These are stories Report on Business is following Thursday, Oct. 25, 2012.
Apple hits and misses
Apple Inc. topped market expectations on revenue as it reported fourth-quarter results late today, but was below estimates on a nonetheless fat profit. Its shares dipped in immediate after-hours action.
Here are some key numbers to consider:
- Apple earned $8.2-billion (U.S.) or $8.67 a share, diluted, compared to $6.6-billion, or $7.05 a year earlier.
- Revenue climbed to $36-billion from $28.3-billion.
- Number of iPhones sold: 26.9 million, up 58 per cent.
- Number of iPads sold: 14 million, up 26 per cent.
- Number of Macs sold: 4.9 million, up 1 per cent.
- Number of iPods sold: 5.3 million, down 19 per cent.
- International sales represented 60 per cent of over all revenue.
- Estimates for the first quarter of $52-billion in revenue and earnings per share of about $11.75.
“We’re pleased to have generated over $41-billion in net income and over $50-billion in operating cash flow in fiscal 2012,” chief financial officer Peter Oppenheimer said in a statement.
- Apple revenue meets Wall Street targets, iPad sales disappoint
- Amazon reports $274-million loss as expansion plans take a toll
Britain bounces back
Britain has rebounded from its recession, its economy expanding by 1 per cent in the third quarter of the year.
That’s the first estimate of economic growth from the country’s Office of National Statistics, and can be revised, while the pop was due partly to the Olympics, so the next while may not be as bright.
But it’s still a good sign for the first western economy to report third-quarter growth.
“The preliminary estimate of GDP growth in quarter three may have been affected by a number of factors, which need to be taken into account in the interpretation of the latest figures,” the agency said.
“First, the growth rate is based on the level of GDP in the second quarter of 2012, which had one fewer working day than usual because of the Queen's Diamond Jubilee bank holiday. In addition the London 2012 Olympic and Paralympics Games may have affected economic activity in the third quarter. In particular, the sales of Olympic tickets increased GDP growth in the quarter by 0.2 percentage points and there may have been other effects, which are impossible to quantify.”
CNOOC sees Nexen deal approval
China's CNOOC Ltd. still expects the Canadian government to approve its huge takeover of Nexen Inc. despite its rejection of a proposed deal by Malaysia's Petronas for Progress Energy Resources Corp.
"Our team is still working to obtain approval," CNOOC's chief financial officer, Zhong Hua, told reporters today as he unveiled the energy company's latest quarterly results, according to Reuters.
"We still expect the approval by the end of the year."
There is much controversy in Canada surrounding the takeovers of resource companies by foreign state-owned enterprises, though the government hasn't said why it turned down Petronas, other than it didn't meet the country's "net benefit" test.
But CNOOC believes it's not in the same boat.
This is a hugely different deal," the CFO said.
Nexen also said today it still expects the deal to go through. The comments came as the Canadian energy company posted a hefty drop in third-quarter profit to $59-million or 11 cents a share from $200-million or 38 cents a year earlier.
Potash profit slips
Changing demand patterns from major fertilizer users are hurting profits at Potash Corp. of Saskatchewan, which cut its profit outlook as sales fell for its namesake crop nutrient amid a price standoff with India and China, The Globe and Mail's Pav Jordan writes.
Saskatoon-based Potash Corp., the world’s largest fertilizer maker, said profit fell to $645-million (U.S.), or 74 cents a share, in the third quarter, compared to $826-million, or 94 cents a share, in the same period last year.
It also warned that full year 2012 earnings would likely come in between $2.40 a share and $2.60 a share, or about 14 per cent below earlier guidance.
Central bank policies buoy loonie
The combined policies of the Bank of Canada and the Federal Reserve promise to continue to buoy the Canadian dollar, not the best news for the country’s exporters.
The loonie, according to senior currency strategist Camilla Sutton of Bank of Nova Scotia, is projected to remain above parity with the U.S. dollar through to the end of 2013.
There are many factors behind the strength of Canada’s dollar, of course, but central bank policy is responsible for some of the fuel.
Two days ago, the currency rallied when the Bank of Canada watered down its rate outlook, but still maintained that the next change to its benchmark overnight rate would be up. Then yesterday, it weakened when Mr. Carney told reporters the need for such a hike is “less imminent.”
On top of that, the Fed yesterday maintained its outlook, as expected, pledging an emergency low Fed funds rate through to at least 2015. It also continues its latest asset-buying program, a scheme known as QE3 because it marks the third round of quantitative easing and one that pressures the U.S. currency.
As The Globe and Mail’s Kevin Carmichael reports, a rate hike in Canada is now expected somewhere between mid-2013 and the end of the year.
All of this spells a long period of a strong currency, which the Bank of Canada warned this week will affect exports, partly because of the actions of other central banks.
“Canadian exports are projected to pick up gradually but remain below their prerecession peak until the first half of 2014, reflecting weak foreign demand and ongoing competitiveness challenges,” the central bank said Tuesday as it held the overnight rate at 1 per cent.
“These challenges include the persistent strength of the Canadian dollar, which is being influenced by safe haven flows and spillovers from global monetary policy.”
- Carney on rates: No 'imminent' changes
- Kevin Carmichael's Economy Lab: Watch economy, not Carney, for clues on where rates will go
- (Subscribers only) David Parkinson: Carney barks, but he's a long way off biting
Telecom complaints rise
Canada’s Commissioner for Telecommunications Services says there was a 35-per-cent increase in telecom consumer complaints in its 2011-2012 year and that wireless services topped the list for the fourth consecutive year.
About 60 per cent of the issues raise in complaints related to wireless, unregulated local or long distance telephone services or internet access came from wireless users, the CCTS said today, The Globe and Mail’s Bertrand Marotte reports.
Most of the beefs were in connection with billing errors or contract disputes.
Not your father's economy?
Bank of Montreal's Sal Guatieri takes an in-depth look today at indicators past and present and comes to this conclusion: Young Americans have been more debt, fewer jobs and less downtime than their parents had, but are much better off in other ways.
"Many young American (and Canadian) families believe they have a harder row to hoe than the previous generation and are always stretching to reach the once low-hanging fruit picked by their parents," the senior economist at BMO Nesbitt Burns says in a study today.
Then, he sets out to determine whether the perception is accurate, and whether the economy and financial story today are uglier than they were 30 years ago.
Comparing statistics from 1972-1981 and 2002-2011, Mr. Guatieri found himself comparing the two-time recession and stagflation of the older generation to the financial crisis and recession of the younger, the worst downturn in the United States since the Depression.
Among his findings:
- Young families faced a more troubled economy, and no employment growth in the latest period, compared to average jobs growth of 5 per cent three decades ago.
- While the most recent period was "more challenging" in terms of the economy, the financial position of young families was not "uniformly worse" when adjusting for inflation then and income "destruction" in both periods.
- Today's typical family carries double the debt, with a notable increase in what students owe.
- The U.S. housing market may have crashed, but today's generation are "clearly better off" when it comes to their net worth, their earnings and spending power, and housing affordability.
"Young American families in the past decade have struggled more with debt and joblessness and have less leisure time than the previous generation," Mr. Guatieri writes.
"However, on average, they are wealthier, enjoy lower housing costs, earn and consume more, and have higher living standards. Therefore, it’s not clear which generation had a worse start to their working and family-raising years. The future, however, may be less ambiguous, as rising public debts and retiree obligations suggest younger families could get stuck with a bigger share of the tab than their parents."
- Rob Carrick: Students show their smarts on credit cards
- Eight ways to make life insurance work for you
- Rob Carrick on money: How to save money in Canada