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On the rise

Shares of Blackberry Ltd. (BB-T) spiked in late afternoon trading, closing up 6.4 per cent, after the Globe and Mail reported John Chen is departing as chief executive this Friday, 10 years to the day after he signed on to turn around the smartphone pioneer, a job that remains unfinished.

The 68-year-old technology veteran’s fate with the Waterloo, Ont. company has been a source of speculation for months as a five-year extension to his original employment contract was due to run out at the end of this week. Mr. Chen addressed the uncertainty at an investor briefing two weeks ago, saying he didn’t know if he would remain and that the decision about his future had been left until after the board decided earlier that month to split itself in two. There was also a question of what role Mr. Chen would occupy after Blackberry announced plans earlier this month to spin off its profitable, fast-growing connected car, or internet of things (IOT), business into a separate public company, from its slower growing, unprofitable cybersecurity business.

- Sean Silcoff

Canadian Solar Inc. (CSIQ-Q) rose 1.2 per cent on Monday after saying it would invest US$800-million to build a solar photovoltaic (PV) cell production facility at the River Ridge Commerce Center in Jeffersonville, Indiana.

The company said the plant would produce cells with an annual output of 5 gigawatts (GW), equivalent to about 20,000 high-power modules per day.

The Guelph, Ont.-based company said cells produced at Jeffersonville facility would be used at its 5 GW module assembly plant in Mesquite, Texas, the company’s first manufacturing facility in the U.S., announced in June.

It is expecting to start production at the Jeffersonville facility by the end of 2025.

McDonald’s (MCD-N) beat Wall Street estimates for third-quarter profit and sales on Monday, powered by new launches as well as steady demand for its cheaper burgers and fries from diners struggling with still-high food prices.

Shares of the company, which also raised its quarterly cash dividend by 10 per cent, gained 1.7 per cent in Monday trading.

McDonald’s size and scale have helped keep its meals relatively more affordable even after the industry-wide hike in prices last year, helping counter the trend of inflation-hit consumers eating more at home and a broader decline in footfall.

Drawing on its history of menu enhancements, the burger giant launched the Cheesy Jalapeno Bacon quarter pounder in July and brought back the fan-favorite Spicy Chicken McNuggets to menus in September.

McDonald’s has done a “fantastic job” in returning to menu items that have performed well over time to boost sales and margins, Stephens analyst Joshua Long said.

The “Golden Arches remain resilient,” Long added.

While overall dining traffic fell throughout the quarter, McDonald’s saw a 7.3-per-cent jump in July, data from Placer.ai showed. Footfall strength at McDonald’s tapered off in the next two months but remained ahead of the broader industry trends.

Global comparable sales jumped 8.8 per cent in the quarter ended Sept. 30, while analysts on average had expected a 7.36-per-cent rise, according to LSEG data.

“The value, the affordability, and just the consistency that the McDonald’s brand can bring to the consumer” would further fuel sales momentum in the rest of the year, Long added.

Total restaurant margins increased 12 per cent to US$3.84-billion in dollar terms as prices of proteins and vegetables trended lower, prompting the company to lift full-year margin expectations to 46 per cent from 45 per cent previously.

U.S. comparable sales climbed 8.1 per cent, above estimates of a 7.4-per-cent increase, while same-store sales in its international operated markets also edged past expectations.

Adjusted per-share profit of US$3.19 beat estimates of US$3.00.

General Motors (GM-N) was higher by 0.5 per cent after reaching a tentative contract agreement with the United Auto Workers (UAW) union, effectively ending the first simultaneous strike against the Detroit Three automakers with record wage and benefit hikes.

Details of the agreement with GM, which was the last holdout of the Detroit Three, were not immediately available.

Unifor reaches deal with Stellantis, ending brief strike

The accord follows deals reached in the last few days by the union with Ford Motor (F-N) and Chrysler owner Stellantis (STLA-N) in what experts say stand as significant victories for auto laborers after years of stagnant wages and painful concessions made by the union following the 2008 financial crisis.

Nearly 50,000 workers out of nearly 150,000 union members at the Detroit Three eventually joined a series of walkouts that began on Sept. 15. The UAW’s strategy of escalating, targeted strikes cost the Detroit Three and suppliers billions of dollars over more than 40 days.

Western Digital Corp. (WDC-Q) said on Monday it would split itself into two companies that would focus on the hard drive and flash memory markets, days after talks of a merger with Japan’s Kioxia stalled.

Western Digital shares were up over 7 per cent in Monday trading.

The company launched a review of alternatives last year after activist investor Elliott Management disclosed a stake of nearly US$1-billion in Western Digital and pushed it to separate those businesses.

Reports last week said merger talks between Western Digital and Japan’s Kioxia Holdings had stalled as opposition from Kioxia investor SK Hynix complicated the on-again, off-again deal.

On the decline

Shares of Air Canada (AC-T) gave back early gains and lost 1.3 per cent on Monday after it said it expects 2023 core profit towards the higher range of its previous forecast, after the carrier beat third-quarter profit estimates, benefiting from strong demand for international travel.

North American airlines operating international flights are benefiting from sustained demand for long-haul journeys as more people plan holidays abroad, despite contending with higher costs.

Such airlines are facing pressures from higher labor costs, with pilots at U.S. legacy carriers nabbing steep pay increases in new contracts or tentative agreements.

