alliance to capture growing Asian demand. The companies will consider jointly operating Nippon Oil's 115,000 barrel-a-day refinery in Osaka as part of the venture, Nippon Oil president Shinji Nishio told reporters yesterday. The venture, in which the Japanese company will hold a 51-per-cent stake, will probably start by April, 2009. The deal comes during a visit to Japan by Chinese President Hu Jintao. Under an agreement signed yesterday, Nippon Oil will operate the Osaka plant while PetroChina will handle the purchase of crude oil and sales of refined products. 5001 (Tokyo) rose yen56 to yen774 ($7.46). 857 (Hong Kong) fell 66 Hong Kong cents to $11.46 Hong Kong.
Cablevision to buy Sundance Channel
Cablevision Systems Corp. said yesterday it will buy Robert Redford's Sundance Channel to add the independent film network to its Rainbow Media portfolio of cable movie channels. Sundance, owned by General Electric Co.'s NBC Universal, CBS Corp.'s Showtime Networks and entities controlled by Redford, is valued at $496-million (U.S.) under the terms of the cash-and-share deal agreed with New York-based Cablevision. Sundance was launched in 1996 by director and actor Robert Redford. It reaches nearly 30 million subscribers. CVC (NYSE) rose 6 cents to $23.75.
News Corp. profit jumps on higher ad sales
Rupert Murdoch's News Corp. said yesterday its quarterly profit tripled on higher advertising sales at the Fox TV network and Fox News Channel, as well as a big one-time gain from its stock swap with Liberty Media. The owner of 20th Century Fox and MySpace said its fiscal third-quarter profit rose to $2.7-billion (U.S.), or 91 cents a share, from $871-million, or 27 cents, in the year-ago period. The latest results included a $1.7-billion gain from its swap with Liberty Media. Revenue rose 16 per cent to $8.75-billion. Operating profit at News Corp.'s television division, which includes the Fox TV network and TV stations, rose 53 per cent from lower prime-time programming costs and higher advertising sales from its broadcast of the Super Bowl. NWS (NYSE) fell 25 cents to $19.20.
Paulson says the worst of the credit crisis is over
The worst of America's credit crisis may have passed, Treasury Secretary Henry Paulson said yesterday, though he acknowledged rising gas prices will blunt the effect of 130 million economic stimulus cheques. He ruled out a second stimulus package for now. Mr. Paulson said the turmoil that has gripped Wall Street and that took a turn for the worse again in March has eased somewhat. ''There's progress,'' he said. ''I think we're closer to the end of this'' than to the beginning. A prolonged housing slump, a severe credit crisis and soaring energy costs have pushed the economy to the edge of a recession. With surging oil costs and gasoline prices, Mr. Paulson acknowledged that pain at the pump would diminish the impact of the $168-billion (U.S.) stimulus package payments meant to give the economy a jump-start.
Judge thwarts TD's U.S. branding effort
A Massachusetts judge yesterday extended a temporary ban on the use of the brand name ''TD Commerce bank'' by Toronto-Dominion Bank in a handful of Boston-area counties, after a local bank with a similar name went to court for an injunction to stop the brand from being used in its backyard.
UBS RETURNS FUNDS AMID INVESTIGATION
UBS AG agreed to return more than $35-million (U.S.) it invested in auction-rate securities for 20 towns and public agencies in Massachusetts amid a state probe of the sale of the debt.
U.S. tax evasion probe latest blow for UBS
UBS AG, reeling from record losses, says the U.S. Department of Justice is investigating whether the Swiss bank helped clients evade American taxes.One senior bank employee was ''briefly detained'' by U.S. authorities as a ''material witness,'' the firm said in an e-mailed statement. The Financial Times reported that the employee was Martin Liechti, the Zurich-based head of UBS's international wealth management business for the Americas.
Will Grand Theft Auto drive up takeover bid?
Take-Two Interactive Software Inc. scored more than $500-million (U.S.) in global sales of Grand Theft Auto IV in its first week, making it one of the most lucrative entertainment launches in history.
Help for homeowners?
