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| Market News: News Archive : Morning News Call Week ending |
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Nov 6, 2009
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FRIDAY, NOVEMBER 6, 2009, CANADIAN EDITION
TOP STORIES
• Air Canada posts Q3 adjusted loss
• Suncor Q3 operating profit falls on lower prices
• GM Europe Chief Forster to leave company – report
• AIG posts second consecutive quarterly profit
• Aecon gets $125 mln refinery contract
• RBS Q3 loss halves, shares up 7.5 pct
BEFORE THE BELL
Toronto’s main stock index could open lower on Friday after data showed Canada's economy lost more jobs than expected. Statistics Canada said 43,200 jobs were lost in October after two months of gains, pushing the jobless rate up to 8.6 percent from 8.4 percent in a sign the road to recovery is a bumpy one. U.S. stock index futures rose slightly as investors awaited monthly payrolls data and the unemployment rate, key indicators to determine the strength of the economic recovery. European markets were higher, led by banking stocks, after Royal Bank of Scotland said it more than halved third-quarter losses as impairments fell. Asian shares were also up with gains spread evenly across the materials, energy, industrials, IT and financials. Oil was down to trade at around US$79.30 a barrel.
COMPANIES REPORTING RESULTS
• Ainsworth Lumber Co Ltd. (ANS). Expected to report Q3 loss of 17 cents a share, according to Thomson Reuters I/B/E/S
• Brookfield Asset Management (BAMa). Expected to report Q3 earnings of 3 U.S. cents a share
• Canadian Real Estate Invt Trust (REF_u ). Expected to report Q3 earnings of 28 cents a share
• Ember Resources Inc. (EBR). Expected to report Q3 loss of 12 cents a share
• Emera Inc. (EMA). Expected to report Q3 earnings of 23 cents a share
• InnVest Real Estate Investment Trust (INN_u). Expected to report Q3 earnings of 21 cents a share
• Just Energy Income Fund (JE_u ). Expected to report Q2 earnings of 12 cents a share
• Labopharm Inc. (DDS). Expected to report Q3 loss of 10 cents a share
• SNC-Lavalin Group (SNC). Expected to report Q3 earnings of 57 cents a share
STOCKS TO WATCH THIS MORNING
• Aecon Group Inc. (ARE). The construction company on Friday said one of its units received two contracts worth $125 million from Consumers' Co-operative Refineries Ltd to modify existing process units at their Regina refinery.
• Agrium Inc. (AGU). CF Industries Holdings Inc rejected latest revised proposal from Agrium citing that the offer continued to substantially undervalue the company.
• Ainsworth Lumber Co Ltd. (ANS). The company on Thursday reported third-quarter loss of 21 cents a share.
• Air Canada (ACa) (ACb). The country's biggest carrier reported on Friday a third-quarter loss on an adjusted basis, hurt by lower passenger revenue, and said it does not expect to see a full recovery for another 12 months to 18 months.
• Algonquin Power and Utilities Corp. (AQN). The company on Thursday reported third-quarter adjusted net earnings of 9 cents per trust unit, on revenue of $45.1 million.
• ARC Energy Trust (AET_u). The conventional oil and gas royalty trust on Friday reported third-quarter net earnings of 29 cents a unit, on revenue of $239.2 million.
• Arctic Glacier Income Fund (AG_u). The company on Friday reported third-quarter EPS of 37 U.S. cents, on sales of US$100.8 million, which fell 8 percent and said its objective is to improve profitability by closely monitoring expenses and capital outlays.
• Bioniche Life Sciences (BNC). The biotechnology company on Friday reported first-quarter loss of 9 cents a share, on revenue of $7.1 million, which fell about 12 percent and said it has potential to receive a further US$110 million from licensing deal.
• Bonavista Energy Trust (BNP_u). The mid-sized income trust reported on Thursday third-quarter adjusted earnings of 24 cents per unit, on production revenue of $181 million, which fell 49 percent.
• Brampton Brick Ltd. (BBLa). The company on Thursday reported third-quarter loss of 1 cent a share, on sales of $19,234 from continuing operations.
• Breakwater Resources Ltd. (BWR). The company on Thursday reported third-quarter EPS of 1 cent.
• Brookfield Real Estate Services Fund (BRE_u). The company on Friday reported third-quarter EPS of 23 cents per unit.
• Centamin Egypt Ltd. (CEE). The gold producer expects to move into the midcap FTSE 250 index in the next reshuffle, the company said on Friday as it made its debut on the London Stock Exchange's main market.
• Centric Health Corp. (CHH). The company on Thursday reported third-quarter EPS of 1 cent.
• Clarke Inc. (CKI). The company on Thursday reported third-quarter basic EPS of 11 cents from continuing operations. Revenue along with other income was $70.2 million, for the quarter.
• Espial Group Inc. (ESP). The company on Thursday reported third-quarter loss of 7 cents, on revenue of $2.9 million.
• Gran Tierra Energy Inc. (GTE). The company on Friday reported third-quarter loss of 1 U.S. cent a share, on revenue of US$75.4 million.
• Home Equity Income Trust (HEQ). The company on Thursday reported third-quarter adjusted EPS of 15 cents.
• Horizon North Logistics Inc. (HNL). The company on Thursday broke even in the third-quarter and revenue for the period was $32.0 million. The company appointed Bob German as the CEO and Scott Matson as the CFO.
• Kingsway Financial Services Inc. (KFS). The property and casualty insurer reported its fifth straight loss in the third quarter on Friday, hurt by losses stemming from run-off and discontinued businesses.
• Kinross Gold Corp. (K). The gold miner announced an unsecured credit facility of US$450 million, which was led and arranged by Scotia Capital and Bank of America Merrill Lynch. The new facility, will expire in November of 2012.
• MagIndustries Corp. (MAA). The company said its unit, MagMinerals Potash Corp, has agreed to acquire the Congolese company Potasse du Congo. The company added it is in discussions with third parties interested in participating in exploration activities.
• Magna International Inc. (MGa). The auto parts company reported a surprise third-quarter profit on Thursday, helped by cost reductions and restructuring initiated late last year even as reduced production by North American and European automakers pushed its revenue down 16 percent. The company's co-CEO said it is not looking at taking over any other automakers following the collapse of its deal to buy a stake in General Motors Co's European operations.
• Midnight Oil Exploration Ltd (MOX). The company on Thursday reported third-quarter loss of 6 cents a share. The company also said its production for the quarter averaged 1,812 barrels of oil equivalent per day.
• Newalta Inc. (NAL). The industrial waste management company on Thursday posted an 81 percent drop in third-quarter profit, primarily hurt by lower commodity prices.
• Orca Exploration (ORCb). The company plans to more than double its daily gas output capacity at the Songo Songo field in Tanzania to 200 million cubic feet within three years, CEO Peter Clutterbuck said on Friday.
