These are stories Report on Business is following Thursday, May 8, 2014.
Follow Michael Babad and The Globe's Business Briefing on Twitter.
Nintendo in controversy
Things to keep in mind when navigating the complex world of Nintendo: If you see a goomba, stomp it. If you see Bowser, beat the crap out of him. If you see a Zelda villain, stab him. And if you see a gay couple strolling by Lake Hylia, stay away.
Because Princess Toadstool, it seems, doesn't like lesbians.
Nintendo finds itself in a storm of controversy today after outlawing same-sex marriage among Mii characters in the Tomodachi Life game, a blockbuster in Japan that will soon be released in other countries.
This is a game where, according to The Associated Press, you get to date, flirt with and marry other characters. But you can't get it on with an avatar of the same sex.
Nintendo says same-sex relationships weren't in the original Japanese version, and that it's the same code. Of course, same-sex marriage is banned in Japan.
Nintendo of America told the wire service that the "relationship options" of Tomodachi Life represent "a playful alternate world rather than a real-life simulation."
Well, yeah, that's what Nintendo does. I, for one, never believed that eating a mushroom and getting really big, or transforming into a flying raccoon, simulated real life.
Nintendo says it's monitoring the feedback so it can "better understand our consumers and their expectations."
Nintendo shouldn't need feedback. It need simply look at how other companies operate. We live not in a Zelda-like medieval society, but rather the 21st century.
If other game makers can embrace LGBT characters, so can Nintendo.
- Nintendo bans same-sex relationships in 'quirky' life simulator 'Tomodachi'
- Omar El Akkad: Nintendo's long fall in the gaming wars
Unilever to shut plant
The province of Ontario's factory sector took another hit today as Unilever announced plans to close a Toronto-area plant and shift the work to Missouri.
Production is largely expected to end late next year, with the final shutdown the following March, affecting some 280 employees, the company said.
Work at the plant, which produces dry mixes for soup and other food types, is moving to an existing plant in Independence, Missouri.
"As more than 80 per cent of the volume produced at Bramalea is shipped to the United States, Unilever made the strategic decision to make its investment closer to where the bulk of the product is consumed," said Unilever Canada chief John Le Boutillier.
Scotiabank in Canadian Tire deal
Bank of Nova Scotia is buying 20 per cent of Canadian Tire's financial services arm, a deal that demonstrates just how serious the lender is about expanding its credit card footprint, The Globe and Mail's Tim Kiladze reports.
In exchange for $500-million in cash and a commitment to fund up to $2.25-billion in credit card receivables, Scotiabank gets one-fifth of the retailer's financial services unit, which is dominated by credit cards, and becomes the exclusive partner for any of its new products and marketing initiatives.
Canadian Tire also has the option to sell up to 29 per cent more of its financial services arm to the bank at a fair market price over the next ten years.
Central banks hold firm
European Central Bank president Mario Draghi surprised the markets today by saying the bank's governing council is "comfortable" in launching measures next month to fight falling inflation and the rising euro, a strong signal that ECB thinks the euro zone recovery is in jeopardy if no action is taken.
While the ECB, as expected, left the benchmark interest rate intact at a record low of 0.25 per cent, Mr. Draghi repeatedly highlighted the dangers of falling inflation and the rising euro, our European correspondent Eric Reguly reports.
Mr. Draghi did not say which easing measures the ECB is prepared to take tackle disinflation and the rising euro. Options include forms of quantitative easing tailored to the European markets, negative interest rates (charging banks to park funds at the ECB) or a cut that would take rates to zero. The ECB could also intervene in the foreign exchange markets to put downward pressure on the euro.
BlackBerry says phone visibility key
BlackBerry Ltd. may be shifting its focus to business and government customers, but it is still crucial that its phones remain visible in retail outlets, says the head of the company's enterprise division.
John Sims, Blackberry's president of global enterprise solutions, said today that products need to be widely sold in cellular companies' stores, and consequently its relationships with the wireless carries that sell handsets are important, The Globe and Mail's Richard Blackwell reports.
While Blackberry's strategy "is grounded in enterprises," and chief information officers who make decisions on technology "don't go to the local store," Mr. Sims said, it is still "important for us to be present in those environments because their employees go to those stores and they see the devices."
Workers may get their smartphones from their company, but "they are going to be a lot more comfortable with the device ... if they saw it in a store," he said.
