News

Today's top stories from Report on Business :

RIM unveils buyback

Research in Motion Ltd. RIM-T unveiled a share buyback of up to $1.2-billion (U.S.). Canada's tech darling said it would buy up to 21 million shares, or 3.6 per cent of the stock outstanding, a move aimed at boosting its share price. Analysts, however, still believe the stock will be pressured by competitive concerns over other new smart phones and applications. On Monday, RIM's shares fell more than 6 per cent after a downgrade by a Citigroup analyst who cited new phones and competition. Among the threats to RIM are Apple's iPhone, a new Motorola smart phone that runs on Google's Android system, and Palm's Pre.Said UBS: “Although the share repurchase should give investors some comfort, we believe headwind concerns (Verizon Wireless mix, iPhone concerns, etc.) will likely remain, putting the onus on the company to continue to disprove market concerns through earnings strength. Multiples are likely to remain compressed until the company shows sustained signs of earnings strength and acceleration.” Read the story

Opel workers walk out in protest

As the anger about the scrapping of Magna International Inc.'s MG.A-T Opel deal spreads across Europe, GM chief executive officer Fritz Henderson says the auto maker could use some of its $50-billion (U.S.) in government aid to help restructure its European unit. He said today, though, he will use federal funds for Opel only if needed. The backlash spread today after GM's decision late Tuesday to hold onto Opel, rather than selling 55 per cent to Magna and its Russian partner, Sberbank, as planned. Thousands of Opel employees in Germany walked off their jobs for a mass rally, while Russian Prime Minister Vladimir Putin slammed GM, saying it showed the “scornful” approach of U.S. businesses when dealing with European partners. Read the story

Related: Storm rages in Europe over failed Opel deal

U.S. insider trading scandal widens

The hedge fund insider trading scandal widened today with charges of fraud and conspiracy against 14 more people. Already, the probe has ensnared hedge fund managers, top Silicon Valley executives, and others. The Galleon case is the biggest hedge fund insider trading case in Wall Street history. Raj Rajaratnam, the billionaire founder of the Galleon Group, is accused of masterminding an illegal operation. In New York today, federal prosecutor Preet Bharara told reporters: “We allege some of the defendants [were] taking a page from the drug dealers' playbook [and] deliberately used anonymous, hard-to-trace, prepaid cellphones ... to avoid law enforcement detection. When sophisticated business people begin to adopt the methods of common criminals, we have no choice but to treat them as such.” Read the story

CPPIB in deal for U.S. health data provider

The Canada Pension Plan Investment Board has teamed with private equity firm TPG Capital in a $4-billion (U.S.) deal for IMS Health Inc., a U.S. health-data care company. Including debt, the leveraged buyout is worth $5.2-billion. The CPPIB wants into the area as a defensive investment with predictable long-term growth. The deal also could signal the beginning of the comeback of private equity firms after a hiatus during the recession and credit crunch.

Flu shots for bankers spark outrage

New York City health officials scrambled to explain themselves today after outraged media reports about bankers who got scarce H1N1 flu vaccines through their employers. Members of Congress fired off letters demanding immediate explanations and the U.S. Centers for Disease Control and Prevention reminded state and city health officers of the need to make sure the most vulnerable people get shots first. As in Canada, the demand for vaccine has frayed nerves in the U.S., and public health departments across the country say they will not be able to meet the bulk of the demand until December or January. New York City health department spokeswoman Jessica Scaperotti said the city had given 800,000 doses to about 1,100 providers, with Goldman Sachs getting 200 of the 5,300 doses it requestion. She said 16 of the city’s 25 biggest employers had vaccine, including Columbia University, Citigroup and others, as well as the Federal Reserve Bank, which is not among the top 25 employers. Read the story

Wall Street poised for hefty payouts

France moved today to change how bankers are paid. New rules will force the banks to spread out compensation, and there are incentives to stay away from risky practices. In the United States, The New York Times reports, the big question on Wall Street is now also related to pay. As the newspaper put it: “After all those federal bailouts, many banks are turning handsome profits. Top producers are looking forward to blowout paydays once again.” There has, of course, been growing controversy about hefty payments that preceded the financial meltdown. The Times cites a study by pay consultant Johnson Associates that suggests Wall Street may be headed for another whopper, possibly the biggest since 2007. Johnson's annual report is closely watched for bonus season and projects that payouts in the industry will rise 40 per cent from last year. What's most notable, the paper says, is how quickly pay is expected to surge for traders, Wall Street's “kings and queens of ka-ching.” Bond, commodities and currency traders can expect their bonuses to rise by up to 60 per cent, investment bankers by 15-to-20 per cent.

Stocks ride strong economic reports

U.S. stocks rode bullish economic news and strong earnings reports to their strongest day in more than three months, bringing reluctant Canadian equities along for the ride. The Dow Jones industrial average gained 203.82 points to close at 10,005.96. The S&P/TSX composite index closed up 109.50 points at 11,180.70. Read David Parkinson's Market Blog

What to watch for in jobs report

Economists generally expect Friday's October employment report from Statistics Canada to show another month of job creation, though some disagree. What they're most focused on is whether the private sector has started hiring again. In September, job gains came thanks to 36,000 new positions in the public sector; the private sector, where employment has fallen by 3.9 per cent over the past year, eliminated 17,100 jobs. Says BMO Nesbitt Burns: “The service sector is likely to contribute most of the gains in October, following the recent trend, and reversing the prior month's surprise outperformance of goods-producing sectors. September's unexpected gain in manufacturing is likely unsustainable. However, a continued rebound in housing points to job gains in the construction industry, which should provide some offset.” The report will be released at 7 a.m. ET, followed by the U.S. employment report 90 minutes later. Read the story

U.S. still in jobs crisis

In the United States, economists generally expect another big hit, but not as painful as in previous months, which should show layoffs easing somewhat. Millions of positions have been lost in the recession, and the country remains in a jobs crisis. The number of Americans filing for the first time for jobless benefits fell again last week to the lowest level since early January, according to fresh data today. Still, the number of unemployed workers seeking initial benefits stood at 512,000, another sign of the deep trouble in the labour market.

