Tuesday July 22, 2008
REPORT ON BUSINESS FRONT PAGE 
After Nipplegate defeat, FCC crusade in tatters
She has won six Grammy Awards, been nominated for an Oscar, and had a star placed on Hollywood's Walk of Fame. Now, Janet Jackson can pin another medal on her chest: accidental First Amendment crusader.
Sluggish U.S. economy hammers Apple outlook
The U.S. economic slowdown is starting to take the shine off Apple Inc. On Monday, the tech darling became the latest in a growing contingent to feel an economic chill as it posted a financial forecast for the current quarter that failed to meet Wall Street expectations.
Telecom gear makers anticipate windfall
The federal government's wireless spectrum auction is done, billions have been spent, and now the companies providing the guts of the wireless networks are about to battle it out for the spoils.
U.S. buyers stalk TransAlta
Just a few months ago, Luminus Management LLC was a big thorn in Steve Snyder's side.Now, the U.S. private equity firm claims to be one of his biggest fans.
INTERNET
Yahoo's future cloudy despite deal with IcahnThe deal by Internet pioneer Yahoo to give Carl Icahn three seats on its board may have ended the threat of a proxy fight, but the company still has to prove to investors that it can stand on its own two feet.
The Markets
UPSandP/TSX13,689.19+173.23DOWNDow11,467.34-29.23DOWNNasdaq2,279.53-3.25UPDollar99.86+0.43UP
COLUMNISTS
Carbon conundrum is solvable
Canada has two big hurdles to clear to ensure its nascent carbon-trading market takes off, traders say.For starters, the country needs to harmonize its regulations so that provinces and the federal government all have consistent rules on how much polluters can emit, which will standardize the market within Canada. With all the political sniping surrounding the issue, the situation has been well publicized.
TransAlta's dilemma: Does LS want to buy, or sell?
The antagonistic tone is gone; the public threats have disappeared. As far as some New York hedge fund managers are concerned, they've seen the light and now understand the brilliance of TransAlta and its long-time CEO, Steve Snyder.
Oil's heyday over, bond prices set to rebound
Even after yesterday's rebound to $131.04 (U.S.), crude oil is down about 10 per cent from its peak and some observers are making the brave call that its glory days are over. Carl Weinberg, chief economist at High Frequency Economics, is one of the doomsayers, arguing that oil should retreat to $95 a barrel this summer, which implies a steep drop during the next six weeks.
Iran's gasoline imports prime target for sanctions
For a quarter-century, the United States has used economic sanctions to squelch Iran's nuclear ambitions and choke off its support for terrorism.Apparently, without much effect.Now Washington is threatening more of the same - either unilaterally or through the United Nations. U.S. Secretary of State Condoleezza Rice, with the apparent backing of other major countries, has given Tehran two weeks to respond to demands that it stop enriching uranium or face new ''punitive measures.''
E*Trade deal will leave big shoes to fill
Investors are going to miss E*Trade Canada when it's gone, even if they never dreamed of doing business with this upstart online broker.E*Trade is to be acquired by Bank of Nova Scotia in a deal that closes early this fall. What we have here is a nimble, innovative, competitive broker being purchased by an outfit that is none of those things. Nightmare outcome: ScotiaMcLeod Direct Investing absorbs E*Trade like a python eating a rat.
INTERNATIONAL BUSINESS
Cellphones boost LG but outlook cloudy
LG Electronics Inc. increased second-quarter earnings by 84 per cent with strong results in mobile phones and at its LCD joint venture, but the South Korean firm faces a tougher second half amid a global economic downturn. LG predicted revenue would dip in the third quarter as cash-strapped consumers spend less on high-end gadgets.. LG's April-June profit rose to 707 billion won ($695.4-million) from 385 billion won a year ago. Operating profit globally climbed to a record 856 billion won from 464 billion won. Quarterly revenue rose 22 per cent to 12.7 trillion won. 066570 (Seoul) rose 4,500 won to 113,500 won ($111.46).
Battle for TNK-BP ties U.S. chief in red tape
E.ON, Dong buy Shell stake in planned U.K. wind farm
E.ON AG and Dong Energy AS have agreed to buy Royal Dutch Shell PLC's stake in London Array, one of the world's largest planned wind farms, lifting a threat it might be cancelled. The companies said yesterday that Dong and E.ON, which already each own a third of the 1,000-megawatt project, would buy Shell's third for an undisclosed sum. Shell said in May that it wanted to sell out because rising costs made it unclear whether the planned 341 turbine wind farm in the Thames Estuary would be profitable. EOA (Frankfurt) rose €1.25 to €117.85 ($187.68). RDSA (London) rose 11 pence to & 18.31 ($36.68).