Mr. Sims was speaking to reporters after giving a presentation to several hundred business customers in Toronto, the fourth stop in an eight-city road show in North America and Europe, where Blackberry is emphasizing its business-friendly strategy to current and potential clients.
Telus boosts dividend
Telus Corp. hiked its dividend today as it posted a jump in first-quarter profit.
As The Globe and Mail's Jacqueline Nelson reports, the Canadian telecommunications company boosted the dividend by 2 cents to 38 cents as its profit rose to $377-million, or 61 cents a share, from $362-million or 56 cents a year earlier.
Operating revenue also climbed 5 per cent to $2.9-billion, over last year. Telus has pledged to grow revenue between 4 per cent and 6 per cent this year.
The company said it added 48,000 new postpaid wireless customers in the quarter, exceeding the new additions at rivals BCE Inc. and Rogers Communications Inc.
Earnings flood in
From factories to theatres, other Canadian corporate reports also flooded in today. Here's a sampling:
- Magna posts higher profit, sales climb 7 per cent
- Quebecor's profit, revenue rise in first quarter
- Valeant narrows loss, revenue soars on strong U.S. sales
- Cineplex hikes dividend, posts lower profit on bad weather, weaker box office
- SNC-Lavalin boosts outlook as profit climbs
Housing starts surge
Canada's residential construction industry picked up speed last month, though observers don't see that lasting.
Housing starts surged in April to an annual pace of 194,809 units, Canada Mortgage and Housing Corp. said today, from 156,592 in March.
The longer term trend – a six-month moving average – showed construction starts dipping to 183,515 from 184,602.
The April surge was large driven by condo construction.
"A bounce-back in new home construction activity in April had been expected following the sharp outsized drop in the previous month that likely reflected the negative, though transitory, impact of lingering severe winter weather," said economist Laura Cooper of Royal Bank of Canada, suggesting the possibility of "pent-up demand" continuing to drive construction for the next while.
"However, we anticipate that the rebound will be relatively short-lived and housing starts will resume a gradual downward trend," she added.
- Follow our coverage of Canada's housing market by Tara Perkins
- Housing starts pick up the pace in April
No sweetener
Analysts are trimming their outlook for shares of Tim Hortons Inc., though only slightly, as they cite heightened competition for the coffee and doughnut king.
"We continue to believe that the operating environment for Tim Hortons remains highly competitive, as evidenced by the recent declining same-store transaction trend," said analyst Derek Dley of CanaccordGenuity, who cut his target price on the stock to $58 from $59 in the wake of the chain's first-quarter results yesterday.
"In our view, the company is taking the appropriate steps to try and increase the productivity of its existing store base, through initiatives such as double lane drive-thrus and product innovation," he added in a research note.
"However, given the stepped-up focus on the breakfast daypart by a number of its competitors, the environment remains more challenging than we have witnessed in the past."
Yesterday, as The Globe and Mail's Bertrand Marotte reports, Tims profit rose 5.5 per cent in the first three months of the year, to $90.9-million or 66 cents a share, from $86.2-million or 56 cents a year earlier.
Revenue rose 5.8 per cent to $766.4-million.
Both profit and revenue, however, were shy of what analysts had projected.
Same-store sales, a key measure in retailing, rose by 1.6 per cent in Canada and 1.9 per cent in the United States.
Like the analysts, chief executive officer Marc Cara cited the improvements at the chain, including new menu items.
It is, however, a highly competitive market in an increasingly on-the-run world, which is why some stock analysts have a slightly dimmer view.
Like Mr. Dley, Raymond James analyst Kenric Tyghe also cut the target on Tim Shares, to $65 from $66, though with an "outperform" rating, citing not just the competition but also the poor winter weather.
His outlook, though, suggests the chain is doing the right things.
"Our positive bias on Tim Hortons is predicated on the traction of its ongoing key strategic initiatives, specially accelerated renovations, menu simplification with coffee-centric combos, single-serve introduction in retail, and increased focus on loyalty in the short- to medium-term," Mr. Tyghe said.
"With the breakfast item digital menu board rollout driving solid average ticket increases, we are cautiously optimistic of the impact of the lunch rollout currently in process," he added.
Tim Hortons shares have underperformed the S&P/TSX composite by more than 17 per cent in the past year, having lost 5 per cent.
- Bertrand Marotte: Tim Hortons profit rises, but falls short of expectations
- Brian Milner in ROB Insight (for subscribers): Global coffee industry at full perk
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