These are stories Report on Business is following Wednesday, June 29. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
MySpace sold to ad firm Today's sale of MySpace highlights the decline of the social media site that Facebook left in its dust.
News Corp., which acquired the site several years ago for $580-million (U.S.), sold it today for about $35-million to Specific Media, an ad firm, reports say.
MySpace was once wildly popular, but, according to The New York Times, advertisers abandoned it along with its users. Its revenues this year are expected to be just more than $180-million, well below its peak of $605-million.
But everyone acknowledges that MySpace was a pioneering venture that brought many to social networking.
TMX, LSE kill deal The proposed merger of TMX Group Inc. and London Stock Exchange Group PLC is dead.
TMX said today that a majority of the votes cast by proxy before yesterday's deadline in fact supported the deal, but it was clear the two exchange operators wouldn't get the two-thirds require in a vote scheduled for Thursday, The Globe and Mail's Paul Waldie and Boyd Erman report.
TMX Group chief executive officer Tom Kloet said the company will now focus on other alternatives including a rival bid from Maple Group Acquisition Corp, a collection of Canadian financial institutions and pension funds. The bid by Maple, worth about $50 a share, had been conditional on the defeat of the TMX-LSE merger.
- TMX, LSE kill merger deal
- David Berman's Market Blog: Investors cheer TMX deal collapse
- Read our complete coverage of the battle for control of TMX
The Greek Tragedy The scenes from Athens today have an air of the unreal about them. Inside Greece's Parliament, politicians broke into applause after they approved harsh new austerity measures. Outside, demonstrators clashed with police, as they have done time and again to protest the government's plans to hike taxes, cut back services and sell off billions in state assets in a bid to stay alive.
The measures approved today are key to Athens averting a credit default. If all goes according to plan, the EU, European Central Bank and International Monetary Fund will give Athens €12-billion more from its original bailout, and agree to a second rescue package down the road.
After tomorrow's second vote, the EU finance ministers will meet Sunday to discuss all the issues, including proposed voluntary rollovers by private debt holders. Fears began to ease earlier when France said said its banks would agree to roll over some debt, sparking hope that other European institutions will agree to the same plan.
But it's not easy going from here, and one shouldn't be surprised if the debt crisis rears its ugly head again. Not only are the people of Greece violently opposed to cutbacks, but markets have climbed and plunged on the ups and downs of the Greek tragedy.
Here are the views of some observers:
"One only has to look at the scenes outside the Parliament building in Athens to know that there is a long way to go with some opinion polls saying that over 70 per cent of Greeks are opposed to the measures.There is also the small matter of the ratings agencies who have gone on the record as saying that any type of reorganizing, restructuring of debt would technically be considered a default event." Michael Hewson, market analyst, CMC Markets
"Should the two Greek votes pass, then the short-term EU aid is almost certain to follow. Then the fun begins. What happens from that point forward is still marked by enormous uncertainty. How to address Greece's longer run funding requirements within the confines of an economy that stands no hope of doing it on its own through economic and revenue growth, and how to do so without triggering a default stamp is proving to be enormously complex." Derek Holt, Karen Cordes Woods, economists, Scotia Capital
"While in theory, the European/IMF package could take care of all of the financing needs through Q2 2014 (ensuring the IMF will be in the game through Q2 2013), in practice, we expect that economic weakness in Greece will test the country's political resolve to stay with austerity that long. We could be back at the table a year from now if it becomes apparent that Greece is once again falling short of its fiscal targets, or if the government is unable to stay the course in the face of public opposition and recession." Avery Shenfeld, CIBC World Markets
"There remain considerable doubts over whether the Greek government will be able to sell the €50-billion of state-owned assets a second bailout package would incorporate, and whether it will actually be able to implement the new austerity measures. More fundamentally, we still expect government debt to remain stubbornly high over the coming years, suggesting that the government may still be unable to borrow from the markets when any bailout package ends." John Higgins and Ben May, economists, Capital Economics
- Greece passes key austerity plan
- How a Greek default would ripple around the world
- Yield-hungry investors eye the European landscape
Loonie pops The Canadian dollar climbed more than a penny today after the latest inflation reading put some heat on the Bank of Canada. Also buoying the currency was a general relief rally as Greece's government won a crucial vote on new austerity measures.
The higher-than-expected showing on inflation got markets thinking that Bank of Canada Governor Mark Carney may raise interest rates again sooner rather than later, said Scotia Capital currency strategist Camilla Sutton.
Economists had been thinking Canadians may not get another rate hike until next year, but they're re-thinking things today given the central bank's mandate for an inflation rate of 2 per cent. It's now 3.7 per cent, an eight-year high.
