These are stories Report on Business is following Monday, Jan. 23, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
RIM shares sink You've got to wonder who prepped RIM's new chief executive officer for his market debut today.
Thorsten Heins told investors he sees no need for "drastic change," that the BlackBerry maker is "evolving," and there's no "seismic" shift after the dramatic resignations of Mike Lazaridis and Jim Balsillie as co-chiefs of the company and the board. I'm not suggesting that's not how Mr. Heins sees it, but it's certainly not what shareholders want.
Even before he spoke on a conference call this morning, there were questions over the choice of Mr. Heins. Not that he's not a capable guy, but he's an insider who happens to have no CEO experience.
On a day the stock should have climbed, given the calls for change at the company, Research In Motion Ltd. sank.
"While we think this is a small step in the right direction, we are surprised RIM has decided to go with an operations minded insider, especially since we consider the challenges tied more to strategy," said analysts Phillip Huang and Amitabh Passi of UBS Securities Canada.
"We don’t believe these announcements (likely propelled by shareholder and, quite possibly, some board pressure) will produce much change in the short-medium term, and much will depend on the success of BB10," they added, referring to RIM's coming new operating system.
Other analysts agreed.
"It’s unclear to what extent the new CEO will be able to materially impact the vision and direction of the company in light of rapidly changing competitive conditions, and correct RIM’s seeming inability to navigate these challenges," said Mike Abramsky of RBC Dominion Securities.
"CEO Heins, while a seasoned network executive, has never been a public company CEO, and lacks deep consumer marketing and software experience. Resisting recent calls for change, CEO Heins will be staying the course on RIM's plans (BB10, PlayBook, new handsets) and focusing on improved execution."
Mr. Lazaridis backed Mr. Heins, saying that he has "demonstrated throughout his tenure at RIM that he has the right mix of leadership, relevant industry experience and skills to take the company forward. We have been impressed with his operational skills at both RIM and Siemens."Analysts also ruled out the possibility of a takeover, particularly at RIM's current price.
"A strategic buyer might feel that they can keep RIM’s business viable long term and thus pay a premium," said Stuart Jeffrey of Nomura Securities.
"However, we don’t see a high likelihood of a strategic buyer bidding for RIM, given that it is unclear if RIM’s applications can run on third-party platforms or whether BB10 can emerge as a strong platform with broad application support," he said in a research note.
"A financial buyer would likely have little confidence in greatly extending the tail of RIM’s cash flow and would thus probably want to see the stock trade at a material discount to the $15 of value per share estimated above. A financial buyer may not, therefore, step in until RIM’s share price falls below $10," he added.
- RIM shares slide after shakeup
- Jim Balsillie and Mike Lazaridis out, Thorsten Heins in as CEO of RIM
- Heins eager to prove he's up to the task at RIM
- At Research In Motion, a new CEO vows to silence the doomsayers
- Boyd Erman: RIM must dispel any doubt that Heins is running the show
- A letter from Mike Lazaridis and Jim Balsillie to RIM employees
Chesapeake cuts back Chesapeake Energy Corp. is slashing its output of natural gas, raising questions about whether other major producers will follow suit amid decade-low prices.
Chesapeake, the second-largest producer in the United States, said today it is immediately cutting production by 8 per cent a day, or half a billion cubic feet, from its daily 6.3 billion cubic feet, which accounts for about 9 per cent of the country's production. It says it's prepared to double that if need be.
It's also further cutting dry gas drilling by half, to about 24 rigs by the second quarter this year from the current 47.
Chesapeake stock climbed, as did that of Encana Corp. , Canada's major producer.
CN blocks pension Canadian National Railway Co. has has suspended Hunter Harrison’s pension payments, alleging that the former CN chief executive officer has breached provisions of his retirement deal.
Montreal-based CN has launched legal proceedings in Illinois against Mr. Harrison, who retired from CN at the end of 2009, and who is being pushed by an activist shareholder to be the new chief at rival Canadian Pacific Railway Co. .
Mr. Harrison said he has received the legal notice, but he declined further comment.
Lagarde calls for 'year of healing' Christine Lagarde pulled no punches in a speech in Germany today, warning all countries they must get their act together and work in unison to avoid a global collapse.
The chief of the International Monetary Fund appears to see what Europe's leaders can't, that infighting, bickering and dithering put the economy on a path to ruin.
On the euro front, Ms. Lagarde called for combining the euro zone's emergency funds, and boosting their power. What the euro zone has done to date, she said, are only pieces of what must be a broader, more aggressive push in the 17-member monetary union. And she called on the European Central Bank to step up to the plate more.