European central banks hold the line

The European Central Bank took its first step today toward the exit from its crisis steps by signalling that one-year loans to banks will not be repeated next year. The ECB kept its main interest rate on hold for the sixth month in a row and ECB President Jean-Claude Trichet promised to announce a decision on the central bank's cheap and abundant liquidity policy in December. Its stance contrasts with the U.S. Federal Reserve's promise to keep rates near zero for an extended period and the Bank of England's extension of its quantitative easing program, although at a slower pace. The Bank of Canada has also vowed to keep rates low for an extended period. But other central banks, including Australia and Norway, have already raised rates, a move other major central banks are not expected to follow until well into next year. The ECB (whose benchmark rate among the 16 countries that share the euro remains at 1 per cent) has seen some of its countries, such as Germany, emerge from recession, but still isn't ready to move. “While several major European countries have started to show signs of recovery, with several countries posting an expansion in economic activity in [the third quarter], inflation remains quite low and tilted to the downside, which will likely keep the ECB sidelined for some time yet, but could lead to a gradual exit of unconventional programs,” Scotia Capital economists said. Read the story

Iceland lowers rates ... to 11 per cent

Iceland, which has been among the hardest hit by the crisis, cut interest rates this morning, but one can hardly call them rock bottom. The benchmark rate, which peaked earlier at 18 per cent but had held at 12 per cent since June, now stands at 11 per cent. Compare that with the Federal Reserve's rate of almost zero. The central bank of Iceland, whose banking system buckled to the credit crisis, projects that the economy will shrink 8.5 per cent this year and 2.4 per cent next year. It finally sees a return to growth, of 2.2 per cent, in 2011. The bank also offered some potential relief on rates: “Provided that the krona remains stable or appreciates and inflation continues to fall as forecast, conditions fur further easing of monetary policy should soon be in place.”

Manulife posts loss

Canada's major life insurance companies are reporting quarterly results today. Manulife Financial Corp. MFC-T lost $172-million, compared with last year's profit of $510-million, hurt by higher reserves and lower corporate bond rates. The increase in reserves is the result of a review of actuarial assumptions, which led to a charge of $783-million. The bulk of that is due to Manulife updating payouts it expects to have to make to segregated fund customers; the rest from updating how long it believes policy-holders will live. That we're living longer is hitting Manulife to a certain extent. There was also a $1.2-billion charge because of lower interest rates and corporate spreads, but a gain of $1.2-billion as stock markets rose. Read the story

Why Sun Life doesn't see a quick return to normal

Sun Life Financial Inc. SLF-T was first out of the gate this morning with a warning to investors that it probably won't return to normal profit levels even next year. Sun Life lost $140-million in the quarter, a much narrower loss than the same time last year, driven largely by an update of assumptions related to interest rates and other factors. Notable was that the insurer projected “normalized” profits for next year in the range of $1.4-billion to $1.7-billion, down from average annual operating earnings of $2.1-billion from 2005-07. Here's why: “Going forward, earnings are expected to reflect today's lower asset levels and account values as well as higher risk management costs, potential volatility and uncertainty in capital markets, the expected higher levels of capital required regulators, lower leverage, currency fluctuations and the potential for higher tax costs as governments around the world look to address higher deficits.” That's a lot for investors to digest, but signals the uncertain times as regulators demand less risk and governments find ways to reduce their hefty recession-related spending. Read the story

Obama extends key tax credit

Barack Obama is moving to keep the economy juiced and help the millions of Americans who have lost their jobs. The White House said today the President would sign a bill expanding the popular homebuyers' tax credit and extending jobless benefits. The $8,000 (U.S.) credit for first-time home buyers will be extended for seven months and expanded to include a $6,500 credit for some prospective buyers who already own homes. Congress today completed work on the $24-billion package aimed at helping those who have lost their jobs and haven't found new work.

Building sector recovery builds steam

The building sector continues to rebound. The value of building permits rose 1.6 per cent in September to $5.1-billion, marking the second month in a row of gains. Of note in the Statistics Canada report today is that the value of residential permits rose 9.4 per cent to $3.2-billion, a level not reached since September, 2008, just as the meltdown was beginning in force.

Toyota posts surprise profit

Toyota Motor Corp. is a sign of the times as the economy inches back. The world's biggest auto maker surprised markets this morning with a quarterly profit. Not only that, the Japanese car maker also projected that its annual loss will be less than forecast. Still, investors aren't convinced. Read the story

More American men doing housework

An estimated two million wives are now the sole breadwinners in families across the U.S. as more men than women have lost their jobs to the recession, according to the Center for American Progress. Experts say unemployed husbands are probably taking on more housework and child-care duties, for now. But they don't expect that to continue when men find work again. Read the story

In today's Report on Business

Chrysler pledges to repay Ottawa

Where buyers, sellers meet, China offers signs of hope

TransCanada to increase pipeline toll fees