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Analyst urges Apple to share wealth A noted U.S. analyst is urging Apple Inc. to get some of its billions in cash back to shareholders. The technology giant should do this by buying back $30-billion (U.S.) in stock while setting a 4-per-cent annual dividend, Tony Sacconaghi of Sanford C. Bernstein said in a report today, according to Bloomberg News. "One common and growing source of investor frustration has been the company's unwillingness to return any part of its burgeoning $46-billion cash balance," he said in a report penned as an open letter to chief executive officer Steve Jobs, noting how well Apple has done for its shareholders already but citing the position as a "common and growing source of investor frustration."
An Apple spokesman told Bloomberg that "we have maintained our cash and strong balance sheet to preserve the flexibility to make strategic investments and, or acquisitions."
India warns on BlackBerry The Indian government today warned it would shut down two BlackBerry services if it does not get access to encrypted data by the end of this month. India's Ministry of Home Affairs said in a statement today that the home secretary met with the country's security and telecom authorities and set the deadline.
"The meeting asked the Telecom Department to convey to service providers that two BlackBerry services, namely Business Enterprises Services and Messenger Services, be made accessible to Law Enforcement Agencies by 31st August, 2010," the statement said. "If a technical solution is not provided by 31st August, 2010, the Government will review the position and take steps to block these two services from the network."
Research In Motion Ltd. has been tussling with several governments over access to such data.
Android operating system surges Research In Motion Ltd. is holding its own in the ultracompetitive and lucrative smart phone market, but Google Inc. is coming on strong with its Android operating system, based on fresh numbers today. RIM sales of the BlackBerry reached 11.2 million units in the second quarter of the year, confirming its standing as the fourth-largest branch with 3.4 per cent of the market for mobile devices, up from 2.7 per cent a year earlier, according to Gartner Inc., the global research and consulting firm. RIM trails the traditional heavyweights of the mobile market, Nokia, Samsung and LG, which command far larger positions.
Here's where it gets interesting, and somewhat more competitive: In the market for smart phone operating systems, RIM is No. 2, its share of the market slipping to 18.2 per cent from 19 per cent, Gartner said. While the iOS from Apple Inc. edged up to 14.2 per cent from 13 per cent, Google's Android surged to grab 17.2 per cent of the market from just 1.8 per cent a year earlier. Noteworthy is that Android overtook RIM in the United States. "A non-exclusive strategy that produces products selling across many communication service providers (CSPs), and the backing of so many device manufacturers, which are bringing more attractive devices to market at several different price points, were among the factors that yielded its growth this quarter," said research vice-president Carolina Milanesi.
RIM recently unveiled its new Torch BlackBerry, which has a touch screen and slide-out keyboard. "We believe the Torch's form factor will still appeal more to business users than to consumers and will stop many loyal BlackBerry users defecting to other platforms, but it won't attract many new users to the brand," Gartner said in its report.
Updated operating systems, Ms. Milanesi said, will help spur growth in smart phones in the second half of the year. "But we believe market share in the OS space will consolidate around a few key OS providers that have the most support from CSPs and developers, and strong brand awareness with consumers and enterprise customers," she said.
BMO urges U.S. to spend The United States should pump more money into stimulus measures, and Ottawa should keep its options open, BMO Nesbitt Burns argues, citing three myths about such spending.
"Short of blowing another hole in the deficit, we believe that there is a very strong case for the U.S. to open the fiscal spigots wider yet to make sure the recovery sticks," deputy chief economist Douglas Porter said in a report. "The long-term fiscal cost from a lengthy period of sub-par growth would be much more damaging than a small down payment now - a stitch in time saves nine. The most effective way of delivering real support to the economy would be direct transfers to the beleaguered states to avert further job losses; but, at the very least, Washington should not embark on any tightening measures at this point."
There's far less in Canada, he said, though given the troubled nature of the U.S. rebound, a more solid fiscal showing in Ottawa, and the fact that stimulus has been effective, Canadian policy makers should "keep their options open for the 2011 budget season, and not lock in a hard stop on stimulus just yet."
Mr. Porter cited three myths:
- That markets are stressed by large deficits. "Aside from a few very specific countries (Greece, Portugal, Spain), most government bond markets have shown no such concern this year ... The bond market is concerned all right, but not about too much public sector borrowing. The fact is, governments still have the borrowing field to themselves, as households and businesses are simply in no mood to borrow aggressively at this point."
- That huge U.S. stimulus measures haven't worked. "Part of this statement actually is true; U.S. stimulus hasn't really worked this cycle, partly because it hasn't really been tried yet ... Measured on contribution to GDP, U.S. public sector spending and investment has barely added to growth in the past year ... Whatever stimulus Washington has been pumping into the economy has been almost entirely offset by deepening cutbacks at the state and local level."
