These are stories Report on Business is following Tuesday, Feb. 5, 2013.
Dell deal struck
Some of the greats – Michael Dell is one – got started in a dorm room.
Perhaps it’s time to go back to college, relive the res experience, and come up with something new. Like something mobile. Or cloud-y.
(Clearly there’s something about dorm rooms. Mr. Dell started at the University of Texas, and Facebook’s Mark Zuckerberg, of course, at his Harvard residence. And Google’s Larry Page and Sergey Brin met up at California’s Stanford U.)
Dell Inc.’s stock chart tells the story, zooming up in the late 1990s to more than $50 (U.S.) when the PC ruled. Now, as computing transforms, we have a world of smartphones, tablets and, of course, the cloud.
All of which signals why Mr. Dell and private-equity partner Silver Lake, backed by a loan from Microsoft Corp. and financing from major banks, struck a deal today to take the computer maker private, for $13.65 a share, or a total $24.4-billion.
According to The Financial Times, Dell, which once reigned supreme, relies on PCs for some 70 per cent of its business. It’s that business that is under threat, so much so that Microsoft agreed to kick in a $2-billion loan, given its reliance.
Indeed, Mr. Dell cited the long road ahead as the company announced the deal.
“We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise,” he said in a statement.
“Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision.”
Rival Hewlett-Packard Inc. sought today to get a leg up from what it called Dell’s “very tough road” ahead.
“The company faces an extended period of uncertainty and transition that will not be good for its customers,” HP said in a statement.
“And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."
- Dell to go private in $24.4-billion deal
- Sean Silcoff in ROB Insight (for subscribers): Dell's stash of cash is the hidden gem in LBO
RIM climbs again
Shares of Research In Motion Ltd. climbed again today, by more than 6 per cent, after a stunning 15-per-cent rally yesterday.
After an equally stunning decline last week after RIM’s launch of its new BlackBerry 10 device, the shares have climbed back, though they still sit below the almost $18.50 level reached before the new smartphones were unveiled.
They began to plunge after RIM, which plans to change its name to BlackBerry, said the devices wouldn’t go on sale in the United States until late March.
The stock closed in Toronto today at $15.94.
Yesterday’s rally followed its advertising debut at the Super Bowl on Sunday, and amid an upgrade from Sanford C. Bernstein analysts, who hiked their price target on the stock to $22 (U.S.) from $12, and their rating to “outperform.”
The new touchscreen BB10, which has won positive reviews and will be followed by a keyboard model, went on sale in Britain last week.
Sales begin in Canada today, and The Globe and Mail’s Iain Marlow and Rita Trichur report record preorders among Canadian carriers.
- New BlackBerry arrives in Canada, carriers see strong demand
- RIM enjoys post-Super Bowl rally amid analyst upgrade
- How to assess RIM’s turnaround
Primaris bidders team up
Two bidders that had been competing for Canada's Primaris Retail Real Estate Investment Trust are now teaming up, The Globe and Mail's Tara Perkins reports.
The new offer will see H&R Real Estate Investment Trust buy Primaris’s operating platform as well as 25 of its shopping centres, while the consortium led by KingSett Capital will pick up 18 properties.
It is valued at $27.98 per Primaris unit, and increases the amount of cash that investors can elect to receive.
“The result of the two bidders for Primaris joining in this amended transaction has created an opportunity that provides a higher price than what was previously agreed upon,” Primaris chief executive officer John Morrison said in a statement.
- Competing Primaris bidders agree to join forces
- Tim Kiladze's Streetwise (for subscribers): RioCan's making moves in urban markets
What's moving the yen
Plots and subplots are driving down the value of the yen, in turn boosting the fortunes of Japanese manufacturers such as Toyota Motor Corp.
Amid the developments in Japan, the auto maker today posted a gain of more than 23 per cent in quarterly profit but, perhaps more importantly, boosted its outlook for the year, based on better sales but also a weaker currency.
Toyota’s senior managing officer, Takahiko Ijichi, went so far as to cite the impact of the recently elected government led by Prime Minister Shinzo Abe, who wants a lower yen and stronger action from the Bank of Japan.
“Ever since the new government took control, it feels as though Japan is filled with the spirit for economic revival,” the Toyota executive told reporters in Tokyo, according to Bloomberg News.
“Some say that they can’t feel any real substance in the whole ‘Abenomics’ phenomenon, but as a result, it’s weakened the yen and boosted stock prices.”
Coupled with that was the decision today by Bank of Japan Governor Masaaki Shirakawa to leave his post a few weeks early, on March 19. The coincides with the departure of two deputies in a period of intense pressure on the central bank by the new government.
That, said senior currency strategist Camilla Sutton of Bank of Nova Scotia, was the main reason for the yen’s continued decline today. Or, as she phrased it, the “plot.” Then there are the “subplots,” which include everything from Abenomics to the islands dispute between Japan and China.
The governor’s decision today underscores that “there is going to be a sea change at the Bank of Japan,” she said.
- Brian Milner's Economy Lab: Why Japan Inc. is singing praises of Prime Minister Shinzo Abe
- Toyota boosts outlook as profit rises 23%
- Bank of Japan's Shirakawa to step down early
Amazon shuts Canadian newsstand
Amazon.com Inc. is dismantling its Canadian newsstand, leaving readers without access to hundreds of digitized magazines and newspapers that had been available at its online store, The Globe and Mail's Steve Ladurantaye reports today.
The company introduced a “Canadian storefront” for its users late last month.
“Current subscriptions will be cancelled and refunded,” a spokesman at the company’s Canadian public relations agency Sonic Boom Creative Media said, adding he couldn’t answer any questions about why the decision was made or whether the newsstand could be revived at some point.
Streetwise (for subscribers)
- The e-mails S&P didn't want you to see
- Desjardins buys big stake in Qtrade
- There's money being made in ABCP, but most of it goes to the U.S.
- A good year for the chiefs at RBC's capital markets
- The 'Fedi' Fountain? Companies step in as Italy's treasures crumble
- Why Japan Inc. is singing praises of Prime Minister Shinzo Abe
ROB Insight (for subscribers)
- Dell's stash of cash is the hidden gem in LBO
- Foxconn's union drive follows Marx's playbook
- End of investor fear should ignite Canadian IPO boom
- Gordon Pape: When RRSPs are better than TFSAs
- Rob Carrick: Why the Home Buyers’ Plan should be wound down
- In a stagnant economy, should you hunker down and take fewer risks?
- Video: The librarian who wants to book returns of 5%
- U.S. seeks $5-billion in S&P mortgage rating suit
- Kathleen Taylor out as Four Seasons CEO
- BP profit tumbles as oil spill trial looms
- Plans for Montreal metallurgical facility put on ice
- Euro zone economy shows signs of recovery, optimism builds
- MasterCard doubles payout, unveils $2-billion stock buyback
- Canadians back to borrowing as average consumer debt hits new high
- Bell Aliant profit, revenue fall