These are stories Report on Business is following Wednesday, Dec. 11, 2013.
The postman (doesn't) always ring twice (any longer)
As the old saying about the United States Postal Service goes, “neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.” An updated version might add that e-mail certainly does.
As it announced its dramatic overhaul today, Canada Post noted how the digital revolution has “dramatically changed” the needs of consumers where postal services are concerned.
As The Globe and Mail’s Barrie McKenna reports, the Crown corporation today unveiled a five-point plan to phase out urban door-to-door delivery, hike prices, and do other stuff that will no doubt get your goat if you live in a city.
It’s necessary, Canada Post says, to meet the needs of Canadians and survive without overburdening taxpayers.
“Canadians understand Canada Post’s challenges,” it said today in the document unveiling its plans.
“They send and receive less mail every year and expect that trend to continue,” it added.
“At the same time, they are looking to Canada Post to help them save time by conveniently delivering the increasing number of goods and documents they order online.”
Most importantly, it added, “the rise in digital communications has dramatically changed the postal needs of Canadians.”
All of this sent me looking for stats on e-mail, texting and the like. Here’s what I found from market research firm The Radicati Group in Palo Alto, California:
- The number of e-mail accounts globally is projected to rise to 4.9 billion in 2017 from 3.9 billion now.
- Of that, consumer accounts are forecast to climb to almost 3.8 billion from about 3 billion in the same time frame.
- Business accounts are expected to jump to 1.14 billion from 929 million.
- The number of e-mail messages sent and received is projected to rise to 207 billion from 183 billion.
E-mail traffic, Radicati says, is adapting to the surge in social media and instant and text messaging.
As it now stands, most e-mail traffic originates from businesses, who send and receive more than 100 billion messages a day around the world. By the end of 2017, that’s projected to climb to more than 132 billion.
But personal e-mail is forecast to decline for the reasons cited above, to 74.5 billion from 82.4 billion.
Mobile instant messaging is a biggie, with some 460 million accounts expected this year.
“The mobile e-mail market has shown strong growth over the past year, a trend that is expected to continue,” Radicati says.
“Anywhere access has become a common feature for all users, who now access their mail from a number of devices, at any time and from any location,” it added, citing a total of 897 million mobile e-mail users globally this year.
- Barrie McKenna: Urban home mail delivery to end, Canada Post announces
- Bertrand Marotte: Canada first G7 country to cut universal postal service
- Video: Canada Post, you've got mail: Stop whining and adapt
- Infographic by Stuart Thompson: Canada Post's worsening financial picture
- Molly's back on BBM: Why BlackBerry's 'forbidden fruit' is such a hit
- Bill Curry and John Ibbitson: Harper tightening the reins on CBC, Via Rail and Canada Post
- Canada Post's five-point plan
- Radicati's e-mail report
Politicians strike deal
Investors are celebrating (though in muted form) a deal struck by U.S. politicians that should head off another government shutdown.
There are still several questions, and approval is required, but the agreement has bolstered hopes heading into the new year.
“The deal, struck between negotiators from the House and the Senate, doesn’t appear to particularly favour either side and is going to draw criticism from members of both parties,” said market analyst Craig Erlam.
“However, it is an important first step in ensuring that we don’t go through another shutdown, similar to October, that saw the popularity of both major parties drop significantly and almost 800,000 workers sent home without pay,” he added in a research note today.
“One thing the deal does do is remove one more element of uncertainty that could have otherwise weighed on the recovery,” he added, though noted there’s no deal on the debt ceiling.
The agreement would fix spending through to late 2015, while still setting “modest” deficit-reduction measures, said senior economist Sal Guatieri.
It would not, however, extend the emergency jobless benefits, he added, which, on expiry, could cost up to 0.2 per cent from gross domestic product in 2014.
“If passed, the budget deal could scale back nearly half of the estimated 0.6-per-cent fiscal hit on GDP next year,” Mr. Guatieri noted.
“Of equal importance, it could ward off political brinkmanship and fiscal policy uncertainty for at least a year, unleashing a wave of business investment and hiring.”
Property market overvalued
Canada is home to the world’s most overvalued housing market, Deutsche Bank says in a new study that suggests overvaluation to the tune of 60 per cent.
Other groups have put Canada near the top of the list, but the German bank puts it at the top, ahead of Belgium, New Zealand, Norway, Australia, France, Britain, Sweden, Finland and Spain, which make up the rest of the top 10.
Deutsche Bank economists Peter Hooper, Torsten Slok and Matthew Luzzetti came to that conclusion via an average of two measures, ratios of home prices to rent and home prices to income, compared to their historical averages.
On the first, prices to rent are 88 per cent above the historical average in Canada, and on the second, 32 per cent, Deutsche Bank says in the study published yesterday.