- That Canada's stimulus measures have been modest. "Despite Ottawa's initial foot-dragging on the stimulus front in the early stages of the recession, and persisitent carping about the efficacy of the measures by almost all and sundry, Canada has arguably had one of the most successful stimulus programs in the industrialized world ... The direct ipact of government spending and investment has added 1.6 percentage points to GDP growth in four quarters to [the first quarter]"
GM posts profit, Whitacre to step down General Motors Co. is rebounding smartly from the recession and its filing for bankruptcy protection, posting a second-quarter profit today of $1.3-billion, the best showing since 2004. It marks the second consecutive quarterly profit for GM, after earning $865-million in the first three months, as it prepares to file for an initial public offering that would take the auto maker public again. GM sales rose 5.3 per cent from the first quarter to reach $33.2-billion, sales it said were strong everywhere but for Europe. GM is now the third auto maker among the Detroit Three to post better earnings. Reports suggest it will file for an IPO as early as tomorrow or Monday, seeking to raise up to $16.
GM also said today that Ed Whitacre, who led the company back from bankruptcy protection, is stepping down as chief executive officer Sept. 1, though he'll continue as chairman until the end of the year. Mr. Whitacre will be replaced by Daniel Akerson, a current board member and managing director of The Carlyle Group. "I believe we've accomplished what we set out to do," Mr. Whitacre said.
- Whitacre stepping down as GM chief
- GM posts $1.33-billion profit
- Recovery a 'long, slow slog' for Detroit 3
Jobless claims sour markets Global markets soured again today after an unexpected increase in initial claims for jobless benefits in the U.S. rose to a six-month high. The troubling numbers signal the U.S. is still mired in a jobs crisis, and are yet another sign that will heighten fears over the state of the economic recovery.
The S&P/TSX composite index slipped today, along with the Dow Jones industrial average and the S&P 500 in New York.
The jobless numbers, which put a new face on what otherwise was shaping up to be a calm morning, showed the number of Americans filing new benefit claims climbed by 2,000 to 484,000 last week. A four-week moving average, seen as a smoother measure, showed an increase of 14,250 to 473,500.
"Well, this has certainly been a fine week for those calling for a sharp slowdown (or worse)," said BMO Nesbitt Burns senior economist Jennifer Lee. "There was more evidence of China's economy slowing, the Fed and the [Bank of England]downgraded the outlook on their respective economies, the trade data from Canada and U.S. caused many to revise down their growth forecasts, euro zone production took a slide in June, Cisco disappointed. And now, more news that the U.S. job environment remains weak ... Very disappointing claims results. Very sad picture of the unemployed."
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Gross eyes greener Canadian pastures Renowned bond investor Bill Gross doesn't believe the U.S. government is doing enough to spur on the economy, so the founder of Pacific Investment Management Co. is casting his eye about. "We're much more in awe of countries such as Canada, with a decently balanced budget, and with low debt-to-GDP, and with financial institutions that have been solvent and sound and conservative in their lending, and that have something to export," Mr. Gross, the co-chief investment officer of Pimco, told The Globe and Mail's David Parkinson in an exclusive interview published today. "North of the border has become, while not our favourite destination, certainly a preferable destination to what we see in the United States."
Of box office flops and beer sales How decidedly un-Canadian. Financial results from two major companies today suggest some of us may be cutting back on two traditionally favourite pastimes, drinking beer and going to the movies.
Canadians are renowned for enjoying nights out at the movies, which helped Cineplex Galaxy Income Fund ride through the recession. Today, though, the theatre chain had a rare setback in its second quarter, blaming a series of box office flops for an 8.2-per-cent drop in theatre attendance and a 2-per-cent dip in revenue to $243.7-million. Profit slipped to $17.4-million from $19.9-million a year earlier. Cineplex chief executive officer Ellis Jacob didn't name the movies that flopped, saying only that revenue was hurt by "the lack of success of certain highly anticipated movie titles."
The movies may have bombed but popcorn's still doing well. Concession revenue per patron, at $4.36, was up by 6.6 per cent from a year earlier, and the best the company has ever recorded.
The beer scene is a little murkier. Anheuser-Busch InBev NV, the biggest brewing company in the world, said today its beer volumes in Canada fell 7.1 per cent in the second quarter due to "industry weakness" and a drop in market share.It didn't say how much of that was industry weakness. Over all, the brewer created by the marriage of InBev and Aneuser Busch Cos. in 2008, posted a second-quarter profit of $1.15-billion (U.S.), up from $1.07-billion a year earlier.
The Brewers Association of Canada says total sales among domestic brewers were down 1.1 per cent in May from a year earlier. That's based on the latest figures available doesn't take imports into account.
Tim Hortons profit climbs Movies may be flopping, but coffee, doughnuts and Iced Capps are still doing well. Tim Hortons Inc. THI-T said today its second-quarter profit climbed to $94.1-million or 54 cents a share from $77.8-million or 43 cents a year earlier. Revenue rose 5.7 per cent to $639.9-million. Same store sales, the key measure, rose 6.4 per cent. "Our quarterly same-store sales performance in Canada was the best in several quarters, and the strength of our same-store sales growth in the U.S. was gratifying given continued economic challenges in that market," said chief executive officer Don Schroeder.
From today's Report on Business
- China's growth slowing fast
- Maple Leaf chief must walk fine line
- OPTI heads back to the bond markets
- Rob Carrick: CPP's strategy offers useful pointers on playing it safe
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