The U.S. House of Representatives opened debate yesterday on a bill that would create a $300-billion (U.S.) fund to save homeowners from foreclosure, but President George W. Bush threatened to veto the legislation, which he said would ''reward speculators and lenders.''
Housing, labour woes push city to bankruptcy
Vallejo, Calif., officials voted to file for bankruptcy late Tuesday night because the San Francisco suburb isn't able pay its bills after costs for police and firefighters soared and the housing market's slide cut into tax revenue.
CANADIAN BUSINESS
Prentice launches assault on Canada-U.S. border woes
Heavy-handed security is turning the Canada-U.S. border into a ''two-headed monster'' that isn't making the continent safer or more prosperous, Industry Minister Jim Prentice says.
BCE results place it at crossroads
BCE Inc.'s first-quarter financial results yesterday highlighted the strategic dilemma the new owners will inherit from chief executive officer Michael Sabia.The country's largest telephone company is struggling to add enough wireless, Internet and television customers to make up for the erosion of its traditional local phone service.
Battle lines drawn at MI Developments
A plan to restructure major chunks of Frank Stronach's empire will come down to whether he or opponents of the deal can sway holders of about 25 per cent of the shares of MI Developments Inc.
Kinross in hunt for Russian gold
Kinross Gold Corp. is in talks with potential Russian mining partners in hopes of winning the chance to develop major gold deposits in the former Soviet Union.''We talk all the time to the big gold producers and to others who want to be in the gold business. We've got nothing to announce right now but there is lots of work in progress,'' Tye Burt, Kinross's chief executive officer, said following the company's annual general meeting.
Thomson Reuters to keep purse open
Thomson Reuters Corp. isn't finished making deals in the wake of the $16-billion (U.S.) takeover of Reuters Group PLC by Thomson Corp., but future acquisitions will carry a much smaller price tag.
CGI co-founders cash in, but keep control
It has been a good week for Serge Godin.On Tuesday, the co-founder and chairman of CGI Group Inc. was inducted into the Canadian Business Hall of Fame for his role in building Canada's largest computer services company.
Tax plan will help richest provinces, study says
The federal government's plan to reduce corporate taxes will benefit only the prosperous provinces and won't do anything to stimulate the slowing economies in the rest of the country, a study indicates.
Ottawa gets Imperial Oil's Kearl data
The regulatory review panel that approved Imperial Oil Ltd.'s $8-billion Kearl oil sands mine has submitted to Ottawa additional material called for by a Federal Court judgment made in March.
Typical pension won't provide 'adequate' income, group warns
The typical pension plans being offered to Canadians ''will not contribute meaningfully to an adequate retirement income,'' an organization of pension professionals warned yesterday. The Association of Canadian Pension Management said it does not necessarily favour traditional employer-guaranteed defined-benefit plans, but is ''advocating for a level playing field.''
MDA-Alliant deal dilemma: What's next?
When U.S. space and weapons company Alliant Techsystems Inc. reports year-end results today, it likely won't be able to shed much light on one aspect of its business: a proposed $1.3-billion deal to buy the space assets of MacDonald Dettwiler and Associates Ltd.
Balsillie adds his weight to startup Igloo
Dozens of technology startups ache to make a name for themselves in the social networking game, but only one has Research In Motion Ltd. co-chief executive officer Jim Balsillie on its board.
Joffe drops move to get directors on TLC board
U.S. investor Stephen Joffe has dropped a plan to get his slate of directors on the board of laser eye-surgery company TLC Vision Corp. Dr. Joffe said yesterday he withdrew his nominations because it is clear that TLC's board would ''marginalize'' his three nominees and keep them from making needed changes. Discord on the board could also harm the interests of shareholders, he said in a statement.
Nortel CEO voices dismay
Nortel Networks Corp. chief executive officer Mike Zafirovski told investors at the company's annual general meeting in Ottawa yesterday that the company's depressed share price is ''unacceptable.'' ''Our stock price is disappointing ... and I share that disappointment with you,'' he said, noting the weaker economy has created ''uncertainty'' in the telecom market. Moreover, consolidation among customers and the emergence of new rivals is hurting prices. Rivals are also losing money.