EU dangles farm tariff cuts to kick-start WTO talks
The European Union said yesterday it would be willing to slash farm tariffs by 60 per cent as part of a new global trade pact, the deepest cut it has ever offered. EU Trade Commissioner Peter Mandelson told reporters at the World Trade Organization that the offer was meant to kick-start a week of talks on a new global commerce pact. The 27-nation bloc has previously proposed to cut the tariffs by 54 per cent. Mr. Mandelson added the offer depends on emerging economies, such as Brazil, India and China, responding with improved offers on lowering industrial tariffs.
VW bucks car slump with record first-half sales
Volkswagen AG boosted group vehicle sales 5.8 per cent in the first half to a record 3.27 million units thanks to brisk demand in China, Brazil and Eastern Europe, Europe's biggest car maker said yesterday. In June alone, company deliveries increased 2.4 per cent to a record 573,000 vehicles, while the overall market contracted 5.1 per cent, the company said. The global market rose only 1 per cent in the half, it said. VW sales in China swelled 23.2 per cent to 531,600 vehicles in the first six months, the first time deliveries had exceeded the half-million mark there. Deliveries in Brazil rose 21.8 per cent to 316,000 units. VOW (Frankfurt) rose 15 euro cents to €190.30 ($303.06).
Bank of America profit beats estimates
Arguably the 'most important' U.S. car, Ford Model T celebrates 100th birthday
Ford Motor Co. is marking the 100th anniversary of the Model T, the first low-priced car that introduced motoring to the masses, at a time when Americans are cringing at the cost of filling their gas tanks and the U.S. auto industry is struggling with plant closings and layoffs.
Yahoo's future still unclear despite truce with Icahn
A ceasefire with activist investor Carl Icahn has earned Yahoo Inc.'s board of directors a respite from the uncertainty swirling around the embattled Internet pioneer, but left its future is far from settled and even revived speculation about a link with AOL.
Investors expect Roche to raise bid for Genentech
Biotechnology pioneer Genentech Inc. mulled Roche Holding AG's $43.7-billion (U.S.) offer for its remaining shares yesterday as investors made clear their feelings that the Swiss pharmaceutical giant should pay considerably more.
Bricklin sues Chery over failed U.S. venture
Entrepreneur Malcolm Bricklin's Visionary Vehicles has filed a lawsuit accusing China's Chery Automobile Co. of defrauding the company after the two formed a joint venture to import Chinese cars to the United States.
CANADIAN BUSINESS
Private equity hot for infrastructure
A record number of private equity funds have set their sights on infrastructure assets, and are searching markets around the world for buyout targets and new sources of capital. Yesterday, a U.S.-based buyout group bid $7.8-billion for Calgary-based power generator TransAlta Corp. If it is completed, the deal would be the latest in a soaring number of takeovers during the past three years of assets such as roads, airports and utilities.
Build it bigger, and hope they still come
The Ottawa Congress Centre is just a stone's throw from Parliament Hill - yet, ironically, at 75,000 square feet, it is too small to host a political convention.Nor has it been very successful competing with newer and larger venues for the bread-and-butter trade shows and business conventions.
CN says it's not tied to Chicago deal
Canadian National Railway Co. warned yesterday that it's willing to abandon plans to acquire a Chicago-area rail carrier if too many strings are attached to the purchase.CN announced in September that it had struck a tentative deal to buy the strategic Elgin Joliet and Eastern Railway Co. for $300-million (U.S.), hoping to bypass train gridlock in Chicago's core by rerouting traffic through EJandE's suburban tracks.
Setting an example - to avoid
For anyone planning on weighing in on the debate over whether Canada has made a grave mistake by allowing its most precious resource assets to be sold to the highest foreign bidder - don't bother.
SunOpta profit hit by setback in berry division
Troubled organic food distributor SunOpta Inc. unveiled its delayed 2007 financial results yesterday, and they show a dramatic drop in profit caused by the inventory accounting problem in its berry division that bruised its share price earlier this year.
Writedowns erase government pension fund's profit
Canada's federal government workers and pensioners have been hit hard by the credit crisis, which forced the money manager that runs their retirement fund to book $920-million of losses on holdings of asset-backed commercial paper and other exotic investments.
Gottlieb sought to calm staff, court told
Livent Inc. co-founder Myron Gottlieb met with a member of the company's accounting staff in 1998 not to discuss an ongoing fraud but to reassure him the company wasn't moving its head office to New York, Mr. Gottlieb's lawyer suggested in court yesterday.