• Petaquilla Minerals Ltd. (PTQ). The emerging gold producer said on Thursday its CEO and President Christopher Davie resigned.
• Points International Ltd. (PTS). The loyalty reward solutions provider on Thursday broke even for the quarter and revenue for the period was US$20.7 million. The company expects 2010 revenue of US$60 million to US$70 million.
• Quest Capital Corp. (QC). The mortgage financier swung to a third-quarter loss, hurt by a surge in loan-loss provisions and a fall in net interest income.
• Silver Standard Resources Inc. (SSO). The miner on Thursday broke even for the third-quarter.
• Suncor Energy Inc. (SU). The energy company’s third-quarter operating profit fell 64 percent as oil and gas prices sank in its first quarterly reporting period including results from Petro-Canada assets it acquired in August.
• SunOpta Inc. (SOY). The company, which processes natural and organic food products, on Thursday posted third-quarter adjusted EPS of 7 U.S. cents, on revenue of US$253.8 million, which fell 12 percent.
• TeraGo Inc. (TGO). The national broadband service provider on Friday reported third-quarter loss of 15 cents a share, on revenue of $8.6 million.
• Thompson Creek Metals (TCM). The molybdenum miner said on Thursday its third-quarter profit fell 80 percent due to a sharp drop in the prices of the steel-hardening agent. Separately, it announced 30% increase in molybdenum mineral reserves and adopted a new 16-year mine plan for Thompson Creek mine, replacing the previous 10-year plan.
• Vermilion Energy Trust (VET_u). The company on Friday reported third-quarter funds from operations of 89 cents a unit, on revenue of $150 million.
CORPORATE EVENTS
08:30 Kingsway Financial Services (KFS). Q3 earnings conference call
08:30 Thompson Creek Metals Co. Inc. (TCM). Q3 earnings conference call
09:00 Air Canada (ACa). Q3 earnings conference call
09:00 Northstar Aerospace Inc. (NAS). Q3 earnings conference call
09:00 Protective Products of America Inc. (PPA). Q3 earnings conference call
09:30 Suncor Energy (SU). Q3 earnings conference call
10:00 Breakwater Resources Ltd. (BWR). Q3 earnings conference call
10:00 Calloway Real Estate Investment Trust (CWT_u). Q3 earnings conference call
10:00 Cascades (CAS). Q3 earnings conference call
10:00 Compton Petroleum (CMT). Q3 earnings conference call
10:00 Gran Tierra Energy Inc (GTE). Q3 earnings conference call
10:00 Labopharm Inc. (DDS). Q3 earnings conference call
10:00 SunOpta Inc. (SOY). Q3 earnings conference call
11:00 Arctic Glacier Income Fund (AG_u). Q3 earnings conference call
11:00 Brookfield Asset Management (BAMa). Q3 earnings conference call
11:00 Ember Resources Inc (EBR). Q3 earnings conference call
11:00 Enerflex Systems Ltd. (EFX_u). Q3 earnings conference call
11:00 Gastar Exploration Ltd. (GST). Q3 earnings conference call
11:00 InnVest Real Estate Invetmentt Trust (INN_u). Q3 earnings conference call
11:00 Kodiak Oil & Gas Corp. (KOG). Q3 earnings conference call
11:00 Newalta Inc. (NAL). Q3 earnings conference call
11:00 Silver Standard Resources Inc. (SSO). Q3 earnings conference call
11:00 Vermilion Energy TRust (VET_u). Q3 earnings conference call
13:00 Ainsworth Lumber Co. Ltd. (ANS). Q3 earnings conference call
14:00 Just Energy Income Fund (JE_u). Q2 earnings conference call
14:00 SNC-Lavalin Group (SNC). Q3 earnings conference call
15:00 Emera Inc (EMA). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• Calfrac Well (CFW) price target raised to $21.50 from $20; rating market perform at Raymond James
• Churchill (CUQ) price target raised to $25 from $19; rating raised to strong buy from market perform at Raymond James
• Cinch Energy (CNH) rating cut to market perform from outperform at Raymond James
• Manulife Financial (MFC) rating raised to neutral from underperform at Credit Suisse
• Talisman Energy (TLM) price target cut to $20 from $21; rating hold at Canaccord Adams
• West Energy (WTL) price target raised to $3 from $2.75; rating raised to outperform from market perform at Raymond James
EXDIVIDEND
• The Cash Store Financial Services Inc. (CSF). Amount of $0.10
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
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INSIGHT
U.S. government likely to keep media rules strict
Newspaper publishers and other struggling media companies want the U.S. government to help them survive the toughest times they have ever known, mainly by easing rules on how big they can get.
They will be lucky if they get any aid at all.
The Federal Communications Commission held meetings this week with policy experts and consumer groups to see if it should change rules that define how many people newspapers, television and radio stations can reach and that limit their size to protect free speech and allow for healthy competition.
But other more pressing concerns on Capitol Hill and in the Obama administration, and the threat of lawsuits to thwart any changes to the rules, are muffling enthusiasm.
"Nobody cares," said Jonathan Knee, a media banker at investment firm Evercore Partners Inc. "Nobody is willing to spend political capital over it."
As advertising sales shrink and more people get information and entertainment online, media companies want the government to let them operate more freely. Sentiment also is growing that the Internet and other technology advances have rendered media regulation debates obsolete, media industry observers say.
The FCC rules have come up for review before, but the stakes are higher now, with broadcasters and publishers like Tribune Co going bankrupt.
But lawmakers and the White House are dealing with multiple problems that loom larger, from health care and climate change to financial industry overhaul, so little might get done.
"This is an administration that's taken on a whole host of very large initiatives that are sucking the oxygen out of Washington in a big way," said John Chachas, a media banker at Lazard who supports deregulation. "Reconsideration of these ancient rules is desperately needed, but not a top priority in a country suffering 10 percent unemployment."
Conversations with congressional and administration staff as well as lobbyists bear this out. As a result, media companies and lobbyists seem gripped by a lassitude that is surprising for people who lobby hard to get what they want.
EASILY DEMAGOGUED
The FCC reviews the rules every four years to see whether they should be loosened. During the Bush administration, the agency tried to relax the rules, but consumer groups sued and an appeals court panel effectively froze the changes.
Next year, the FCC may propose more changes to those rules, a process that will throw off plenty of verbal sparks. FCC Chairman Julius Genachowski has not given his opinion.
Among the most important rule is one that generally forbids companies from owning TV and newspapers in the same market. Another limits what percentage of the audience broadcasters can reach.
They are among the obstacles that make it hard for a media conglomerate like News Corp, for example, to buy a big piece of NBC Universal from General Electric, or for News Corp to buy The New York Times because it owns the New York Post and Wall Street Journal and area TV stations.
"I expect (the FCC) to conduct studies, hold hearings and eventually issue a notice of proposed rulemaking that I largely expect will be a confirmation of the status quo. In other words, that nothing will change," said Derek Turner, research director at Free Press, a group opposed to relaxing the rules.