Agrium invests in search for new potash mine site
HudBay says costs could force it to close smelter
Gildan posts higher profit on stronger sales
Gildan Activewear Inc. reported a higher second-quarter profit yesterday, helped by stronger sales and selling prices for its clothing lines. The company, which sells T-shirts, socks and underwear, said its profit rose to $41.7- million (U.S.) or 34 cents a diluted share in the quarter ended March 30. That compares with profit of $21.1-million, or 17 cents, in the year-ago period. The Montreal-based company said sales rose 26.5 per cent to $293.8-million. Last week, Gildan cut its second-quarter adjusted profit forecast to 35 cents a share from 42 cents and its 2008 target to $1.45-$1.50 a share from $1.85-$1.90. GIL (TSX) fell 22 cents to $28.01 (Canadian).
Horn River Basin called 'world-class play'
Energy consultant Wood Mackenzie is calling British Columbia's Horn River Basin gas field ''a world-class play.'' In a new report, Wood Mackenzie says recoverable resource estimates in the basin could already average 37 trillion cubic feet of gas. That's comparable to the reserves held in the area that will supply the proposed Alaska Gas Pipeline. The consultants say a preliminary analysis suggests that at a natural gas benchmark price of about $6.50 (U.S.) per 1,000 cubic feet, a relatively high price, the return on investment would be about 10 per cent, which is in line with other major gas projects. That also factors in challenges such as the area's remoteness.
Cinram gears up for rising Blu-ray production
DVD producer Cinram International Income Fund kicked off its seasonally slow first half with a loss and predicted slumping sales of traditional DVDs will continue. But the Toronto-based disc manufacturer is building up its capacity to produce high-definition discs. ''On the Blu-ray front, we will be adding capacity in lockstep with our ability to secure replication volume for this new format, gearing up in time to be ready for the busier second half,'' chief executive officer Dave Rubenstein said yesterday. Late Tuesday, Cinram posted a $3.4-million (U.S.) first-quarter loss, reversing a year-ago profit of $7.2-million. CRW.UN (TSX) fell 11 cents to $6.21.
Bombardier boosts outlook for jet markets
Bombardier Inc. has boosted its market forecasts for business and regional jets over next 10 and 20 years as it prepares to launch its new C Series airliner. The Montreal-based aerospace manufacturer acknowledged short-term uncertainty over the economic outlook, but said yesterday it expects 13,200 business aircraft will be delivered worldwide over the next decade, representing $300-billion (U.S.) of revenue. Additionally, 12,900 regional jet airliners are expected to be sold through 2027, worth $528-billion. Bombardier didn't specify what portion of each market it expects to realize. BBD.B (TSX) rose 7 cents to $6.53.
GENERAL BUSINESS
ET CETERA
''We used to speak about [oil price] hawks and doves in OPEC. Now, there are no doves.''Energy analyst David Kirsch on OPEC's reluctance to let prices drop. Page 1
GLOBE INVESTOR
Throwing discounts into our P/E analysis
WHAT ARE WE LOOKING FOR?Today, let's look at the stocks trading at the greatest price-to-earnings discounts. We'll stick to companies in the SandP/TSX composite and we'll use Thomson ONE's Stock Reports Plus, which is a stock ideas feature inside Thomson Reuters' portfolio management tool used by institutional investors.
Finger-pointing won't make your portfolio grow
Only Hillary Clinton and Paul Maurice eclipsed the notoriety of a bank economist yesterday on the globeandmail.com website.Ms. Clinton is running for the presidency of the most powerful country in the world, and Mr. Maurice has just been fired as coach of the most important hockey team in the world. As for Benjamin Tal of CIBC World Markets, he merely told investors they were acting like a bunch of scaredy-cats by piling up record levels of money in safe places rather than investing it in the stock markets.
Timminco investors deserved more
Eric Sprott may know what he's doing but plenty of retail investors in Timminco don't have the faintest clue what they've gotten themselves into.I base this claim on a cascade of e-mails that landed in the inbox a couple of weeks ago after this space discussed how Timminco's biggest shareholder and, effectively, its CEO, sold a lot of stock at prices well below where the shares trade now.
