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Sponsorship: You can cheat on your spouse, but not on Tour de France

These are stories Report on Business is following Wednesday, Oct. 17, 2012.

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Just sayin'
Nike chairman Phil Knight on sponsorship of Tiger Woods, in an interview with Sports Business during the golfer's infidelity scandal in 2009:

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"One of the things we always try to do when we have a big endorsement is check out the character and the pattern of the individual. But you're not going to get it right all the time, and if you're going to be in the business you have to recognize that … Obviously, he was one we checked out and he came out clean, and I think he's been really great. When his career is over, you'll look back on these indiscretions as a minor blip, but the media is making a big deal out of it right now."

Nike on the sponsorship deal with Lance Armstrong, in a statement today during the racer's doping scandal:

"Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him. Nike does not condone the use of illegal performance enhancing drugs in any manner."

Of course, they're different. Just pointing it out given that sponsorships are supposed to be all about stand-up guys people can look up to.

(Just pointing out, too, that as Nike cut Mr. Armstrong loose, Adidas signed up Justin Bieber for its NEO label. Mr. Bieber doesn't need dope because he's on a natural high: "I found a real connection with NEO because is about fashion, freedom and being true to who you are.")

Potash cuts outlook
Potash Corp. of Saskatchewan is cutting its profit outlook, largely because of delays in signing new deals with Chinese and Indian buyers.

The agricultural giant said today 2012 earnings per share will come in "below the low end" of its earlier projection of $2.80 (U.S.) to $3.20, The Globe and Mail's Bertrand Marotte reports.

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For the third quarter, earnings per share are now projected at the low end of its 70-cent to 90-cent forecast.

"The change primarily reflects lower than forecasted potash sales volumes due to delays in new contracts with buyers in China and India," the company said.

Just yesterday, CIBC World Markets analyst Jacob Bout cut his price target on Potash shares to $46 from $54, also cutting his view of Agrium Inc. and The Mosaic Co., the other major producers.

His target on Agrium fell to $121 from $125, and on Mosaic to $64 from $72.

"The continued deterioration in potash demand has resulted in pricing pressure in key markets such as China and Brazil," Mr. Bout said in his report on Potash Corp.

"With no stabilizer in sight, the threat of a potash 'holiday' in China and India has become the most likely scenario given current market conditions in these regions."

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Oil patch hops
Canada's oil patch is hopping today with news of a few deals.

First, ExxonMobil Corp. has struck a $3-billion deal for Celtic Exploration Ltd., offering $24.50 a share and half a share in a new company to be created. That over all price includes debt.

Celtic's main oil and gas business is in central Alberta, and it holds land in the Montney and Duvernay gas plays.

Separately today, Penn West Petroleum Ltd. Unveiled deals to sell $1.3-billion in non-core assets.

U.S. housing starts surge
As JPMorgan Chase and Co.'s Jamie Dimon noted last week, the U.S. housing market appears to be turning the corner.

It just so happens that Canada's residential real estate market is heading down at just about the same time.

The latest numbers released today show construction starts in the United States surging by 15 per cent in September, to an annual pace of 872,000. And that's up from August. From a year ago, it's up by almost 35 per cent.

Housing starts are now at their best showing in about four years.

Building permits also climbed, by almost 12 per cent.

"The rising optimism within the new build sector, as indicated by yesterday's reported sixth consecutive monthly increase in homebuilders' confidence to its highest level since 2006, as well as the elevated level of building permits suggest that the housing market should maintain this momentum over the coming months and we continue to expect overall housing market conditions to improve gradually over the forecast horizon," said economist David Onyett-Jeffries of Royal Bank of Canada.

Of course, in Canada, construction starts remain strong, but that's not expected to last.

And the latest measure of the resale housing market showed sales down 15 per cent in September.

Smartphone use surges
Sixteen years after the launch of the smartphone, the number of these gadgets in use now tops 1 billion, according to a new report today.

Unfortunately for some device makers – Research In Motion Ltd. is one, but it's certainly not alone – the spark in the industry has been the iPhone over the last several years.

Yet fortunately, the new report from Strategy Analytics points out the huge growth potential, notably in emerging economies.

"The world's first modern smartphone, the Nokia Communicator, was introduced in 1996," said senior analyst Scott Bicheno.

"Nokia remained a dominant force in smartphones for over a decade until the arrival of Apple's iconic iPhone in 2007," he said.

"The iPhone revolutionized smartphone design and it catalyzed industry growth."

Strategy Analytics put the number of smartphones in use around the world at 1.038 billion in the third quarter of the year, compared to an estimated 708 million a year earlier.

And that can only grow.

"We estimate one in seven of the world's population owned a smartphone in the third quarter of 2012," said Neil Mawston, the group's executive director.

"Smartphone penetration is still relatively low. Most of the world does not yet own a smartphone and there remains huge scope for future growth, particularly in emerging markets such as China, India and Africa. The first billion smartphones in use worldwide took 16 years to reach, but we forecast the next billion to be achieved in less than three years, by 2015."

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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