Democratic Commissioner Michael Copps at Tuesday's FCC hearing warned against relaxing the rules.
"We've been asleep at the switch when we weren't downright destructive," Copps said. "Twenty-plus years of heedless deregulation eviscerated almost every public interest guideline we had. Media companies took advantage of that."
If the FCC makes it easier for media companies to buy and sell assets, they will pursue the same strategies when the economy improves, he said. That will hurt them and their workers later, Copps said.
Consolidation, said Media Access Project President Andrew Jay Schwartzman, makes it hard for small competitors to survive and robs people of local journalism. Large companies, he said, lay people off to save costs and suck up local ad dollars.
"It's the problem, not the solution," he said of media consolidation.
TV station and newspaper owners say it is time to shelve rules made obsolete by the Internet and other competitors.
"They're talking about an era that doesn't exist anymore," said Marshall Morton, chief executive of Media General Inc, a newspaper owner and TV broadcaster in Richmond, Virginia. "It's an easily demagogued issue. This is the way to make some hay if your theme is 'Corporate America is bad'."
But even if the FCC alters the rules, it will just be the next round in the battle.
"Anything that the commission does, one way or the other, will be litigated by both sides," Schwartzman said.
--- Robert MacMillan and John Poirier, Reuters
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
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Nov 5, 2009
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THURSDAY, NOVEMBER 5 , 2009, CANADIAN EDITION
TOP STORIES
• Canadian Natural Q3 profit tumbles
• Thomson Reuters Q3 revenue falls; profit beats Street
• Agrium raises bid for CF Industries to US$4.5 bln
• Alamos Gold Q3 profit up 70 pct
• Sun Life takes Q3 loss on actuarial changes
• Penn West Q3 profit slumps 99 pct
BEFORE THE BELL
Toronto’s main stock index could open lower on Thursday as commodity prices fall. On the macro front, data set for release are building permits and Ivey PMI. Wall Street is set for a flat start ahead of the release of weekly jobless claims and productivity data. European stocks were down, with banks and miners among the biggest losers. The Bank of England expanded its quantitative easing programme by 25 billion pounds to 200 billion pounds and kept its key interest rate on hold at 0.5 percent. The European Central Bank kept its main refinancing rate unchanged at a record low of 1.0 percent. Asian shares were down, with Japan's Nikkei shedding 1.29 percent. Oil fell to trade at around US$80 a barrel. Spot gold inched lower but remained within striking distance of US$1,100 an ounce after hitting an all-time high for the second straight session.
COMPANIES REPORTING RESULTS
• AltaGas Income Trust (ALA_u). Expected to report Q3 earnings of 35 cents a share, according to Thomson Reuters I/B/E/S
• Aurizon Mines Ltd. (ARZ). Expected to report Q3 earnings of 5 cents a share
• Calloway Real Estate Investment Trust (CWT_u). Expected to report Q3 earnings of 8 cents a share
• Dundee Precious Metals Inc. (DPM). Expected to report Q3 earnings of 3 cents a share
• Great-West Lifeco Inc. (GWO). Expected to report Q3 earnings of 48 cents a share
• Inter Pipeline Fund (IPL_u). Expected to report Q3 earnings of 20 cents a share
• Magna International Inc. (MGa). Expected to report Q3 loss of 7 U.S. cents a share
• Manulife Financial Corp. (MFC). Expected to report Q3 earnings of 27 cents a share
• Newalta Inc. (NAL). Expected to report Q3 earnings of 21 cents a share
• Points International Ltd. (PTS). Expected to report USD$0.00 per share in Q3
• Silver Standard Resources Inc. (SSO). Expected to report Q3 loss of 4 cents a share
• Stantec Inc. (STN). Expected to report Q3 earnings of 54 cents a share
• SunOpta Inc. (SOY). Expected to report Q3 earnings of 5 cents a share
• Thompson Creek Metals Co. (TCM). Expected to report Q3 earnings of 14 U.S. cents a share
• True Energy Trust (TUI_u). Expected to report Q3 loss of 12 cents a share
STOCKS TO WATCH THIS MORNING
• Agrium Inc. (AGU). In the latest twist in a takeover battle going on since January, the fertilizer maker is planning to make a final offer for CF Industries Holdings Inc on Thursday, the WSJ said, citing people familiar with the matter.
• Agrium Inc. (AGU). The fertilizer maker on Thursday again sweetened its hostile bid for U.S. rival CF Industries, the latest twist in a three-way takeover battle in the fertilizer sector.
• Alamos Gold Inc. (AGI). The mining company on Thursday reported a 70 percent rise in third-quarter profit, helped by an increase in gold sales and a higher average realized gold price.
• Andrew Peller Ltd. (ADWa). The company on Wednesday reported second-quarter EPS of 12 cents from continuing operations, on sales of $67 million, which rose 2 percent.
• Biovail Corp. (BVF). The drugmaker reported a lower third-quarter profit on Thursday despite growing revenue, as restructuring charges hurt the company.
• Bridgewater Systems Corp. (BWC). The company on Thursday reported third-quarter EPS of 7 cents, on revenue of $15.8 million, which rose 53 percent.
• Canaccord Capital Inc. (CCI). The company said on Thursday it swung to a second-quarter profit, helped by higher trading and investment banking revenues.
• Canadian Natural Resources Ltd. (CNQ). The independent oil explorer’s third-quarter profit fell 77 percent as oil and gas prices plunged, it said on Thursday.
• CCL Industries Inc. (CCLb). The company on Thursday reported third- quarter EPS of 51 cents, on sales of $294.3 million.
• Ceres Global Ag Corp. (CRP). The company reported on Wednesday second-quarter EPS of 73 cents.
• Churchill Corp. (CUQ). The construction company on Thursday reported a 36 percent rise in third-quarter net profit, helped by a gain from an asset sale.
• CriticalControl Solutions Corp. (CCZ). The company on Wednesday reported third-quarter revenue of $7.1 million.
• Data Group Income Fund (DGI_u). The company on Thursday reported third-quarter earnings of 14 cents per unit, on revenue of $84.4 million and said it intends to maintain its monthly distributions at existing levels.
• Dundee Corp. (DCa). The asset management company’s unit Dundee Resources acquired 11.34 percent interest in Cogitore Resources Inc at 28 cents a share.
• Dundee Precious Metals Inc. (DPM). The mining company on Wednesday reported third-quarter EPS of 4 cents, on net revenue of $50.3 million.
• Extendicare Real Estate Investment Trust (EXE_u). The REIT on Wednesday reported third-quarter FFO of 38 cents per share from continuing operations, on revenue of $532.1 million, which rose 8.5 percent.
• Fortis Inc. (FTS). The gas and power utility on Thursday reported third-quarter EPS of 21 cents, on revenue of $664 million.
