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morning business briefing

These are stories Report on Business is following Wednesday, Oct. 23, 2013.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Supposed fake reviews
BlackBerry Ltd. has been winning rave reviews for its BBM chat app on Android devices. Maybe too rave in some cases.

The Next iPhone News website has found what it says may be a "massive amount" of fishy five-star reviews of the free messaging service at the Google Play app store, finding, for example, several that used the same language: "Thank you so much blackberry team. I was waiting this app. Its really great user friendly and smooth."

No, it appears there really can't be that many people who don't fully grasp grammar and punctuation.

And BlackBerry, which has had a successful rollout of the service for those using rival devices such as the iPhone and Android-powered products, is trying to deal with the problem.

"We have recently been made aware of a number of potentially fake five-star reviews of BBM for Android on Google Play," spokeswoman Victoria Berry told The Globe and Mail's Sean Silcoff.

"We do not approve of or condone such activities and are committed to working with Google to resolve this."

It's unfortunate because, as Ms. Berry added, Google Play also contains "many genuinely great and useful reveiws from our new BBM users."

After a false start, BlackBerry resumed the rollout this week, and said just yesterday that there had been more than 10-million downloads in 24 hours.

BlackBerry is in the midst of an auction for all or part of the company. Canada's Fairfax Financial Holdings Ltd. has signed a letter of intent to lead a consortium that would buy the company for $4.7-billion (U.S.) or $9 a share. Other potential suitors are also kicking the tires.

Poloz takes dimmer view
The Bank of Canada is taking a dimmer view of the economy and is no longer sending a signal that the next move in interest rates will be a hike.

"Uncertain global and domestic economic conditions are delaying the pick-up in exports and business investment, leaving the level of economic activity lower than the bank had been expecting," the Bank of Canada said in its statement today.

Before this morning's policy statement, the central bank had been saying for some time that the next move in its benchmark interest rate would be up, not down.

But today, The Globe and Mail's Barrie McKenna reports, Governor Stephen Poloz and his colleagues dropped that reference in a surprise to the markets.

The central bank also trimmed its projections for economic growth in Canada and the United States.

It now projects the economy to expand by just 1.6 per cent this year and 2.3 per cent in 2014, with no return to full production capacity until late 2015.

"A dovish statement from the Bank of Canada catches an inattentive market," said Sébastien Galy of Société Générale.

"They increased the time it takes for inflation to return to target and reduced potential growth," he said in a research note.

"They still haven't factored in the underlying deflationary pressures in Canada but are clearly worried, adding some emphasis on the risk of a housing correction"

Caterpillar sees trouble
Citing a "difficult" year and global uncertainty, Caterpillar Inc. today posted a drop in third-quarter profit and cut its forecast for the year amid a decline in the mining industry, driving down its share prices.

The industrial machinery giant's profit sank to $946-million (U.S.) or $1.45 a share from $1.7-billion or $2.54 a year earlier. Revenue plunged to $13.4-billion from $16.4-billion.

Caterpillar also trimmed its projections for 2013, now expecting revenue of about $55-billion, down from a range of $56-billion to $58-billion.

It also cut its forecast for earnings per share to about $5.50.

"Not only is mining down from 2012, the demand for equipment has been difficult to forecast," Caterpillar said in a statement, though it noted "continuing strong" commodities production.
"Orders for new mining equipment began to drop significantly in mid-212 and have continued at very low levels."

Encana rebounds
Encana Corp. today boasted of "rapid progress" as it rebounded to a third-quarter profit.

The Canadian energy giant today posted a profit of $188-million (U.S.) or 25 cents a share, compared to a loss a year earlier of $1.2-billion.

Operating earnings slipped to $150-million or 20 cents a share, beating the estimates of analysts, from $263-million or 36 cents.

"We are making rapid progress in the development of our strategy and reached a major milestone with the recent announcement of our new organizational structure and senior management team," said chief executive officer Doug Suttles.

"We're focusing our energy on finalizing our strategy which will inform our capital allocation decisions for 2014 and beyond," he added in a statement.
"Our goal is to make Encana a more focused, dynamic and efficient organization."

CP sees strong quarter
Canadian Pacific Railway Ltd. today posted record earnings in the third quarter and says its efficiency drive has resulted in the lowest operating ratio in company history, The Globe and Mail's Bertrand Marotte reports.

Calgary-based CP boasted a third-quarter profit of $324-million or $1.84 per share, up from $224-million or $1.30 in the year-earlier period.

The third-quarter operating ratio — a key measure of efficiency (operating costs as a percentage of revenue) – dropped to 65.9 per cent, or 820 basis points from the year-earlier period.

"We enter the fourth quarter with momentum and are well positioned for what I believe will be a record 2013," said chief executive officer Hunter Harrison.

Spain inches ahead
Spain appears to be finally out recession, but hardly out of trouble.

The Bank of Spain today estimated that the economy expanded by 0.1 per cent in the third quarter of the year, after nine straight quarters of contraction sparked by a housing bust.

"During the third quarter, the gradual improvement in the Spanish economy seen since the beginning of the year continued, against a background of some easing in financial tensions and improved confidence," the central bank said in its quarterly report.

Spain has far, far to go. More than one-quarter of its work force is unemployed, while the jobless rate among young people stands at a stunning 56 per cent.

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