These are stories Report on Business is following Wednesday, April 2, 2014.
Manufacturing forecast to increase
The decline in the Canadian dollar will probably mean a notable lift to the country’s factories, though the timing is uncertain.
“The good news is that the currency leads activity, so the 10-per-cent drop in the past year will have a meaningful impact on activity,” Bank of Montreal’s chief economist said today.
“The debate is how long is the lag, and how much is the impact?” Douglas Porter said in a research note.
“The lag is at least three months, and could be as long as 18, and the best estimate is that a 10-per-cent depreciation in the C$ will ultimately boost Canadian manufacturing activity roughly 3 per cent.”
Mr. Porter noted the hits to Canadian manufacturing, whose share of North American output peaked between 2000 and 2002, when the currency was at its weakest.
Since then, U.S. manufacturing output is up 13 per cent, and Canadian output down 10 per cent.
An eroding currency helps a country’s manufacturing exports as it lowers their costs in foreign markets.
The loonie, as Canada’s dollar coin is known, sank markedly last year, and of late has been hit by the difference in tone between the Canadian and U.S. central banks, and thus the speculation over interest rates.
Having said that, the loonie has rebounded somewhat to above the 90-cent U.S. mark, closing in on 91 cents today.
Over all, it shed almost 4 per cent in value in the first quarter of the year.
“However, the pattern of movement shifted from decline in January toward stabilization in the latter two months of the quarter, as the balance of domestic economic data improved alongside construction developments for U.S. and global growth,” Bank of Nova Scotia said today.
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Chen cuts off T-Mobile
Just about a month after a public spat between the two companies, BlackBerry Ltd. says it’s dumping T-Mobile US inc.
The Canadian smartphone maker said late yesterday it won’t renew T-Mobile’s licence to sell BlackBerry devices when that deal expires later this month.
In a short statement, BlackBerry gave no reason for the latest development.
But it follows a high-profile fight between BlackBerry and T-Mobile, after a promotion by the latter that encouraged some users of the smartphone to switch to Apple Inc.’s iPhone 5.
In February, BlackBerry’s chief executive officer, John Chen, slammed T-Mobile, prompting his counterpart, John Legere, to fire back and needle Mr. Chen on Twitter.
Mr. Chen did not cite this when he announced he’s now cutting off T-Mobile, though he pledged the “best possible customer service” to BlackBerry users still on the U.S. wireless company’s network. Or, for that matter, anyone who buys a new BlackBerry from T-Mobile, which calls itself the “Un-carrier.”
“BlackBerry has had a positive relationship with T-Mobile for many years,” Mr. Chen said.
“Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers,” added Mr. Chen, who has launched a turnaround at the Waterloo, Ont.-based company.
“We hope to work with T-Mobile again in the future when our business strategies are aligned.”
T-Mobile is believed to represent between 10 per cent and 15 per cent of BlackBerry’s U.S. business.
Fights between device manufacturers and wireless carriers are not uncommon, but a public war of words like this one is rare.
After the fight began, Mr. Chen took T-Mobile to task on the company’s blog over the offer, displaying his fury.
Loyal BlackBerry fans also lashed out, prompting a new promotion from the carrier, which offered BlackBerry users a credit if they wanted to trade in for a different smartphone, including a BlackBerry.
BlackBerry would not comment this morning beyond the statement.
But a source close to the company said much of this is about which carriers Mr. Chen is targetting.
Remember, when this fight broke out publicly he said he would put his efforts on strengthening BlackBerry’s relationships with its two biggest connections, Verizon Communications and AT&T Inc..
That’s no small matter, because money and resources go into those relationships.
Add to that, the source said, the dissatisfaction at BlackBerry over the resolution of the public tussle, or lack thereof.
And, of course, the fact that “respect matters to John, loyalty matters to John.”
And while no one is saying this, it’s not necessarily a question of Mr. Chen escalating the battle, but instead may well be a case of the spunky CEO getting out in front of the divorce, with his own message, before any comments from Mr. Legere, who took some time before getting warmed up today.
Hours after the BlackBerry announcement, the T-Mobile chief again fired back via Twitter today, saying that “I can’t, for the life of me, understand why @BlackBerry would take choices away from customers.”
In one case, responding to one Twitter user who said he’d yet to see an estimate revision from T-Mobile “since BlackBerry fired them as a customer last night,” Mr. Legere was dismissive of the smartphone maker’s clout:
“Are you serious or joking? We value all customers but this is 1+ per cent of our base total and a small fraction of what we add quarterly.”
- BlackBerry, T-Mobile spat escalates into blog-tweet slugfest
- Sean Silcoff: BlackBerry pleads for patience as sales plummet
Osisko finds white knight
In an effort to thwart Goldcorp Inc.’s hostile bid, Osisko Mining Corp. cut a complicated deal with Yamana Gold Inc. and two Canadian pension funds that will allow the miner to operate its large gold mine in Quebec, The Globe and Mail's Rachelle Younglai reports.
Toronto-based Yamana will buy a 50-per-cent interest in Osisko’s mining and exploration assets for cash and stock valued at $7.60 for every Osisko share. That is 10 per cent higher than Osisko’s closing price Monday, while Goldcorp’s cash and stock offer of $6.33 per share.
At the same time, two Canadian pension funds CPP Investment Board and Caisse de dépôt et placement du Québec will provide Osisko with a total of $550-million in funding in return for a stream of future production from Osisko’s Canadian Malartic gold mine.
Shares of Agrium Inc. are slipping this morning after the Canadian agribusiness giant warned investors to expect a first-quarter profit that’s “just above breakeven.”
“The slow start to the spring season is expected to impact the timing of wholesale, and to a lesser extent retail, earnings,” Agrium said in a statement.
“First-quarter wholesale results were also impacted by reduced rail availability and the usual lag in realized wholesale nutrient prices.”
Factor in, too, the unplanned shutdown of a boiler that needs to be fixed.
Agrium gave no other estimate for its results, but said it would provide an outlook for the second quarter when it releases its first-quarter report May 6.
“Agricultural fundamentals continue to improve and we anticipate a strong spring season which will benefit both retail and wholesale results in the second quarter,” it added.
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