• Gerdau AmeriSteel Corp. (GNA). The company on Thursday reported third-quarter loss of 6 U.S. cents a share, on sales of US$1.1 billion.
• Goldcorp (G). The gold miner said on Wednesday its third-quarter net profit fell 62 percent, but its core earnings beat estimates and the company raised its 2009 production outlook and chopped its cost guidance.
• IBI Income Fund (IBG_u). The company on Wednesday reported third-quarter revenue of $68.8 million and said its EBITDA decreased $1.1 million, for the period.
• IMAX Corp. (IMX). The company on Thursday reported third-quarter EPS of 2 U.S cents, on revenue of US$43.6 million, which rose 33 percent.
• Manitoba Telecom Services Inc. (MBT). The company on Thursday reported third-quarter EPS of 67 cents, on revenue of $462.9 million.
• Marsulex Inc. (MLX). The industrial services provider on Wednesday posted a 15 percent rise in third-quarter profit, helped by strong performance across its operating units.
• Melcor Developments Ltd. (MRD). The company on Wednesday reported third-quarter basic EPS of 32 cents, on revenue of $44.4 million.
• Penn West Energy Trust (PWT_u). The conventional oil trust’s third-quarter profit plunged 99 percent as it had unrealized risk management gains on its oil and natural gas collars a year earlier, the company said on Thursday.
• Petrominerales Ltd. (PMG). The company on Wednesday reported third-quarter EPS of 26 cents, on crude oil revenue of $119.5 million.
• Quebecor Inc. (QBRa) (QBRb). The media and communications group on Thursday reported third-quarter adjusted loss of 82 cents, from continuing operations, on revenue of $918.4 million.
• Research In Motion Ltd. (RIMM). The BlackBerry maker on Thursday said its board authorized a share buyback of up to US$1.2 billion. The company would buy back about 21 million common shares, representing about 3.6 percent of the currently outstanding common shares on Nasdaq.
• RuggedCom Inc. (RCM). The communications equipment maker reported on Wednesday a lower-than-expected second-quarter profit, hurt by a strong Canadian dollar and higher operating expenses.
• Sprott Inc. (SII). The asset manager on Thursday reported third-quarter EPS of 4 cents, on revenue of $22 million, which fell about 13 percent.
• Sprott Inc. (SII). The company on Thursday reported third quarter EPS of 4 cents, on revenue of revenue $22 million, which fell 13 percent.
• Sun Life Financial Inc. (SLF). The insurer reported a net third-quarter loss on Thursday, due mostly to a change to the assumptions it uses to value its books, but cited underlying strength as it maintained its dividend payout.
• Suncor Energy (SU). Canada’s biggest energy company on Thursday reported oil sands production during October averages approximately 307,000 barrels per day.
• Superior Plus Corp. (SPB). The company, whose services span from energy to specialty chemicals, said on Wednesday it will raise $45 million through an equity financing in order to partially finance the acquisition of assets from Griffith Energy Services Inc.
• SXC Health Solutions Corp. (SXC). The healthcare information technology provider on Thursday posted a better-than-expected third-quarter profit, helped by new customer wins, and raised its outlook for the full year.
• Thomson Reuters Corp. (TRI). The news and financial data publisher on Thursday reported a decline in third-quarter revenue as sales in its legal and markets divisions fell, while underlying operating profit rose on currency benefits and cost cuts.
• Transglobe Energy Corp. (TGL). The company on Thursday reported third quarter loss of 2 U.S. cents a share.
• WestJet Airlines Ltd. (WJA). Traffic numbers at Canada's major airlines flew in opposite directions last month, with the carrier boosting its percentage of seats filled and Air Canada (ACa) reporting a slight drop.
• World Energy Solutions Inc. (XWE). The company on Thursday reported third-quarter loss of 8 cents a share, on revenue of $3.5 million.
ECONOMIC CALENDER
08:30 Building permits for Sept: Prior 7.2% Expected 1.6%
10:00 Ivey PMI for Sept: Prior 59.0 Expected 61.7
CORPORATE EVENTS
08:30 Biovail Corp. (BVF). Q3 earnings conference call
08:30 Bridgewater Systems Corp. (BWC). Q3 earnings conference call
08:30 Dundee Precious Metals Inc. (DPM). Q3 earnings conference call
08:30 IMAX Corp. (IMX). Q3 earnings conference call
08:30 Macquarie Power & Infrastructure Income Fund (MPT_u). Q3 earnings conference call
09:00 Manitoba Telecom Services (MBT). Q3 earnings conference call
09:00 Sun Life Financial Inc. (SLF). Q3 earnings conference call
09:30 Equitable Group Inc. (ETC). Q3 earnings conference call
10:00 Extendicare Real Estate Investment Trust (EXE_u). Q3 earnings conference call
10:00 GMP Capital Inc. (GMP). Q3 earnings conference call
10:00 Livingston International Income Fund (LIV_u). Q3 earnings conference call
10:00 Marsulex Inc. (MLX). Q3 earnings conference call
10:30 Superior Plus Corp. (SPB). Q3 earnings conference call
11:00 Alamos Gold Inc. (AGI). Q3 earnings conference call
11:00 AltaGas Income Trust (ALA_u). Q3 earnings conference call
11:00 Canadian Natural Resources Ltd. (CNQ). Q3 earnings conference call
11:00 Quebecor Inc. (QBRa). Q3 earnings conference call
12:00 Calfrac Well Services Ltd. (CFW). Q3 earnings conference call
12:00 Penn West Energy Trust (PWE). Q3 earnings conference call
13:00 Goldcorp (G). Q3 earnings conference call
13:30 Gerdau AmeriSteel Corp. (GNA). Q3 earnings conference call
13:30 Aurizon Mines Ltd. (ARZ). Q3 earnings conference call
14:00 Manulife Financial Corp. (MFC). Q3 earnings conference call
14:30 CCL Industries Inc. (CCLb). Q3 earnings conference call
15:30 Great West Lifeco Inc. (GWO). Q3 earnings conference call
16:00 Morguard Corp. (MRC). Q3 earnings conference call
16:00 Morguard Real Estate Investment Trust (MRT_u). Q3 earnings conference call
16:00 Stantec Inc. (STN). Q3 earnings conference call
16:30 Gluskin Sheff Associates Inc. (GS). Q3 earnings conference call
16:30 Inter Pipeline Fund (IPL_u). Q3 earnings conference call
16:30 Transglobe Energy Corp. (TGL). Q3 earnings conference call
17:00 Points International Ltd. (PTS). Q3 earnings conference call
17:00 SMTC Corp. (SMX). Q3 earnings conference call
17:30 Magna International Inc. (MGa). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• Enbridge Income Fund (ENF_u) target price raised to $10 from $8.75; rating sell at Canaccord Adams
• Killam Properties (KMP) target price raised to $9 from $8; rating buy at Canaccord Adams
• Talisman Energy (TLM) price target raised to $22 from $21; keeps outperform rating at Raymond James
• Trinidad Drilling (TDG) price target raised to $8.75 from $8.25; keeps outperform rating at Raymond James
• Zcl Composites (ZCL) target price cut to $3.50 from $4 rating market perform at Raymond James
EXDIVIDEND
• Canadian Utilities Ltd. (CU). Amount $0.3525
• CU Inc. (CIU_pa). Amount $0.2875
• Glentel Inc. (GLN). Amount $0.30
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
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INSIGHT
After Opel reversal, GM CEO in spotlight
At the new GM, the buck now stops with the board.
