These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
RIM unveils new BlackBerry Amid the security issues dogging Research In Motion Ltd. in several countries, the Waterloo, Ont.-based technology giant today unveiled a new BlackBerry with a slider keyboard and touch screen. The BlackBerry Torch also has a new operating system, the BlackBerry 6, and Web browser, a move aimed at boosting market share as RIM battles the likes of the iPhone from Apple Inc. and other new smart phones on the market.
Here's what some analysts said:
- "They finally caught up. They needed something sexy for the consumer. It didn't blow the doors off. But they're solidly on a level playing field." Maribel Lopez, Lopez Research, to Dow Jones Newswires
- "It really closes the gap with Android and iPhone -- probably more Android, because Apple really offers something unique. But RIM really overhauled the user interface. I think they've regained their No. 2 position in terms of technology." Shaw Wu, Kaufman Brothers, to Reuters
- "This gets them back in the game. It should slow the tide of people jumping ship." Ross Rubin, NPD Group, to Dow Jones Newswires
- "The new OS catches up to the competition in many respects with an improved browser, touch interface, 5 [megapixel]camera, etc. However, the display resolution of 480x360 is not as high as those found on other competitive flagship smart phones (iPhone 960x640; Droid X 854x480) and, in our opinion, RIM still needs to improve its ecosystem." Phillip Huang, Maynard Um, UBS
- "The fact that this device is going to be geared toward both enterprise and consumer, that will be a positive as people will feel that if they design for this device, they can hit two birds with one stone." Nick Agostino, Mackie Research Capital, to Reuters
- "The Torch and OS6 put Research In Motion on firm competitive ground against Apple's iPhone and the Android devices, with a touch screen on par plus the BlackBerry keyboard. The key question is whether RIM can convince developers to prioritize this new platform above the competition." Charles Golvin, Forrester Research
- "Developers want to go where the consumers are and consumers want to go where the developers are. RIM is going to have to tell a very compelling story to attract the first batch of developers." Michael Gartenberg, Altimeter Group, to Reuters
Today's announcement, made with AT&T Inc. in the United States, comes after a weekend flurry of controversy surrounding security concerns in several countries, notably the threat by the United Arab Emirates to shut down BlackBerry service in October if RIM doesn't take the measures needed to allow authorities to monitor communications.
In Dubai today, the UAE defended its decision, following the U.S. State Department's comments yesterday that it is disappointed by the move. "It is regrettable that after several years of discussions, BlackBerry is still not compliant with UAE regulatory requirements even as it complies with similar policies in other countries," Yousef al-Otaiba, the ambassador to Washington, was quoted as saying in local newspapers, according to Agence France Presse.
He said his country wants "exactly the same regulatory compliance" that RIM gives other governments.
RIM, not mentioning the UAE dispute directly, said in a statement yesterday that it is "committed to continue delivering highly secure and innovative products that satisfy the needs of both customers and governments."
- RIM unveils BlackBerry Torch
- RIM aims to take bite out of Apple
- The latest buzz: A RIM tablet
- RIM-UAE fight spills to other nations
- Kuwait won't suspend BlackBerry service, report says
TD cites fiscal headwinds Canada stacks up well in a fiscal comparison to its peers, and cutting the combined federal-provincial deficit in half over the next two years appears well within reach, Toronto-Dominion Bank economists say. But "the harder part will be getting to zero deficits from there," deputy chief economist Derek Burleton and senior economist Pascal Gauthier said in a report today.
"On balance, government budget plans - which are based on private-sector forecasts - have generally assumed relatively lacklustre long-term economic and baseline revenue growth," they said. "What's more, debt-service costs are projected to rise steadly over the next five years. These forces have put the onus on longer-term budget plans to hold program spending growth to about 2 per cent on average post-[fiscal year]2011-12. Even then, the pace of deficit reduction slows dramatically."
They list three "gale-force headwinds" impeding longter-term planning:
- Modest recovery, lower trend growth: Private sector forecasters are wary about the fiscal challenges of Canada's major trading partners, tougher financial rules, a strong dollar and continuing restructuring among manufacturers. There are also demographic pressure.
- Faster age-related spending: Canada's aging population will continue to push up costs such in areas such as health care and seniors benefits, a particular issue for the provinces. "Health care has been growing by about 6 per cent to 7 per cent per year across the provinces, and given an aging population, little let-up in health expenditures on a status-quo basis can be expected."
- Rising interest costs: "These will go up as interest rates rise and debt accumulates. Under the latest budget plans, and based on private sector forecasts for interest rates, this would translate into an increase in the costs of servicing the debt from $51-billion in [fiscal year] 2009-2010]to $71-billion in [fiscal year]2013-14. These higher costs are almost equally spread across the federal and provincial levels of government."