Bombardier jet manuals need revising, NTSB says
The U.S. National Transportation Safety Board recommended yesterday that Bombardier Inc. revise the reference book for its Challenger 600 airplanes to include more detailed instructions for takeoff.The recommendation to regulator Transport Canada follows an investigation into a February, 2005, incident, in which a Challenger jet ran off a runway at Teterboro Airport in New Jersey while attempting to take off.
REIT watch*
Cadence accepts Barrick's $410-million takeover bid
Priszm halves distribution; records quarterly profit
FAA lets Porter restore full Toronto-N.J. schedule
Porter Airlines Inc. will be restoring its full schedule in September between Toronto and Newark, N.J., recovering from a setback in which the U.S. Federal Aviation Administration scaled back flights during the busy summer season. Privately owned Porter said yesterday that the FAA will allow seven round-trip flights each weekday between Toronto City Centre Airport and Newark, beginning Sept. 3. The FAA told Porter in May to cancel two of its seven round-trip slots for the summer to help alleviate plane congestion in the New York area, but Porter later preserved one of the slots. Starting Sept. 3, the final weekday landing in Toronto is slated to be 9:55 p.m., compared with the current 10:30 p.m. Porter added that the FAA has approved six round-trip flights on Sundays, up from the current five.
Three more Lowe's stores slated to open in Ontario
U.S. home improvement retailer Lowe's Cos. Inc. will open three more stores in Canada by the end of January to add to the seven it already launched here since late last year. The move comes amid continuing speculation that the Mooresville, N.C.-based chain will eventually scoop up rival Rona Inc. of Boucherville, Que., as it races to take on market leader Home Depot Inc. The Lowe's stores so far in Canada are all in Ontario, with the new ones expected to open in Belleville, Whitby and Windsor. ''Additional sites remain in the pipeline,'' Lowe's said in a statement yesterday. A spokeswoman for Lowe's wouldn't reveal its sales performance in Canada. LOW (NYSE) fell 18 cents (U.S.) to $19.75.
Biovail picks Aug. 8 to reconvene meeting
Biovail Corp. has set Aug. 8 as the date for reconvening its annual meeting, after a judge ruled last week that the initial session held on June 25 wasn't legal. At the meeting, to be held at the InterContinental Hotel in downtown Toronto, shareholders will get one more chance to vote for or against a slate of directors proposed by company founder Eugene Melnyk. The company wants shareholders to vote for its own slate. Any proxies that were submitted for the first meeting are still valid, although shareholders can still change their vote if they want. Shareholders who have not yet submitted proxies can do so by a deadline of 10 a.m. EST on Aug. 6. BVF (TSX) rose 11 cents to close at $10.43.
NEB to hear TransCanada jurisdiction change request
The National Energy Board plans to hold public hearings into TransCanada Corp.'s recent request to have oversight of its Alberta natural gas pipeline system switched from provincial to federal jurisdiction. The NEB, an independent federal energy regulator, said the hearing will take place Nov. 18 in a location yet to be determined. Last month, TransCanada said it wanted to change jurisdiction over its Alberta gas system, currently regulated by the Alberta Utilities Commission. TransCanada said the move would help it feed natural gas from British Columbia and the Arctic into its network. Current rules under the Alberta Utilities Commission preclude the company from acquiring, constructing or operating facilities that transport gas across Alberta boundaries. TRP (TSX) rose 20 cents to $38.20. CP
RioCan sells retail complex stake to pension fund
RioCan Real Estate Investment Trust says a retail partnership it's part of has sold a 20-per-cent stake in the Quartier DIX30 retail complex near Montreal to a unit of the Hydro-Quebec Pension Fund. Financial terms were not revealed. RioCan said the buyer of the 20-per-cent stake from original partner Devimco Inc. was a numbered company, 2946-8964 Quebec Inc., part of the Hydro-Quebec Pension Fund, resulting in a restructuring of the co-ownership of the retail property. As part of the restructuring, Devimco's option to require RioCan to buy its original 50-per-cent co-ownership interest has been deleted. REI.UN (TSX) rose 20 cents to $20.00.
CGI Group sells unit to Shumka Group
Business information technology firm CGI Group Inc. has sold one of its Canadian business processing units to a private buyer for an undisclosed amount. The unit being sold provides claims adjusting and risk management services to the property and casualty insurance industry. The business unit, which records about $70-million in revenue annually, is being bought by The Shumka Group, a supplier of claims management services. The deal is expected to close in early August. GIB.A (TSX) fell 6 cents to $10.07.