"What we must all understand is that this is a defining moment,” Ms. Lagarde told the German Council on Foreign Relations, according to reports of the text of her speech. “It is not about saving any one country or region. It is about saving the world from a downward economic spiral. It is about avoiding a 1930s moment, in which inaction, insularity and rigid ideology combine to cause a collapse in global demand."
Along with combining the bailout funds, Ms. Lagarde also laid out a path for stability: More and "timely" monetary easing, boosting bank capital levels by raising funds rather than skimping on loans, and, where it can be done, gradual rather than sharp cutbacks to bring budget deficits into line.
She called on the United States to play its role as the world's biggest economy by helping to ease consumer debt burdens.
The IMF is ready to play its part, she added, and wants to raise its own resources by up to $500-billion (U.S.), noting that global financing needs will reach an estimated $1-trillion in coming years.
Ms. Lagarde has certainly put into focus what needs to be done, calling for the unified approach the world's leaders took during the financial crisis. The question now is whether the world's leaders will listen.
Her comments came as euro officials began yet another meeting, and as investors watched to see if Greece can get its talks with creditors back on track.
There has been no agreement as a deadline draws nearer and as private creditors now face a loss of 65 per cent to 70 per cent on their bonds.
"Let’s not forget that we started out at a 21-per-cent haircut at last July’s EU summit and the number has kept going up, at the same rate that Greece’s economy has been spiralling down," said CMC Markets analyst Michael Hewson.
"It remains unlikely that a deal will be reached by the end of today’s EU finance minister’s summit, as originally hoped. Even so Greek officials remain confident that a deal can be reached by the next EU summit on Jan. 30 but time is short, given the deadline of a €14.5-billion bond repayment in March."
Bay's Brooks promoted Bonnie Brooks, the retail executive who is spearheading the turnaround efforts at the Bay, is being promoted to yet another top job: To head U.S. sister chain Lord & Taylor, The Globe and Mail's Marina Strauss reports.
Ms. Brooks, chief executive officer at the Bay, has been credited with bolstering the Bay’s performance as it begins to enjoy signs of a revival since she arrived in 2008, soon after parent Hudson’s Bay Co. was taken over by U.S. real estate magnate Richard Baker.
Vancouver not affordable Vancouver is the world’s second-least affordable major city to buy a house, according to an annual survey of global housing markets, The Globe and Mail's Steve Ladurantaye reports.
The Eighth Annual Demographia International Housing Affordability Survey covers 325 metropolitan markets around the world.
Canada was the third most affordable market, behind the United States and Ireland. The markets that were surveyed were Australia, Canada, China (Hong Kong), Ireland, Britain and the United States.
What to watch for this week The Federal Open Market Committee, the Federal Reserve's policy-setting panel, announces it decision Wednesday, to be followed by a press briefing. But something different will be in store this time out.
"Chairman Bernanke will boldly go where no Fed chief has gone before with the publication of interest rate forecasts from all 17 policy makers," said senior economist Sal Guatieri of BMO Nesbitt Burns.
"The forecasts, to be unveiled at the end of the meeting, will cover the final quarter of 2012 and the end of subsequent years. Each policy maker will also state the period in which he/she expects rates to increase, as well as his/her outlook for the Fed’s balance sheet. If the modal forecast and starting date of rate hikes suggest that rates will rise much later than the market anticipates (late 2013 or early 2014) or much later than mid-2013 (recall, the conditional pledge of no change 'at least through mid-2013'), then longer-term interest rates should decline, an effective easing in policy. A somewhat more dovish slate of incoming policy makers could lean in that direction, though recent better economic data suggest otherwise. "
On the earnings front, Canadian National Railway Co. reports quarterly results Tuesday, followed by Canadian Pacific Railway Ltd. on Thursday. CP will be certainly be worth watching given its battle with activist shareholder Bill Ackman of Pershing Square Capital Management LP.
Also, watch for fourth-quarter results Thursday from Potash Corp. of Saskatchewan , whose stock is well down over the course of a year.
"We expect Q4 results to benefit from strong potash pricing, partially offset by lower sales," said analyst Brian MacArthur of UBS Securities Canada. "... We note that the main focus will be on 2012 guidance."
Other heavyweights are also due to report, including Apple Inc. and McDonalds Corp., on Tuesday, Boeing Co. on Wednesday, AT&T Inc., Caterpillar Inc., Colgate-Palolive Co. and Starbucks on Thursday, and Chevron Corp. and Procter & Gamble Co. on Friday.
|CHK-N Chesapeake Energy||27.05||
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|CNR-T Canadian National Railway||59.43||
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|ECA-T EnCana Corp.||20.41||
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|CP-T Canadian Pacific Railway||161.34||
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|POT-T Potash Corp. of Saskatchewan||33.87||
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