"The data suggest that while a soft patch of economic growth is likely to keep the Bank of Canada on the sidelines for now, the pick-up in underling price momentum is a trend the inflation-targetting central bank can't ignore - one factor suggesting rate hikes before year-end," said economist Emanuella Enenajor of CIBC World Markets.
Inflation rate rises Inflation is, indeed, getting awfully hot in Canada, though it's largely driven by high prices at the pump.
The annual inflation rate climbed in May to 3.7 per cent, uncomfortably above the Bank of Canada's target, Globe and Mail economics reporter Jeremy Torobin writes.
The so-called core rate, which excludes volatile items and guides the central bank's monetary policy, came it at 1.8 per cent, Statistics Canada said today. The overall rate was up from 3.3 per cent in April. Month over month, prices climbed 0.7 per cent, though on a seasonally adjusted they rose 0.2 per cent.
Energy prices spiked 16.6 per cent from a year earlier, the federal agency said. Strip out gas, and prices rose 2.4 per cent over the 12 months.
But Mr. Carney still has wiggle room.
The inflation rate is expected to fall again, and economists believe price pressures will ease. And remember, gasoline prices are a big factor here.
"Canada's headline rate of inflation has likely hit its high-water mark and should soon begin to head lower," said deputy chief economist Derek Burleton of Toronto Dominion Bank. "... All said, look for headline CPI inflation to fall back to below 3 per cent during the second half of 2011 and for core price inflation to stay below the Bank of Canada's inflation target of 2 per cent."
House prices rise House prices in Canada have hit a fresh high, according to the latest reading of the Teranet-National Bank house price index.
Prices rose 1.1 per cent in April from March, marking the strongest in a string of gains over five months, which in turn came after three consecutive gains, National Bank's Marc Pinsonneault said today. But the trend may not last given that many rushed to buy before mortgage rules changes. Year over year, prices rose 4.4 per cent.
"We see the market in a consolidation process," he said. "This will allow household income and rents to gradually realign on their long term relationship with house prices, a welcomed development at a time where there is no more significant upside in the homeownership rate."
Prices rose in all six cities covered by the index. Year over year, though, they fell in Calgary.
Shaw profit climbs Shaw Communications Inc. , which has been in a slump lately that has included layoffs, has bounced back with third-quarter financial results that beat analysts' expectations and included a 28-per-cent boost in profits.
The Calgary-based cable company reported a profit of $202-million or 45 cents per share, up from $158-million and 37 cents per share a year earlier, handily beating Bay Street's expectations of about 42 cents per share, Globe and Mail telecom writer Iain Marlow reports.
Revenue was also up, roughly 36 per cent, blowing past the $1-billion mark to $1.2-billion from $943-million during the same quarter last year.
It's all in the juxtaposition Here's what the president of Niko Resources Ltd. said in his report to shareholders today: "Niko has a strong production base and an extensive portfolio of exploration prospects. Two thousand and twelve could prove to be Niko's most exciting year ever."
Fascinating juxtaposition. Here's what the company also said in its earnings report: "In January 2009, the company announced that the Canadian authorities were engaged in a formal investigation into allegations of improper payments in Bangladesh. The company co-operated in the investigation, which was concluded on June 24, 2011. The company pleaded guilty to one count of bribery under the Corruption of Foreign Public Officials Act, was fined Cdn$9.5-million and is subject to a three-year probation order. In early 2009, the company adopted a full anti-corruption compliance program."
Niko's fourth-quarter profit plunged to $649,000 or a penny a share from $38.7-million or 77 cents a year earlier.
The Calgary-based energy company pleaded guilty last week to bribing a Bangladeshi minister with a luxury SUV and a trip to New York and Calgary.
In Economy Lab today Asset bubbles are almost impossible to identify in real time. Price increases aren't always due to irrational behaviour. And when interest rates are very low, those increases can be very sharp indeed, Stephen Gordon writes.
In International Business today Will OPEC retaliate against the western countries' release of strategic oil stocks by tightening its own supply to drive prices higher again? That question has haunted the oil market for the past week. Javier Blas of The Financial Times examines the issue.
In Personal Finance today Crowdfunding lets anyone with a few bucks fund a cause or business. It also raises questions about donating to a sponsor you've never met.
Be wary of choosing a friend or relative as your financial adviser. Ask yourself: what if you have to fire them?
If you're moving, downsizing or just de-cluttering, a garage sale is a great way to make some extra money.
From today's Report on Business
- Why is it so rare to see women in top economics jobs?
- Impending AECL sale puts ONtario, Ottawa on collision course
- Transportation woes threaten to delay Imperial oil sands project
- The Law Page: Meet Western's new law school dean