Properties in Belgium are deemed to be 56 per cent overvalued, those in New Zealand 51 per cent, those in Norway 49 per cent, and those in Australia 40 per cent.
The study also looks at price bubbles in most OECD nations before the financial meltdown, but cites the fact that Canada, Norway and Australia “have not experienced a burst … yet.”
Among its more notable findings is that, based on the median house price to median household income, Vancouver is more expensive than New York. Toronto, in turn, is just behind the Big Apple.
The report looks at the high level of condo development in Canada, which has been such a concern among policy makers, and notes that “it is not only the housing market that is worrying in Canada.”
By that it means everything from mortgages and credit card balances to personal lines of credit, compared to disposable income, which we know to be at record levels that have prompted repeated warnings from the Bank of Canada and Finance Minister Jim Flaherty.
While many observers outside Canada have warned about a bubble, most Canadian economists say the market won't crash. The Bank of Canada, too, said recently it sees no housing bubble.
- Nouriel Roubini (a.k.a Dr. Doom) warns of frothy Canadian housing market
- Tara Perkins: Rebound continues in Canada's housing market
- A word to the doomsayers: Bank of Canada sees no housing crash
- Nouriel Roubini in The Guardian: Housing bubble 2.0 can only end badly
- Boyd Erman in Streetwise (for subscribers): CMHC gets its house in order
- Tara Perkins: Why demand for condos is still strong
- Boyd Erman in Streetwise (for subscribers): CMHC is piling up capital - fast
- Tara Perkins: Private mortgage insurers prod Ottawa to ensure CMHC raises premiums
HBC loss widens
Hudson’s Bay Co. today boasted of “continued sales momentum” heading into the crucial holiday period, as its third-quarter loss widened on costs associated with its takeover of Saks.
The Toronto-based retailer posted a loss of $124.2-million or $1.04 a share, compared to $14.4 million or 14 cents a year earlier.
But chief executive officer Richard Baker lauded HBC’s “industry-leading sales growth,” which, he said, are evidence of its strategic moves.
Sales climbed 5.8 per cent from a year earlier to $984.1-million. Same-store sales, a key measure in retailing, rose 6.4 per cent at its Hudson’s Bay shops and 1.6 per cent at its Lord & Taylor operations.
Mr. Baker also noted the company completed its deal for Saks, and it’s now focused on integrating the high-end chain into its operations.
“The critical holiday period is now upon us, and we are focused on making it a success,” Mr. Baker said in a statement.
“While we would prefer our year-to-date performance to have been stronger, our investments in both store productivity and our omni-channel platform have produced clear and promising results. We are confident that these investments are necessary and will benefit earnings over the long-term.”
HBC also projected fourth-quarter sales of between $1.37-billion and $1.41-billion.
Encana expands on restructuring
Encana Corp. today expanded on its previously-announced overhaul, saying it expects a hit of $65-million (U.S.) in charges related to the restructuring.
This follows the revamp announced last month by Doug Suttles, the new chief executive officer of the Canadian energy giant.
In November, Encana cut its dividend, said it would focus on just five plays, with a focus on liquids-rich gas, and announced plans to slash 20 per cent of its work force, among other things.
Today, Encana reiterated that it would earmark 75 per cent of its 2014 spending to five plays.
Total liquids production is forecast to increase by 30 per cent
“The goal of all our deliverables for 2014 is targeted at creating sustainable shareholder value for next year and beyond,” Mr. Suttles said today in a statement.
“The work we completed in 2013 has positioned us very well for a strong start in 2014, a start well aligned with our new strategy.”
GM quits Australia
General Motors Co. is pulling out of Australia, citing, among other things, a strong currency that has driven up its costs.
GM plans to stop making autos and engines there by the end of 2017.
“The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world,” chief executive officer Dan Akerson said in a statement.
Some 2,900 jobs will be affected.
- GM to halt production in Australia, says business case 'not viable'
- Greg Keenan: For GM's first female CEO, pressure is to keep auto company on a roll
Gun stocks gain
Yesterday marked the second-quarter results of Smith & Wesson Holding Corp., highlighted by an increase of 27.4 per cent in handgun sales, including those of its “popular” M&P pistols.
Today marks a spike in Smith & Wesson’s share price, continuing a run that has seen the stock climb by about 45 per cent this year, while those of rival Sturm, Ruger & Co. are up almost 60 per cent, bolstered by the introduction this year of three new weapons and plans to open a new factory.
Saturday will mark the remembrance, one year later, of the lost children of Sandy Hook Elementary School.
No matter where you stand on the issue of gun control in America, you can’t escape the unsettling nature of that.
- Robert Cyran in ROB Insight (for subscribers): U.S. gun maker shares fade with hopes of reform
- U.S. gun manufacturers see sales shoot through the roof
Streetwise (for subscribers)
ROB Insight (for subscribers)