These are stories Report on Business is following Friday, June 3. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Rotating strikes pointless Postal workers are off the job in Winnipeg today, and plan to target Hamilton, Ont., over the weekend in a series of rotating strikes that began last night.
I'm not advocating a full-scale walkout, or taking sides in the dispute that ended in union action after seven months of failed talks, but I do question the union's bargaining tactics: Rotating strikes against a postal service are a pointless exercise.
Union president Denis Lemelin said last night that the negotiating team will "evaluate the situation on a daily basis and determine our strike strategy based on developments at the bargaining table," so presumably tactics could change. He told reporters in Ottawa today that the next target will be Hamilton, beginning tonight and running for 48 hours.
The purpose of a work stoppage is to halt production and pressure an employer to come to terms at the bargaining table.
Rotating strikes would be a strong tactic against a manufacturer - General Motors, just as an example, where actual vehicle production would be affected - but against Canada Post they're a minor inconvenience at best.
Yes, people will be affected somewhat, small businesses in particular. But in this age of the Internet, how many people really care about letters from home? This will probably serve to push more businesses further online.
So already the union was in a weak position. Rotating work stoppages only drive home that point.
The union may have chosen that route to try to win public sympathy, but it puts little pressure on Canada Post.
As Winnipeg postal worker Michelle Fidler put it in an interview with The Canadian Press, rotating strikes "might make them go back to the table, but I think that they need to take us seriously. And I think the only way to do that is for the entire country to walk out."
Keystone gets corrective action order The U.S. Pipeline and Hazardous Materials Administration has issued a corrective action order, shutting down the Keystone pipeline until TransCanada Corp. completes a series of steps.
The order is the first against the Keystone line, The Globe and Mail's Nathan VanderKlippe reports.
It comes after two recent leaks from fittings at pipeline pump stations – one on May 7 and another May 27 -- from a system that began commercial deliveries only a year ago. The order mandates 14 steps the company must take before resuming operations, including demands for information, mechanical and metallurgical testing and a report on all issues and incidents on the line.
Keystone was still shut down as the company responded to the May 27 leak, and spokesman Terry Cunha said the company is “going to be implementing all of these conditions and hope to have the system up and running as soon as possible.”
Greece reaches deal with Troika Greece is closer to the next tranche of its bailout money, now expected in July, after a review of its fiscal plans by the Euroean Union, the European Central Bank and the International Monetary Fund, which markets have dubbed the "Troika."
Athens is poised to gut its public sector, close public agencies, raise taxes and speed up its sell-off of state assets as it grapples with a debt crisis and struggles to meet its commitments for aid.
"This strategy includes a significant downsizing of public sector employment, restructuring or closure of public entities, and rationalization in entitlements, while protecting vulnerable groups," the Troika said in a statement.
"On the revenue side, the government will reduce tax exemptions, raise property taxation, and step up efforts to fight tax evasion," the group said. "The government is committed to significantly accelerate its privatization program. To this effect it will create a professionally and independently managed privatization agency, and has drawn up a comprehensive list of assets for privatization with the aim of realizing revenues of €50-billion by the end of 2015. The government will assess progress against intermediate quarterly and annual targets."
After the review, the three bodies said they had reached an agreement with Athens on what has to be done, but warned that more will be needed.
"Reinvigoration of fiscal and broader structural reforms is necessary to further reduce the deficit and achieve the critical mass of reforms needed to improve the business climate and pave the way for sustainable economic recovery," the group said.
"... Building on the agreed comprehensive policy package, discussions on the financing modalities for Greece’s economic program are expected to take place over the next few weeks. Once this process is concluded and following approval of the IMF’s Executive Board and the Eurogroup, the next tranche will become available, most likely, in early July."
- Greece to get next batch of bailout funds
- Greece to present new austerity plan
- EU kicking Greece while its down
- Greek protesters block finance ministry
RIM shares sink Research In Motion Ltd. shares sank today, falling below $40 (U.S.) in New York for the first time since March 2009, amid analysts reports that take a dim view of the BlackBerry maker's stock price.
UBS analysts Amitabh Passi and Phillip Huang, for example, cut their 12-month price target by $15.