The surprise decision by General Motors Co to drop a plan supported by Chief Executive Fritz Henderson to sell the company's Opel unit has raised new questions about the standing of the veteran GM insider after just six months on the job.
"It isn't clear who is running GM," said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. "They've got a problem here."
Henderson, who joined GM in 1984 and worked his way up as a financial manager, has only been in charge of GM since this spring, when the Obama administration ousted Rick Wagoner and ordered the company to appoint outsiders to its hitherto insider-dominated board.
The reversal on selling Opel to a group led by Canada's Magna International Inc suggests to some the new directors -- including Ed Whitacre, the former AT&T Inc CEO who now serves as GM's chairman -- are not deferring to anyone. Noteven Henderson, who expressed confidence recently the Opel sale would be wrapped up soon.
The sale was controversial from the start.
"My view was always if at the end of this Opel ended up outside GM, that was a strategic mistake," Mike Jackson, the head of Auto Nation, told the Reuters Auto Summit in Detroit.
John Smith, a GM group vice president and chief negotiator in the Opel restructuring, told reporters on Wednesday that the decision not to sell Opel was debated vigorously within GM.
"This has been a close call from the very first of the three detailed reviews with our board," Smith said. "It was a coin toss in August, it was a coin toss in September and a coin toss of a kind in November."
HENDERSON HAD FAVORED
Henderson, who vowed to shake up the slow-moving culture of the 101-year-old automaker, had argued the Magna deal was the best remaining choice for cash-strapped GM after seven months of painstaking talks with bidders.
He also said in an interview on CNBC in late October that he thought the board supported the move.
So the company's announcement on Tuesday that the board had decided to abandon the sale left industry watchers wondering whether Henderson was out of the loop -- or losing clout.
"What worries me is the indecisiveness," Ken Lewenza, the head of the Canadian Auto Workers union told the Reuters Auto Summit on Wednesday. "But if at the end of the day it means success for General Motors, it might make sense."
Henderson was already looking like the odd man out in Detroit, where the other two car companies, Ford and Chrysler, are now run by executives -- Alan Mullaly at Ford and Sergio Marchionne at Chrysler -- who have spent most of their careers outside the car industry.
The recommendation to replace Wagoner with Henderson, overhaul the board and find an outside chairman was made at the highest levels of the White House and the Treasury Department.
But it was not one that sat easily with everyone, according to Steve Rattner, the former head of the Obama administration's autos task force.
Rattner said in Washington last month that, while it was obvious Wagoner could not continue at the helm of GM after burning through US$44 billion in cash in 15 months, it was "less clear was whether GM would be better off with Rick's deputy, Fritz Henderson, or with an outsider."
But the task force had to move quickly in restructuring.
"We were exceedingly nervous about the likelihood of recruiting a thoroughbred outside player, particularly in the midst of turmoil," Rattner said.
Rattner said Henderson had been eager to take on the CEO role at GM, but had asked not to be called an "interim" choice, saying that would undermine his chances of success.
To be sure, outsiders can flame out just as spectacularly as insiders in the car business, as the short reign of Bob Nardelli at Chrysler amply demonstrated.
Although Mullaly is drawing raves from the industry for his turnaround of Ford, Marchionne's magic so far has been confined to Fiat SpA in Europe.
The tougher review of management decisions by GM's board will also be seen as positive by governance critics who had charged the former board with being asleep at the wheel during the long skid into bankruptcy.
And not everyone thinks GM's reversal on Opel was a verdict on Henderson.
Lincoln Merrihew, an analyst at Compete Inc, thinks the decision may just be a reflection that the auto industry is pulling out of its tailspin and the desperate measures GM was once contemplating are no longer necessary.
"Is one possibility that the board is shifting control?" Merrihew said. "Sure. I think a more likely possibility is that they feel more confident in the recovery and less of a need to sell assets."
--- By James B. Kelleher, Reuters
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
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Nov 4, 2009
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WEDNESDAY, NOVEMBER 4 , 2009, CANADIAN EDITION
TOP STORIES
• Agrium third-quarter profit plummets
• IAMGOLD posts Q3 EPS of 18 U.S. cents
• GM opts to keep Opel, scraps sale to Magna
• Home Capital Q3 profit tops estimate, ups dividend
• Enbridge Q3 profit tops estimate, raises outlook
• Comcast Q3 profit rises
BEFORE THE BELL
Toronto’s main stock index could open higher on Wednesday as commodity prices rise. Investors will be closely following Wall Street, which is poised for a higher start, ahead of key data on jobs and services sector data, followed by the Federal Reserve's statement on interest rates and the economy. European shares were up, with financials being the major gainers. Asian markets were also up, led by resource-linked stocks. Oil rose above US$80 a barrel, following a U.S. industry report showing an unexpected fall in crude stocks. Gold hit record highs above US$1,095 an ounce as dollar weakness added to momentum lent to the market by India's purchase of 200 tonnes of gold from the IMF to push prices through key technical resistance levels.
COMPANIES REPORTING RESULTS
• Bonavista Energy Trust (BNP_u). Expected to report Q3 earnings of 28 cents a share, according to Thomson Reuters I/B/E/S
• Boralex Power Income Fund (BPT_u). Expected to report Q3 loss of 4 cents a share
• Calfrac Well Services Ltd. (CFW). Expected to report Q3 loss of 15 cents a share
• Extendicare (EXE_u). Expected to report Q3 earnings of 28 cents a share
• Fort Chicago Energy Partners LP (FCE_u). Expected to report Q3 earnings of 19 cents a share
• Goldcorp (G). Expected to report Q3 earnings of 16 U.S. cents a share
• Industrial Alliance Insurance and Financial Services Inc. (IAG). Expected to report Q3 earnings of 65 cents a share
• Macquarie Power & Infrastructure Income Fund (MPT_u). Expected to report Q3 earnings of 3 cents a share
• Marsulex Inc. (MLX). Expected to report Q3 earnings of 18 cents a share
• TransCanada Corp. (TRP). Expected to report Q3 earnings of 46 U.S. cents a share
• Trinidad Drilling Ltd. (TDG). Expected to report Q3 earnings of 3 cents a share
• Wajax Income Fund (WJX_u). Expected to report Q3 earnings of 57 cents a share
• WestJet Airlines (WJA). Expected to report Q3 earnings of 27 cents a share
STOCKS TO WATCH THIS MORNING
• Action Energy Inc. (AECh). The company said on Tuesday it terminated the employment of its President and CFO.
