These are stories Report on Business is following Thursday, March 28, 2013.
Forbes on Lazaridis, Balsillie
At their peak in the spring of 2008, Forbes calculates, the two co-founders of Research In Motion Ltd. were each worth more than $3-billion (U.S.).
Now, the magazine asks, what would it take for Mike Lazaridis and Jim Balsillie to be billionaires again?
As RIM posted a surprise fourth-quarter profit today, Forbes looked at how the former co-CEOs were knocked off the magazine’s famous billionaires list by 2012, attributing the fall to the accompanying rise of Apple Inc.’s iPhone.
“By then, Apple was shipping tens of millions of iPhones each quarter, and BlackBerry handsets seemed old and inflexible,” writes Abram Brown of Forbes.
“Later, Google-based Android phones chipped away further at BlackBerry’s market share and lacklustre innovation attempts limited the company’s competitive abilities.”
Indeed, the company that gave the world the smartphone suffered a rapid fall from grace, its market share eroding and stock price collapsing.
Mr. Lazaridis and Mr. Balsillie stepped down as co-CEOs more than a year ago, and Thorsten Heins was brought in as chief of the company that has rebranded itself as, simply, BlackBerry. Mr. Lazaridis told The Globe and Mail’s Iain Marlow today that the board had asked him to stay as CEO.
Mr. Balsillie severed his ties with the company earlier, and sold his almost 27 million shares for more than $300-million.
Today, Mr. Lazaridis stepped down as vice-chair and director, though he’s still got some $440-million in 30 million shares, which, it’s worth noting, have run up over the past several months.
For Mr. Lazaridis to get back on the Forbes list, those shares would have to be valued at $33.60 each, the magazine notes, and that’s not likely to happen.
Mr. Lazaridis is now involved with a new $100-million venture capital fund, Quantum Valley Investments, while Mr. Balsillie is an adviser to several venture capital companies and startup concerns.
Today, Mr. Heins boasted of the company’s return to profit.
As Mr. Marlow reports, RIM surprised analysts with a fourth-quarter gain of $98-million or 19 cents a share, rebounding from a loss of $125-million or 24 cents a year earlier.
Revenue fell by 36 per cent to $2.7-billion.
RIM also boasted sales of one million from the global launch of its new BlackBerry 10 devices in the quarter, though that excluded the U.S. market and though its subscriber base declined to 76 million.
“We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the company returning to profitability in the fourth quarter,” said Mr. Heins.
“With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers.”
- Forbes: Both BlackBerry founders are gone now. Could either become a billionaire again?
- RIM swings to profit as make-or-break BlackBerry hits market
- Lazaridis: RIM asked me to stay as CEO last year
- Mike Lazaridis’s new quantum leap
- In motion: Jim Balsillie’s life after RIM
- Lunch with RIM CEO Thorstein Heins: Time for a bite, and little else
Rosenberg on Canada
Canada’s economy may be just limping along for now, but David Rosenberg sounds positively bullish today.
The chief economist of Gluskin Sheff + Associates was actually writing about the Canadian dollar in his daily research note, commenting on the currency’s recent gains and reminding his readers that the Bank of Canada has said it won’t engage in competitive devaluation.
“How many other countries are pushing for a hard currency policy right now?” Mr. Rosenberg said.
“All we have on our hands is a mercantilist global currency war which Canada does not want to be a part of.”
As for the Canadian economy overall, here are his points:
1. “The Canadian federal budget last week attacked tax expenditures as a means to ensure a move to budget balance in coming years. This remains a pipe dream south of the border.”
2. Only 11 major economies now boast a triple-A rating from the world’s three big credit rating agencies, Canada among them.
3. Canada’s economy is showing some signs of picking up, and there are indications that the weakening of the housing market is “in its mature stages.” While condos are still in “oversupply” territory, the key single-home category is not.
4. Inflation is just above 1 per cent, compared to 2 per cent in the United States. When you use the same type of measure, Canada’s unemployment rate is 6.5 per cent, compared to America’s 7.7 per cent. “The only way that Canada can have both a lower unemployment rate and a lower inflation rate – by roughtly a full percentage point apiece – is by value of experiencing an upturn in its potential GDP growth rate at a time of secular decline stateside.”
5. The “bitumen bubble,” as Alberta Premier Alison Redford puts it, is easing as the discount for western Canadian oil to the U.S. benchmark narrows to $16. “This narrowing of the spread has obvious positive implications for capital investment, exports, production and fiscal finances.”
6. If you’re bullish on the U.S. auto sector, note that auto and parts exports account for 15 per cent of Canadian exports. Ditto on being bullish on U.S. real estate: “If you are, then this is actually even more bullish for the Canadian economy which is much more sensitive to shifts in wood product prices – once again, a huge positive terms-of-trade shock in the form of firmer lumber prices.”
Mr. Rosenberg’s comments came as Statistics Canada’s latest report on the economy showed gross domestic product inching up by 0.2 per cent in January, reversing December’s decline.
At the same time, the Organization for Co-operation and Development projected Canada’s economy will expand by 1.1 per cent in the current quarter, and by 1.9 per cent in the second.
All of this points to an economy still struggling to find more solid ground, but doing that slowly.
- Canadian economy limps along but forecast to pick up steam
- Economy Lab: Surprising economic strength won't change Bank of Canada's thinking
- U.S. economy posts sluggish growth in fourth quarter
- Carney shifts from housing bubble to sluggish growth
- Recent economic indicators more bad than good, Mark Carney says
Total to take Voyageur hit
The French energy giant that had partnered with Suncor Energy Inc. in the Voyageur upgrader is taking a hit of $1.65-billion (U.S.) as the project dies.
As The Globe and Mail’s Brent Jang reports, Suncor announced late yesterday it was cancelling the project and taking a writedown of $140-million (Canadian) in its first quarter, having already taken a $1.5-billion hit.
It also paid France’s Total SA $515-million for its stake in the project’s assets.
Today, Total said it would suffer a loss of $1.65-billion (U.S.) on the project in its first quarter, but will save more than $5-billion over the next five years by getting out.
“The oil market environment in … North America has changed significantly,” Total said.
“The emergence of an abundance of light oil and condensates produced in the region will increase tremendously the supply of diluents for mining projects and consequently impact upgrader projects in the area,” it added in a statement.
“Following a thorough revenue of its assets shared with Suncor Energy Inc. in Canada, Total concluded that the investment in the Voyageur project was no longer justified from a strategic and economic point of view.”
Cypriot banks reopen
Cypriot banks are open again today for the first time in about two weeks, though amid strict controls aimed at stopping cash from fleeing the embattled country.
As our European correspondent Eric Reguly reports, there was no apparent panic or fuss.
The capital controls, which affect withdrawals and purchases of foreign goods by credit card, are, for now, to be kept in place for seven days.
“Morning images of armed Cypriot police stationed outside banks to prevent civilians from withdrawing their own money stands as a vivid metaphor for how far the euro zone has fallen, and will no doubt focus the minds of equity investors," said Matt Basi of CMC Markets in London.
Streetwise (for subscribers)
- Hot energy prices baked into values of integrated producers
- Auditors on trial as Livent case heads to court
- Surprising economic strength won't change Bank of Canada's thinking
- Better-educated workers are starting at the bottom - but is that so bad?
ROB Insight (for subscribers)
- Rob Carrick: Time to sell my house and rent?
- Tax-efficient investing survives (despite the federal budget)
- Carrick on money: Is there a dividend bubble?