Cat:e528746c-3414-401a-b14b-50247e3bdf01Forum:2d13dc33-9921-4d4a-815f-e809277631e4
Canadian dollar strong The Canadian dollar is actually down slightly from yesterday but still trading at a high level against the U.S. dollar. It had been up sharply yesterday as oil prices and equities rose, said Scotia Capital currency strategist Sacha Tihanyi.
"Canada is getting more caught up in the 'risk on' trade as opposed to the U.S. growth/inflation woes, reflected primarily in [Canadian dollar] strength," said RBC Dominion Securities analysts Mark Chandler and Kam Bath. "The currency has given up a little ground this morning, but stands at a relatively firm 1.025, with near-term oil price futures back up to $81.70 a barrel. While up about 1 per cent over the past week against the [U.S.dollar, the Canadian dollar]is still underperforming most of the other major currencies over this period."
Talisman in Colombian deal with BP Talisman Energy Inc. and Colombia's national oil company Ecopetrol are spending $1.9-billion (U.S.) to get in on the asset sale launched by BP-PLC in the wake of the oil spill disaster in the Gulf of Mexico. BP is selling its Colombian business to the two companies, part of its $30-billion worth of planned asset sales to raise funds that will help cover the costs of the spill. Talisman will have 49 per cent of the Colombian business and Ecopetrol 51 per cent. The two companies already are partners in areas of Colombia and Peru.
"These are tremendous assets that our team knows well," Talisman chief executive officer John Manzoni said in a statement. "They are attractively priced, with excellent running room and we are partnering with the pre-eminent oil and gas company in Colombia ... Completion of this transaction will accelerate our objective of building a material core area in Latin America, with target production of at least 50,000 [barrels of oil equivalent per day]"
Wheat prices running up Wheat prices have been surging on fears of a supply shortage, driven in part by speculators, though they remain below the highs of late 2007 and early 2008 and dipped just slightly today. "Fires in Russia and its regions have prompted speculative buying as capital rotation through the soft commodity markets moves into wheat exacerbating price moves in these rather illiquid markets," said CMC Markets analyst Michael Hewson. "Due to the fires, there are fears that Russia, Ukraine and Kazakhstan's export production could drop by as much as 27 per cent for 2010/11."
Since the beginning of June, he noted, wheat prices have jumped to about $4.50 (U.S.) a bushel to hit $7 yesterday in futures trading on the Chicago Board of Trade. "These rises in price have been the fastest in three decades, but in the short term they don't look in any way sustainable," he said.
Gildan settles suits Gildan Activewear Inc. said today it is paying $22.5-million (U.S.) to settle class-action suits in Canada and the United States, relating to its decision to revise its fiscal 2008 earnings outlook. The clothing maker said that as part of the settlement, both Gildan and its senior officers deny any claims of wrongdoing. "The settlement will be entirely funded by the company's insurance policies and will have no impact on the company's earnings or cash flows," it added.
Molson Coors profit jumps Molson Coors Brewing Co. today posted a sharp jump in second-quarter profit, and while global volumes dipped on "challenging economic and beer industry conditions," the brewer cited growth in Canada, Britain and other markets. Molson Coors said profit jumped to $237.2-million or $1.27 a share from $187.3-million or $1.01 a share a year earlier.
"In the U.S., strong cost management and higher net pricing drove double-digit earnings growth," chief executive officer Peter Swinburn said in a statement. "In Canada, although underlying pretax income declined 3 per cent in local currency, we grew volume and market share and reduced our cost of goods sold per hectoliter. In the U.K., profit declined due to a non-cash increase in pension expense, but we achieved solid top-line performance, growing volume and price in the quarter."
Mr. Swinburn noted that the outlook is still challenging given high global jobless rates.
U.S. consumers saving U.S. consumers have decided they'd rather save than splurge. Consumer spending stalled in June, the U.S. Commerce Department said today, as did growth in personal incomes. The savings rate in the United States rose to 6.4 per cent, its highest level in a year. The stagnation in personal incomes in June, though, follows increases of 0.4 per cent and 0.3 per cent over the previous two months, meaning that they rose "at a fairly decent clip" in the second quarter overall, said Paul Dales, U.S. economist at Capital Economics in Toronto.
"By and large, households decided to save, rather than spend, this extra income," he said. "...This surge in saving is something of a double-edge sword. On the one hand, it restrains spending growth in the near-term; nominal personal spending was flat in June, and in real terms it rose by just 0.1 per cent month over month and by an annualized 1.6 per cent in the second quarter as a whole.
"But on the other hand, households now appear better placed to boost their spending further ahead. The recent fall in confidence suggests this may not happen in the third quarter. What's more, much depends on whether the labour market recovery continues to generate decent rates of income growth. Nonetheless, it is of some comfort that households now appear to have something of a cushion that can be used to pay down debt or support spending."
From today's Report on Business
- Kinross bets big on Africa with $7.1-billion deal
- Insurers cry foul over pending rule changes
- BP hopes to plug well, then turn focus to corporate calamity
- HSBC leads turnaround for Britain's banks
And, read our Streetwise blog and Your Business section