"The stock appears cheap ... but risks abound," analysts Amitabh Passi and Phillip Huang said as they cut their target to $45 (U.S.) from $60 and held their rating unchanged at "neutral." They also trimmed their revenue estimates, referring to the BlackBerry maker by its U.S. stock symbol, RIMM.
"On several metrics, especially PE and EBITDA, RIMM stock appears cheap," the analysts said in their research report.
"However, with limited visibility on earnings power, increasing competitive threats, an un-compelling product refresh, and a management structure that, in our view, now appears sub-optimal (co-chairmen, who are co-CEOs, with one of the CEOs the CMO as well) we still foresee risks investing in RIMM stock at these levels."
Saying that "value is in the eye of the beholder," they noted the recent troubles of Nokia Corp. , the world's biggest cellphone maker, whose stock plunged this week after it cut its sales outlook, pulling down RIM shares as well.
Both Nokia and RIM are under pressure in the smart phone market from the popularity of the iPhone by Apple Inc. and devices that use the Android system from Google Inc. .
"While Nokia’s challenges appear more cumbersome than RIMM’s, what is evident in the mobile industry is that platform transitions can be difficult and profitability transitions (from peak to trough) quite dramatic and sudden," the UBS analysts said.
"We believe RIMM risks a similar outcome (perhaps with a longer tail given its lucrative services revenue stream) unless it makes bold moves and executes on the migration to its next generation QNX operating system flawlessly."
The analysts lay out their "bull/bear" case, and suggest the stock could surge higher "if RIMM delivers its new products on time, manages the transition to QNX flawlessly, and continues to drive growth successfully."
Sterne Agee analyst Shaw Wu cut RIM's target to $44 from $52, saying that "we believe the risk is that EPS for the next two years could end up flat-to-down, meaning Street estimates, which have already been cut significantly, may need to come down further," according to Forbes.
“We did some additional analysis on the potential impact on [Apple's] iCloud on the competitive landscape and believe RIMM could see collateral damage,” he added in the note. “In addition, we see additional pressure from future offerings from [Google] and [Amazon].”
The analyst reports came as ComScore Inc. reported that in the key U.S. market, RIM's share of mobile subscribers dipped to 8.2 per cent from 8.6 per cent in three months ending in April. Apple's share, in turn, climbed to 8.3 per cent from 7 per cent. Its stock also dipped today.
Samsung still ranked as number one, though its share dipped slightly to 24.5 per cent.
In terms of operating systems for smart phones, RIM's share of the market slipped to 25.6 per centfrom 30.4 per cent, while Apple rose to 26 per cent from 25.7 per cent to outpace the BlackBerry maker.
Google shot up to 36.4 per cent from 31.2 per cent.
- Investors to RIM: Tell us a story
- Nokia bloodied in smart phone dogfight
- Nokia warns of weaker sales, sales plummet
U.S. jobless rate inches up What will it take to get Americans back to work?
The U.S. economy created just 54,000 jobs last month as the unemployment rate rose to 9.1 per cent from 9 per cent, the Labor Department said today.
That's a very weak showing for a country struggling to get millions of people back to work in the wake of the financial crisis and recession, and raises even more fears over the slowing U.S. economy.
"Signs of a cooling economy officially reached the job market today," said economist Alistair Bentley of Toronto-Dominion Bank.
"A paltry 54,000 increase in non-farm payrolls in May represents a marked slowdown from the 200,000 plus trend pace seen during the past three months. The question now is whether slowing job growth in May is temporary or a lasting setback. Recent initial jobless claims remain stuck above the 400,000 mark, which points to fairly lackluster job growth. However, as long as the recent declines in gas prices are sustained and manufacturing disruptions created by Japan’s earthquake fade, we remain cautiously optimistic that job growth will move back above the 200K mark during the second half of 2011."
Almost 14 million Americans are now without jobs, and long-term unemployment remains ugly. More than 45 per cent of jobless Americans have been out of work for more than six months. That's more than 6 million people.
"The sole bright spot in the report is that the index of aggregate weekly hours managed to inch higher, which, coupled with a sizeable gain the prior month, has put it on track for a strong (and frankly hard-to-believe) 3.7 per cent annualized rate in Q2," said senior economist Sal Guatieri of BMO Nesbitt Burns. "Look’s like productivity will take a good haircut."