• Aecon Group Inc. (ARE). Canada's biggest publicly-traded construction company on Tuesday reported a third-quarter EPS of 35 cents, on revenue of $707 million.
• Agrium Inc. (AGU). The fertilizer maker and agricultural products retailer reported a 93 percent decline in its third-quarter profit on Wednesday, largely due to lower prices and margins on crop nutrient sales.
• BPO Properties Ltd. (BPP). The company on Tuesday reported a third-quarter FFO of 89 cents per share.
• Cipher Pharmaceuticals Inc. (DND). The company on Wednesday reported third-quarter loss of 2 cents, on revenue of $1.1 million, which rose 59 percent.
• Colossus Minerals Inc. (CSI). The company has signed confidentiality agreements with six global mining companies that may be interested in buying the company, its CEO Ari Sussman said on Wednesday.
• Enbridge Inc. (ENB). The pipeline operator on Wednesday reported third-quarter adjusted EPS of 42 cents and forecast full year EPS in range of $2.30 to $2.36.
• Fairborne Energy Trust (FEL). The company on Thursday reported a third-quarter EPS of 43 cents, on petroleum and natural gas revenue of $55.2 million.
• Fort Chicago Energy Partners LP (FCE_u). The company on Tuesday reported a third-quarter net income of 2 cents a unit, on total revenue of $163.2 million.
• Gabriel Resources Ltd. (GBU). The mining firm on Wednesday reported third-quarter loss of 2 cents a share. The company also appointed Keith Hulley as acting CEO.
• Home Capital Group Inc. (HCG). The company, which mainly underwrites residential mortgages, posted a better-than-expected third-quarter profit, driven by higher loan originations, and the mortgage lender boosted its dividend for the third time this year.
• HudBay Minerals (HBM). The miner said on Tuesday its third-quarter profit rose seven-fold, as higher gold prices and lower costs helped offset the impact of lower copper production and prices.
• IAMGOLD Corp. (IMG). The precious metals miner on Wednesday reported third-quarter EPS of 18 U.S. cents, on revenue of US$235.2 million.
• International Nickel Ventures Corp. (INV). The mineral resource company reported third-quarter loss of 1 cent a share.
• Killam Properties Inc. (KMP). The company on Tuesday reported third-quarter FFO of 22 cents per and 8.8% increase in same store net operating income.
• Magna International (MGa). The board of General Motors Co has opted to keep Opel, undoing months of painstaking negotiations to sell the European unit to a Russian-backed group led by Canada's Magna. GM said that improving business conditions and the strategic importance of Opel to its operations had prompted the move.
• Morguard Corp. (MRC). The company on Tuesday reported third-quarter FFO of $2.01 a share.
• New Gold Inc. (NGD). The mid-sized gold miner on Tuesday reported a third-quarter basic EPS of 1 U.S cent. The company also announced 16% increase in production, 17% decrease in cash cost in the third-quarter 2009 and enhanced value for its El Morro project.
• Nexen Inc. (NXY). The independent oil explorer is happy with its current interest in the Long Lake, Alberta, oil sands project, making a further acquisition of Opti Canada Inc's (OPC) stake doubtful, a Nexen official said on Tuesday.
• North American Energy Partners Inc. (NOA). The company on Tuesday reported a second-quarter EPS of 17 cents, before items, on revenue of $171.1 million.
• Opti Canada Inc. (OPC). The oil sands developer said on Tuesday it may seek a buyer as part of a review of strategic alternatives with the pace of takeovers in the country's energy sector picking up.
• PFB Corp. (PFB). The company on Tuesday reported a third-quarter EPS of 24 cents, on sales of $18.8 million.
• ShawCor Ltd. (SCLa). The company on Tuesday reported a third-quarter EPS of 48 cents.
• Sun-Rype Products Ltd. (SRF). The company on Tuesday reported third-quarter EPS of 3 cents, on net sales of $36.1 million.
• Torstar Corp. (TSb). The book and newspaper publisher on Wednesday reported a 76 percent drop in third-quarter profit from continuing operations, hurt by restructuring charges and weakness at its newspapers and digital segment.
• TransCanada Corp. (TRP). As long as energy companies participate in 2010's open season for a massive, yet-to-be-built Alaska gas pipeline, TransCanada will be on track in its plan to construct the project and start delivering to U.S. markets by 2018, Alaska officials said Tuesday.
• Yamana Gold (YRI). The miner said on Tuesday its core earnings rose on the back of stronger production and higher gold prices, while net profit fell 60 percent due to a loss on derivatives.
• Yellow Pages Income Fund (YLO_u). The company on Wednesday reported third-quarter distributable cash of 35 cents a unit, on adjusted revenue of $410.1 million. The company affirmed it would maintain cash distribution of 80 cents a unit during the period leading to the conversion from an income trust to a corporation.
• ZCL Composites Inc. (ZCL). The company on Tuesday reported third-quarter EPS of 6 cents.
CORPORATE EVENTS
08:15 Torstar Corp. (TSb). Q3 earnings conference call
09:00 BPO Properties (BPP). Q3 earnings conference call
09:00 Russel Metals (RUS). Q3 earnings conference call
09:30 North American Energy Partners Inc. (NOA). Q2 earnings conference call
10:00 Hudbay Minerals Inc. (HBM). Q3 earnings conference call
10:00 Kill Properties Inc. (KMP). Q3 earnings conference call
10:00 New Gold Inc. (NGD). Q3 earnings conference call
10:30 Aecon Group Inc. (ARE). Q3 earnings conference call
10:30 Home Cap Group Inc. (HCG). Q3 earnings conference call
11:00 Catalyst Paper Corp. (CTL). Q3 earnings conference call
11:00 Trinidad Drilling Ltd. (TDG). Q3 earnings conference call
11:00 WestJet Airlines Live (WJA). Q3 earnings conference call
11:30 ZCl Composites Inc. (ZCL). Q3 earnings conference call
12:00 Millar Western Forest Products Ltd. (MWFP). Q3 earnings conference call
12:00 IAMGOLD Corp. (IMG ). Q3 earnings conference call
14:00 Industrial Alliance Insurance and Financial Services Inc. (IAG). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• CGI Group (GIBa) price target raised to $14 from $13; rating outperform at Raymond James
• North American Energy Partners (NOA) price target raised to $9 from $8; rating outperform at Raymond James
• Paladin Energy (PDN) rating raised to outperform from market perform at Raymond James
• Softchoice (SO) price target raised to $8.50 from $7; rating outperform at Raymond James
• Talisman Energy (TLM) price target raised to $21 from $18; rating overweight at Barclays
EXDIVIDEND
• Bank of Montreal (BMO). Amount US$0.6502
• Fortis Inc. (FTS). Amount $0.26
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
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INSIGHT
Central banks lead subtle shift away from dollar
Central banks with trillions of dollars in reserves that are already stepping up euro and yen purchases will likely continue doing so in coming years, driven by worries over the stability of the greenback.
