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No, I do not need new windows: Don’t-call-me list above 12 million Add to ...

These are stories Report on Business is following Friday, Feb. 14, 2014.

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Who phones during Downton Abbey?
Canadians are increasingly choosing not to pause Downton Abbey or House of Cards only to be asked whether they need, want or would like to hear about new windows, doors, roofing or duct cleaning.

After about five years at this, registrations on the country’s National Do Not Call List now stand at more than 12.1 million, according to the latest quarterly report from the Canadian Radio-television and Telecommunications Commission.

That’s up from about 6.7 million in March, 2009.

(That’s also a ‘net’ number that subtracts the de-registrations from the registrations, though why anyone would want to de-register is beyond me. It’s for both phone and fax numbers.)

And a scan of the CRTC’s enforcement decisions through the years shows that while telemarketers for things like duct cleaning and roofing have been a factor, an overwhelming number are for windows and doors.

Home sales soften, prices rise
The number of existing homes changing hands in Canada softened for the fifth month in a row in January, The Globe and Mail's Tara Perkins reports.

Sales of homes over the Multiple Listing Service dropped 3.3 per cent from December to January on a seasonally adjusted basis, according to data released today by the Canadian Real Estate Association, which represents the bulk of the country’s real estate agents.

January’s sales were 0.4 per cent above those during January of 2013.

Prices, on the other hand, continued their trek upwards. The MLS Home Price Index, which seeks to account for changes in the location or type of homes that are selling, rose 4.8 per cent.

Jos. A. Bank buys Eddie Bauer
Jos. A. Bank Clothiers Inc. is adding more of an outdoors feel to its line.

The U.S. retailer, which bills itself as “the expert in men’s apparel,” today struck a deal valued at $825-million (U.S.) Eddie Bauer.

“We have long admired the Eddie Bauer brand and its widespread appeal among those with active lifestyles and excitement about the outdoors, a large and growing customer base that overlaps significantly with ours,” said chairman Robert Wildrick.

Euro zone economy picks up
Slowly but surely – and the key word here may be ‘slowly’ – the troubled euro zone is climbing out of its economic funk.

The monetary union’s economy expanded in the fourth quarter by 0.3 per cent, with notable showings by the core countries, Germany, at 0.4 per cent, and France, at 0.3 per cent.

“Today’s figures confirm that the current [European Central Bank] scenario of a gradual recovery, combined with an improvement in financial conditions and a few months of low inflation, is taking shape,” said economists at Société Générale.

“However, we would caution against excessive optimism, as only Germany has the conditions for a full cyclical recovery led by corporate investment,” they added in a research note.

“Like the ECB, we still consider that the recovery remains fragile and uneven, as shown by the poor December industrial output figures, and that risks are tilted to the downside.”

Factory sales fall
Canada’s manufacturers have suffered not one, but two setbacks.

First, as Statistics Canada reports today, the country’s factory shipments slipped 0.9 in December from November. On top of that, November’s showing was revised down to show a gain of just 0.5 per cent from the previous estimate of 1 per cent.

December’s drop, largely on a 19.4-per-cent decline in the volatile aerospace and parts industries, was the first since the summer.

The auto industry also was hit, the federal agency said.

Over all, sales fell in 15 of 21 industries measured, accounting for some three-quarters of the sector.

Alberta and Ontario were hit hardest, with shipments down 2.8 per cent in the former and 0.8 per cent in Ontario.

Inventories declined by 0.3 per cent, while the inventory-to-sales ratio nudged up to 1.39.

The level of unfilled orders rose by 4.2 per cent. They’re now up in 12 of the past 14 months, Statistics Canada said, and continue “to break previous highs.”

Again, that was largely driven by the aerospace industry.

“The bad weather likely played a role in limiting sales in December and, considering how U.S. economic activity continues to be impacted by the string of storms, it may remain a restraining factor on sales for another month or so,” said senior economist Krishen Rangasamy of National Bank Financial.

“Looking at Q4 as a whole, despite December’s poor results, real shipments were up a solid 3.9-per-cent annualized, the best quarterly performance since 2012,” he added in a research note.

“That may have helped lift Canada’s GDP by around 2.5 per cent annualized in [the fourth quarter of 2013]. With December’s sharp increase, real orders were up 16.6-per-cent annualized in Q4, the biggest jump since 2011, suggesting support for factory output in Q1 this year.”

Analysts cut Bombardier stock price targets
Analysts are downbeat on Bombardier Inc. amid a fourth-quarter report that knocked its shares down by a further 9 per cent yesterday.

The Canadian plane and train manufacturer now ranks among the worst-performing stocks on the Toronto exchange, down about 20 per cent a month and a half into 2014.

That’s not as bad as the bottom three stocks on the TSX, which are down between 23.5 per cent and 26 per cent, but you get the idea.

Chief executive officer Pierre Beaudoin cites 2013 as a good year that saw “major milestones,” and a record order backlog that speaks to revenues for the next four years.

Already, he noted yesterday as he released the fourth-quarter report, this year is “off to an impressive start,” with more than $5-billion in new orders.

At the same time, Mr. Beaudoin is “both excited and realistic” about the outlook for the next two years.

“We’ve continued to invest during challenging times to improve our leadership position in the market place,” he said.

“We have one overriding objective and commitment: generating strong, sustainable, profitable growth. And our investments are about to pay off.”

As The Globe and Mail’s Bertrand Marotte reports, Bombardier yesterday hiked the cost estimate for its key C Series program by more than $1-billion, at the same time projecting softer profit margins for this year.

Bombardier rebounded to a fourth-quarter profit of $97-million (U.S.), or 5 cents a share, from a loss a year earlier of $4-million or a penny. Revenue climbed to $5.3-billion from $4.6-billion.

On an adjusted basis, profit slipped to $129-million or 7 cents from $181-million or 10 cents.

Both Moody’s Investors Service and Standard & Poor’s took their ratings down a notch.

Here’s what some analysts said:

“We are trimming our target price to $4.25 to account for (i) BBD’s protracted margin challenges and reduced guidance; and (ii) our outstanding concerns over the firm’s C Series timeline and related capital spend program.” Steve Hansen, Ben Cherniavsky, Raymond James, as they cut their price target on the shares from $4.50 (Canadian)

“Over all, this was a weak quarter on many different levels. [Free cash flow] and aero [capital expenditures] will be the key areas of concern.” Walter Spracklin, RBC Dominion Securities

“Over all, we are confident in the company’s ability to take advantage of many near-term opportunities in aerospace (including substantive potential orders from Air Canada, Monarch, Garuda and Rostec) as well as transportation, with several new contracts to be awarded by the Mexican government,” Benoit Poirier, Desjardins, who trimmed his target to $6.25 from $6.50

“The ratings on Bombardier reflect what we view as the company's ‘satisfactory’ business risk profile and ‘highly leveraged’ financial risk profile. Our ratings take into consideration the company's leading market positions in the transportation and business aircraft segments, as well as its product range and diversity. These positive factors are partially offset, in our opinion, by the continued execution risk associated with the entry into service of the C Series jet, high leverage, and reported profitability that has been weak in both the aerospace and transportation divisions.” Standard & Poor’s

“The downgrade of Bombardier’s ratings is driven by its higher-than-expected cash consumption in 2013 and our view that the company’s negative cash flow and elevated leverage will persist longer than we previously expected.” Darren Kirk, senior credit officer, Moody’s

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