GENERAL BUSINESS
ET CETERA
If we fail to remain competitive, Australia will incur a substantial opportunity cost and in the worst-case scenario, our resources will fall into overseas hands and we will also become a branch office - just like Canada.
GLOBE INVESTOR
E*Trade deal will leave big shoes to fill
Investors are going to miss E*Trade Canada when it's gone, even if they never dreamed of doing business with this upstart online broker.E*Trade is to be acquired by Bank of Nova Scotia in a deal that closes early this fall. What we have here is a nimble, innovative, competitive broker being purchased by an outfit that is none of those things. Nightmare outcome: ScotiaMcLeod Direct Investing absorbs E*Trade like a python eating a rat.
'I think it's going to get uglier'
Corporate America is sinking in credit-crisis quicksand.Second-quarter earnings from the 100 SandP 500 companies that have already reported, blended with expectations for the 400 yet to report, have lowered the final tally to an expected 17-per-cent drop in earnings from the same quarter last year.
Economy slams brakes on Winnebago
The head of Winnebago Industries Inc. says the economic challenges facing manufacturers of motorhomes have worsened in the month since it reported that quarterly profit tumbled 73 per cent.In an interview at an annual get-together of hundreds of customers near the company's headquarters in Forest City, Bob Olson, Winnebago's new chief executive officer, acknowledged: ''We've got a lot of things going against us.''
Shoppers Drug Mart bucks slowdown
What consumer slowdown? Last week, Shoppers Drug Mart Corp. posted second-quarter results that not only beat Bay Street estimates and rewarded investors for their faith in the stock, but also showed up very well against other major publicly owned drugstore chains in North America.
Newly reopened PH&N Vintage Fund aging well
WHAT ARE WE LOOKING FOR?Most equity mutual funds reveal their top holdings at the end of every quarter. Some will do so monthly. It's worth perusing them for stock tips. You might even become interested enough to invest in the fund.
Carbon conundrum is solvable
Canada has two big hurdles to clear to ensure its nascent carbon-trading market takes off, traders say.For starters, the country needs to harmonize its regulations so that provinces and the federal government all have consistent rules on how much polluters can emit, which will standardize the market within Canada. With all the political sniping surrounding the issue, the situation has been well publicized.
EYE ON EQUITIES: STOCKS THAT SHOULD BE ON YOUR RADAR SCREEN
(CIB.A-TSX)Yesterday's close$10.07, down 6centsCGI Group Inc., an information technology and business process services company, has agreed to sell its Canadian business processing unit, which serves the property and casualty insurance industry, for $30-million to $40-million, said Ralph Garcea, a Haywood Securities analyst. The proceeds will probably be used to pay down debt and buy back stock, he said.
Retail sales expected to cool
It looks like Canadian shoppers are continuing their spending ways as they remain in better financial shape than their colleagues south of the border, but a slowdown seems likely.Retail sales are forecast to have increased 0.6 per cent during May, compared with a 0.6-per-cent rise in April, according to a survey of economists by Bloomberg. If autos are excluded, retail sales are expected to have increased 0.7 per cent in May, down from 1.1 per cent in April.
MONDAY'S MARKETS: WHAT HAPPENED
UPEnergy stocks lift SandP/TSX compositeCanadian energy stocks surged 2.1 per cent, lifting the SandP/TSX composite 1.3 per cent, as relieved investors moved back into some of the beaten up names in the oil patch. Canadian Natural Resources Ltd. rose 4 per cent and Suncor Energy Inc. rose 1.9 per cent.
COMMODITIES
Corn prices hit a seven-week low as crops extended their rebound from last month's flooding, promising some relief for consumers who had faced higher prices for meat, dairy and other foods. Crude oil, gold, silver and copper futures rose, while soybeans and wheat fell.
TIP SHEET
Tempted to dabble in the U.S. technology sector, but unable to shake the memory of the tech wreck at the beginning of the decade? Take heart, says Brian Belski, U.S. sector strategist at Merrill Lynch and Co. Inc. Fundamentals in the sector have improved greatly over the last five years, he pointed out in a report yesterday.
BONDS
Canadian government bond prices ended mixed in a quiet session, with the short end outperforming longer bonds in largely directionless trading. Long-dated Treasuries rallied, ending a three-day selling streak.
FOREIGN EXCHANGE CROSS RATES
The dollar ended moderately higher against U.S. currency in quiet trading as renewed strength in oil prices provided some support in a largely stagnant market environment. The greenback also fell against the euro and yen on easing concerns that European growth will slacken.