A record U.S. budget gap and the rise of dynamic developing economies like China suggest the dollar, down over 20 percent since 2002 on a trade-weighted basis, has further to fall.
Of course, the dollar comprises some two-thirds of global reserves and will remain dominant in most holdings, as attempts to dump it would destroy the value of central bank portfolios.
But with the speed of reserve accumulation increasing after a crisis-induced lull late last year, policy makers can choose to park more new cash in euros and yen without having to sell existing dollar assets.
"I think 2009 will be remembered as a watershed moment for currencies," said Neil Mellor, strategist at BNY Mellon, which has some US$20 trillion in assets under custody. "I don't think there will be an imminent move, but it is quite clear there's a plan to shift reserves to a more balanced portfolio."
Barclays Capital research showed that central banks that report reserve breakdown put 63 percent of new cash coming into their coffers between April and July into non-U.S. currencies.
"There's an incipient desire to reduce the dollar share of reserves, and central banks will use any opportunity to do it, provided it doesn't cause the dollar to fall out of bed," said Steven Englander, chief U.S. currency strategist at Barclays.
International Monetary Fund data shows the dollar's share of known world reserves has been declining since it stood at 72 percent in 1999, the year the euro was introduced. As of the second quarter of 2009, it accounted for 62.8 percent.
To be sure, some of that shift is driven by the dollar's decline against a basket of currencies over that period.
But the Barclays data, which removes valuation effects, shows the second quarter was the only one in which central banks accumulated more than US$100 billion in reserves and put less than 40 percent into dollars, down from a 70 percent quarterly average back to 2006.
Overall reserves rose 4.8 percent to US$6.8 trillion in the second quarter, the IMF said, the first increase in a year.
CATCHING UP TO THE DOLLAR
Policy makers acknowledge the dollar will remain a linchpin of global finance for many years to come. But it has fallen steadily on a trade-weighted basis over the last decade, a troubling sign for China, Russia, India and other big U.S. creditors holding trillions of dollars of U.S. Treasury debt.
Worries about record deficits, run up as the United States borrowed hundreds of billions to stimulate an economy ravaged by financial crisis, has further diminished foreign demand for U.S. assets, making it likely the dollar will weaken further.
And as others catch up to the U.S., the dollar will share the stage with other currencies, said Barry Eichengreen, an economics professor at the University of California at Berkeley.
"The big beneficiary in the short run will be the euro, as only it has the requisite liquidity," he said. "But there's no reason why we shouldn't look forward to the advent of a multipolar reserve currency system."
The euro's share of known reserves hit 27.5 percent in the second quarter, from 18 percent in late 2000, IMF data showed. Analysts say it could exceed 30 percent in coming years.
The yen and sterling also stand to gain, while currencies from commodity exporters such as Australia may see more buying, Mellor said, particularly by energy-hungry emerging economies such as China, which holds US$2.3 trillion in reserves.
Barclays' data showed claims in "other currencies" beyond the big four -- dollar, euro, yen, sterling -- rose more than 10 percent between April and July.
China does not report currency composition but is widely thought to hold around 70 percent in dollars.
Russia, the third biggest reserve holder with US$419 billion in its war chest, says it holds some 47 percent in dollars and 40 percent in euros but wants to buy more of other currencies.
Central banks are also turning to gold, which Wells Fargo global economist Jay Bryson said may partly explain gold's surge to record highs.
Taiwan, the fourth largest reserve holder, has said it is considering buying more gold, while China said in April it had increased gold holdings by 75 percent since 2003. This week, India bought 200 tones of gold from the IMF for US$6.7 billion.
DON'T COUNT DOLLAR OUT
Central banks do face limits on how they diversify their reserve holdings. Most currencies are simply not deep enough to accommodate massive sudden inflows and outflows.
Even a big shift from dollars to euros begs the question of which country's debt to buy. No European government bond market is as deep as the U.S. Treasury market, and bonds with the highest yields are from countries with the weakest economies.
"If you buy a 30-year Italian government bond, is Italy still going to be in the euro zone 30 years from now?" said Bryson. "Probably, but there is a risk there."
And while China's economy is on track to one day become the world's biggest, the yuan won't be a viable reserve candidate until China loosens controls and lets foreigners invest freely.
"That is a matter of decades, not years," said Anne Krueger, a former IMF deputy director now at Johns Hopkins University's School of Advanced International Studies.
Edwin Truman, a senior fellow at the Peterson Institute for International Economics and a former Federal Reserve economist, says it's "not so much a drift away from the dollar as it is a drift to other currencies."
"Will the dollar share of reserves be lower five years from now?" he asked. "If I had to guess, I'd say, 'yes.' Will it be because of a massive stampede out of dollars? Probably not."
--- By Steven C. Johnson, Reuters
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
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Nov 3, 2009
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TUESDAY, NOVEMBER 3 , 2009, CANADIAN EDITION
TOP STORIES
• Talisman Q3 profit plunges
• Magna, labour at GM's Opel agree cost cuts
• J&J to cut 6-7 pct of workforce in restructuring
• U.S. seeks more information on MDS-Danaher deal
• UBS sees outflows continuing as Q3 disappoints
• BP, CNPC sign Iraq's 1st big post-invasion oil deal
BEFORE THE BELL
Toronto’s main stock index could open lower on Tuesday as commodity prices fall. Wall Street is also set for a lower open, pressured by weaker-than-expected results from UBS, and as a shake-up in British banks weigh on investors sentiment. On the macro front, the FOMC begins its two-day meeting on interest rates. U.S. factory orders for October is expected to rise 0.8 percent, according to a Reuters poll. European stocks fell sharply to a new one-month low, led by financials. Asian stocks were also down as investors awaited policy announcements from some key central banks this week for clues on the timing of eventual shifts in policy. Oil fell more than US$1 per barrel towards US$77 as the dollar rose against a basket of currencies and ahead of U.S. inventory data.