Last month, Air Canada pilots staged a protest demanding better pay and benefits as talks over a new contract covering 4,500 pilots at the company continue.

“Our demonstrated adaptability, combined with a stable demand environment, give us every confidence for the rest of the year and into 2024 despite the inevitable headwinds to which our global industry is prone,” CEO Michael Rousseau said.

Canada’s largest airline posted adjusted profit of $3.41 per share for the quarter ended Sept. 30, compared with analysts’ average estimate of $2.15 per share, according to LSEG data.

The company now expects its 2023 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) toward the higher end of its previous forecast range of about $3.75-billion to $4.0-billion.

The Canadian carrier’s quarterly operating revenue rose 19.2 per cent to $6.34-billion, beating analysts’ average expectations of $6.10 billion.

In a research note, Citi analyst Stephen Trent said: “Overall, the results look very encouraging, as the carrier delivered an impressive beat, while also reiterating full-year EBITDA guidance at the high end of the range, in spite of higher fuel and costs. Air Canada’s FCF generation also remained positive. Assuming risk-neutral market conditions, these results could support Buy-rated Air Canada’s shares on Monday morning.”

First Quantum Minerals Ltd. (FM-T) fell 28.5 per cent as it faces uncertainty over its ability to operate in Panama, after the country’s president called a referendum on its recently approved mining contract on Cobre Panama.

The Vancouver-based copper miner agreed on a new contract earlier in the year that would have seen it pay drastically higher taxes.

But as the contract was making its way through Panama’s legislature, public opposition boiled over into street protests attended by thousands. The contract was denounced by environmentalists, Indigenous groups, labour activists and religious groups.

Panamanian president Laurentino Cortizo in a televised national address on Sunday said he is calling a referendum to let the people decide whether to repeal the law that legalized First Quantum’s new contract. The referendum will be held on Dec. 17.

“The vote will legitimize the will of the people,” he said. “The result will be binding.”

Panama just over a week ago signed the new 20-year contract into law.

- Niall McGee

Shares of Tesla (TSLA-Q) slid 4.7 per cent on Monday after key supplier Panasonic Holdings said it cut automotive battery production in the September quarter, cementing concerns of a global slowdown in electric-vehicle (EV) sales.

Panasonic said its production suffered from slowing uptake for high-end EVs in North America, echoing Tesla CEO Elon Musk’s comments from earlier this month that higher-for-longer borrowing costs would take a toll on vehicle demand.

“Panasonic’s warning of soft demand for Tesla’s Model S and Model X cars has many concerned that global economic outlook could be in worse-shape than initially believed,” said Edward Moya, senior market analyst at Oanda.

Earlier on Monday, General Motors reached a tentative deal with the United Auto Workers union, following deals by Ford Motor and Chrysler-owner Stellantis, and potentially putting an end to disruptions that some analysts had said could have given Tesla an edge.

Since the UAW strike began, Tesla shares have, however, fallen 34 per cent compared with a 30-33-per-cent decline in shares of Ford Motor and General Motors, and a 33-per-cent rise in Stellantis’s shares.

Tesla investor Gary Black attributed the weakness in Tesla shares to chipmaker Onsemi’s bleak forecast.

“ON sells to automotive players with over 50-per-cent share of global EV sales, including 4 of the top 5 China EV makers,” he said in a post on social media platform X on Monday.

Israeli-based Check Point Software Technologies (CHKP-Q) fell 1.9 per cent after it said on Monday that its business had continued to operate as planned since the conflict between Israel and Hamas began this month.

Check Point Chief Executive Gil Shwed said 98 per cent of the company’s customers were outside Israel and it had successfully launched new technologies and completed acquisitions.

Mr. Shwed said Check Point’s data showed that over the past three weeks, since Hamas-led militants stormed through the south of Israel on Oct. 7, there had been an 18-per-cent rise in cyber attacks in the country, with 52 per cent against the government sector.

Check Point on earlier reported a higher than expected profit for the third quarter, boosted by double-digit revenue growth in subscriptions for its platform that prevents attacks across networks, mobile and the cloud.

The company said it earned US$2.07 per diluted share excluding one-off items in the July-September quarter, up 17 per cent from US$1.77 a year earlier. Revenue grew 3 per cent to US$596-million.

It was forecast to earn US$2.02 a share on revenue of US$591.5-million, according to I/B/E/S data from Refinitiv.

Mr. Shwed said that a year ago companies had been keeping their existing firewalls for longer rather than updating them. But now, the situation has begun to improve.

“I am seeing some positive changes and I hope they will carry the next few quarters,” he told a news conference.

“The last quarter clearly shows that we are in a very good trend of a positive change. I’m actually quite positive about the business trend that we’re seeing.”

With files from staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 01/03/24 4:00pm EST.

SymbolName% changeLast
AC-T
Air Canada
0%18.12
BB-T
Blackberry Ltd
-0.79%3.77
CSIQ-Q
Canadian Solar Inc
-0.57%20.97
CHKP-Q
Check Point Software
-1.48%158.05
FM-T
First Quantum Minerals Ltd
+0.39%12.9
MCD-N
McDonald's Corp
-0.53%290.73
GM-N
General Motors Company
+0.02%40.99
TSLA-Q
Tesla Inc
+0.38%202.64
WDC-Q
Western Digital Cp
+8.12%64.3

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