Give your retirement savings a potential boost: Look into an IPP
If you're like many, you're probably looking forward to retirement. You'll have more time on your hands to do what you want.Consider Leo Hill of Lakewood, Colo. Mr. Hill decided to spend time in retirement as an amateur consumer advocate. He became suspicious of toilet paper manufacturers and concluded that there were fewer sheets per roll in a 12-pack than in a four-pack. He counted 60 rolls, sheet by sheet, and concluded that he was being short-changed by one sit-down session per roll in the 12-pack. He took his findings to the media, where a reporter tested his theory, but did not come to the same conclusion, even after testing nine brands.
Loblaw can always bank on its credit card business
It won't sell more groceries, or get products onto the shelves faster. But analysts predict a bit of financial engineering could help boost Loblaw's beleaguered stock price.After U.S. retailer Target unveiled a credit card partnership with JPMorgan Chase on Tuesday, veteran Desjardins Securities retail analyst Keith Howlett noted the value of Loblaw's credit card operations.
Enbridge impresses again
Looking for a company that delivers consistent earnings growth, raises its dividend regularly, has billions of dollars of projects coming on stream and whose stock has returned 13 per cent annually over the last half century?
April retail results may surprise
The International Council of Shopping Centers (ICSC) is due to report the monthly same-store sales in the United States for April today, and results could surprise on the upside in the midst of a difficult retail climate.
EYE ON EQUITIES: STOCKS THAT SHOULD BE ON YOUR RADAR SCREEN
Power Corp.(POW-TSX)Yesterday's close$34, down 20centsThe forecast earnings for Power Corp. were lowered because of the expected slower growth from mutual funds owner IGM Financial Inc. and Great-West Lifeco Inc., said Kevin Choquette, an analyst with Scotia Capital Inc.
Oil's price surge raises concerns
Crude oil prices climbed another $1.69 (U.S.) to a record $123.53 a barrel yesterday, heightening concern about the impact on the markets and the economy.With oil testing and then breaking through the $123 level, boosted by an unexpected drop in U.S. diesel and heating oil inventories last week, its next stop could be closer to $130, suggested Colin Cieszynski, market analyst with CMC Markets Canada. He also said the $120 former resistance level could become a new support level, just as the $110 level did, which is a sign that the rally in crude is still intact.
COMMODITIES
Gold and silver prices sank after the U.S. dollar rebounded against the euro, diminishing the appeal of precious metals as inflation hedges. Copper also fell. Other commodities traded mostly higher, with crude oil hitting another record high and agriculture futures rising broadly.
Sprint-Clearwire deal heats up DragonWave
The expected decision by Sprint Nextel Corp. and Clearwire Corp. to join forces in a venture for an ultrafast wireless network may not be doing much for their own stock prices, but it could have a big impact on little-known DragonWave Inc. of Ottawa.
TIP SHEET
With oil at a record high and forecasts calling for spikes of up to $200 (U.S.) a barrel within the next two years, it is no surprise some commentators are balking at the possibility that the world can continue to digest sharply higher energy costs without suffering.
WEDNESDAY'S MARKETS: WHAT HAPPENED
DOWNFinancials drag down Bay StreetCanadian stocks fell, pulled down by banks and insurers, on worries about credit losses and writedowns on subprime assets. The biggest drag on the SandP/TSX composite index was Research In Motion Ltd., which slipped 1 per cent.
BONDS
Canadian and U.S. government bond prices ended higher, recovering from earlier moderate losses in afternoon trading. Traders cited an oversold market and wilting stock markets as contributing to the rally. CANADA
FOREIGN EXCHANGE CROSS RATES
The dollar slid against the U.S. currency after another session of predictable range-trading, continuing its pattern of aimless drift amid a lack of compelling trading incentives. The greenback also rose against the euro, pound and yen on strong U.S. worker productivity data.
TOP FIVE FAVOURITE FINANCE BLOGGERS SO FAR
Vote for your favourites at ReportonBusiness.comThe Fly205Paul Kedrosky181Million Dollar Journey153Canadian Capitalist146Alphatrends142Voting as of 6 p.m. last night. Voting closes next Monday at noon.