Companies accounted for 83,000 new jobs in May - the slowest pace in about a year - while employment in the public sector slipped by 29,000. That's the lastest in a string of monthly results showing governments cutting back.
The government cuts are a sign of more to come at the federal level in the years ahead, Mr. Guatieri said.
U.S. Labor Secretary Hilda Solis called on states and municipalities to take heed as they try to bring their budgets into line.
"We have lost 73,000 government jobs in the last three months," she said.
"As states and localities make budget decisions, they should cut judiciously because their decisions have an impact on jobs and the direction of our economy ... While I would have liked to have seen stronger growth in May, we are still on the right trajectory. With smart investments and the determination of the American people, we will continue on our path toward a full recovery."
The key question now, he added, is whether it's a temporary pause by the private sector related to uncertainty over the recovery, or whether companies are "hunkering down" for a longer stay. While he believes it's the former, the next couple of months will be the telling factor.
"Sluggish job numbers in May highlight that the U.S. economic recovery is fragile, and only has a limited capacity to absorb shocks," added TD's Mr. Bentley. "This is distressing given the evolving challenges in Europe, and its potential ramifications for global financial markets. Also, if oil prices rebound strongly it would materially slow the recovery."
Competition watchdog clears exchange deal Canada's Competition Commissioner has cleared the proposed merger of TMX Group Inc. and London Stock Exchange Group PLC.
The operators of the Toronto Stock Exchange and the London bourse said in a statement today that the watchdog, Melanie Aitken, issued a "no action letter," which confirms that the deal won't be challenged.
The deal still has to clear the Industry Minister and shareholders, amid a competingt, hostile bid by several Canadian banks and pension funds.
- Boyd Erman: TMX and LSE face a high bar for vote win
- Read our complete coverage of the battle for TMX
Chrysler payment calculated The final payment to the Ontario and federal governments for the bailout of Chrysler LLC will be about $129-million (U.S.), based on a deal Chrysler’s parent company made to buy out the remaining interest the U.S. government held in the no. 3 Detroit auto maker, The Globe and Mail's Greg Keenan reports today.
Fiat SpA will pay $500-million for the 6.6 per cent stake the U.S. government in a deal announced late yesterday, an amount that puts a value of $129-million on the 1.7 per cent holding in Chrysler owned jointly by Ottawa and Ontario.
Markets sink Global stock markets are sinking in the wake of the hugely disappointing U.S. jobs report.
Tokyo's benchmark Nikkei slipped 0.7 per cent, and Hong Kong's Hang Seng 1.3 per cent, though they closed before the report was released.
In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were down by between 0.3 per cent and 0.8 per cent by about 8:45 a.m. ET.
Dow Jones industrial average and S&P 500 also slipped.
Inflationary pressure takes on new meaning They've got their economic priorities somewhat skewed in Argentina: They're targeting economists rather than inflation.
The Reuters news agency reports that the government has fined at least nine consulting groups some $120,000 (U.S.) each over their estimates of inflation. Private economists, according to the report, are appealing to the government for what they say is the potential for penalties if they estimate increases in consumer prices at more than double the government's official rate.
They believe the government wants them to keep their mouths shut as it heads toward an election.
Reuters says the official inflation rate through April was 9.7 per cent, while private estimates put it above 20 per cent. (Memo to Argentina's price czar Guillermo Moreno: Go after Reuters, not me.)
In Economy Lab today
There’s been a lot of angst in Canada about companies shipping jobs and production offshore, particularly as the loonie has climbed to par and beyond in the past decade. But a new study by the Department of Foreign Affairs and International Trade suggests that concern may be misplaced, Barrie McKenna reports.
In International Business today
As Etihad Airways blazes a new Silk Road for the global aviation industry, the Persian Gulf carrier warns that Canada is missing out, Globe and Mail transportation reporter Brent Jang writes.
In Personal Finance today
Many homeowners believe their policies will cover them for any and all damages, but the reality can be an expensive surprise.
Students will shop around for fancy dresses and limos, but what about paying for what comes after graduation?
Understand what you need to have versus what you would like to have in your portfolio.
From today's Report on Business