COMPANIES REPORTING RESULTS
• BPO Properties Ltd. (BPP). Expected to report Q3 earnings of 48 cents a share, according to Thomson Reuters I/B/E/S
• Constellation Software Inc. (CSU). Expected to report Q3 earnings of 79 U.S. cents a share
• Dundee Real Estate Investment Trust (D_u). Expected to report Q3 earnings of 19 cents a share
• DundeeWealth Inc. (DW). Expected to report Q3 earnings of 5 cents a share
• HudBay Minerals Inc. (HBM). Expected to report Q3 earnings of 13 cents a share
• Keyera Facilities Income Fund (KEY_u). Expected to report Q3 earnings of 36 cents a share
• Killam Properties Inc. (KMP). Expected to report Q3 earnings of 13 cents a share
• Morguard Corp. (MRC). Expected to report Q3 earnings of 44 cents a share
• NAL Oil & Gas Trust (NAE_u). Expected to report Q3 earnings of 6 cents a share
• Newfoundland Capital Corp Ltd (NCCa). Expected to report Q3 earnings of 17 cents a share
• North American Energy Partners Inc. (NOA). Expected to report Q2 earnings of 4 cents a share
• Red Back Mining Inc. (RBI). Expected to report Q3 earnings of 13 U.S. cents a share
• Russel Metals Inc. (RUS). Expected to report Q3 earnings of 10 cents a share
• Saputo Inc. (SAP). Expected to report Q2 earnings of 41 cents a share
• ShawCor Ltd. (SCLa). Expected to report Q3 earnings of 52 cents a share
STOCKS TO WATCH THIS MORNING
• Absolute Software Corp. (ABT). The provider of computer security solutions on Monday posted a narrower first-quarter loss, helped by higher sales contracts, and said the company is on track to meet its fiscal 2010 outlook.
• Enbridge Income Fund (ENF_u). The trust unit said on Tuesday it proposed a restructuring of the fund to take effect prior to the implementation of Canada's Specified Investment Flow-Through tax law. The proposed change would convert the fund from a tax-advantaged income trust to a taxable Canadian corporation as required by the law, which comes into effect on Jan. 1, 2011.
• Falcon Oil (FO). The company said on Tuesday that tests on the Foldeak-1 natural gas well in the Mako Trough in southern Hungary had been completed and the well has been temporarily plugged and abandoned.
• FirstService Corp. (FSV). The property services company on Tuesday reported third-quarter adjusted EPS of 60 U.S. cents, on revenue of US$451.1 million.
• IMRIS Inc. (IM). The company on Monday reported third-quarter loss of 10 cents per share, on sales of $9.9 million.
• Kinross Gold (K). The gold miner said on Monday it slipped to a loss in the third-quarter, as higher costs associated with a mine expansion offset the positive impact of soaring gold prices.
• Lanesborough Real Estate Investment Trust (LRT_u). The trust said on Monday it has entered into an unconditional agreement to sell a 183-suite apartment property in Surrey, British Columbia, known as Greenwood Gardens for $13.8 million. The company also said the sale is expected to result in net cash of about $2 million.
• Magna International Inc. (MGa). Opel's labour force has agreed to contribute 265 million euros in annual savings if General Motors finally sells a majority stake in its European arm to a group led by the Canadian autoparts maker, Magna.
• MDS Inc. (MDS). U.S. officials have asked for more information about the planned sale of the healthcare company’s Analytical Technologies Division to Danaher Corp, the companies said on Tuesday.
• Northgate Minerals Corp. (NGX). The company on Tuesday reported third-quarter adjusted EPS of 3 U.S. cents and said it sold 85,397 ounces of gold at a realized price of US$982 per ounce and 12.8 million pounds of copper in the quarter. The company said it is set to achieve an annual record of 365,000 ounces of gold at a net cash cost of US$493 per ounce.
• Pacific Safety Products Inc. (PSP). The protective products maker for the defense and security market on Tuesday cut its workforce by 30 positions as an action to address an expected decline in revenue through expense reductions. The company said the layoffs will occur in the company's U.S. and Canadian facilities over the next week.
• Ridley Inc. (RCL). The company on Monday reported first-quarter loss 8 U.S. cents per share.
• Ritchie Bros. Auctioneers Inc. (RBA). The company on Tuesday reported third-quarter EPS of 12 U.S. cents on auction revenue of US$75.9 million
• Talisman Energy Inc. (TLM). The independent oil explorer said on Tuesday its third-quarter profit plummeted 98 percent as oil and gas prices tumbled from a year earlier.
• West Fraser Timber Co Ltd. (WFT). Charges related to a paper mill closure increased the North America's largest softwood lumber producer’s third-quarter loss, but the company said on Monday there were signs demand for construction lumber would improve.
CORPORATE EVENTS
08:30 Kinross Gold (K). Q3 earnings conference call
10:00 Davis Henderson Income Fund (DHF_u). Q3 earnings conference call
10:00 Dundee Wealth Mgmt Inc. (DW). Q3 earnings conference call
10:00 Northgate Minerals Corp. (NXG). Q3 earnings conference call
11:00 Amerigo Resources Ltd. (ARG). Q3 earnings conference call
11:00 FirstService (FSV). Q3 earnings conference call
11:00 Ritchie Bros. Auctioneers Inc. (RBA). Q3 earnings conference call
11:00 Red Back Mining Inc. (RBI). Q3 earnings conference call
11:30 West Fraser Timber Co. (WFT). Q3 earnings conference call
13:00 Talisman Energy (TLM). Q3 earnings conference call
14:30 Saputo Inc. (SAP). Q2 2010 earnings conference call
17:00 Nal Oil & Gas Trust (NAE_u). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• Encana (ECA) price target raised to $67 from $61; rating buy at Genuity
• Kinross Gold (K) price target cut to $24 from $27; rating buy at Genuity
• Nexen (NXY) price target raised to $28 from $26; rating hold at Genuity
• SFK Pulp Fund (SFK_u) rating raised to market perform from underperform; target price raised to $0.75 from $0.65 at Raymond James
• Suncor Energy (SU) rating raised to buy from hold at Genuity
• Talisman Energy (TLM) price target raised to $23 from $22; rating buy at Genuity
EXDIVIDEND
• United Corporations Ltd. (UNC). Amount $0.20
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
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INSIGHT
CIT's bankruptcy exit fraught with uncertainty
CIT Group Inc is looking for a quick exit from Chapter 11 protection but its long-term survival outside of bankruptcy depends in large part on what regulators will allow it to do with its various businesses.
"CIT in general isn't out of the woods yet," said Jeffrey Knopman, principal of Profit Solutions Group Inc, which helps vendors deal with retailers. The bankruptcy financing gives the company a bit of a reprieve, he said, adding, "I think the jury's still out on the longer term."
CIT hopes to move some of its best businesses, including vendor financing and factoring, to its bank, where it can fund them with deposits. But regulators may balk at this move.
Earlier this year, the Federal Deposit Insurance Corp and Utah state banking regulators put CIT Bank under a cease and desist order that prevents it from collecting new deposits.
CIT hopes that once its holding company is better capitalized, regulators will lift that order. But the FDIC may be reluctant to take the risk as it wrestles with a rising tide of bank failures.
In July, the FDIC refused to guarantee CIT bond issues, which could be a sign that government approval even after bankruptcy will be tough.
Even if CIT does get government approval for this plan, it will struggle to raise the deposits it needs, Sean Egan, founding principal of Egan-Jones Ratings said.
The company also has to figure out what to do with its remaining businesses, including its aircraft and railcar leasing operations. CIT is likely to have trouble funding them even when it gets out of bankruptcy.
CIT's efforts in recent years to find funding partners or to sell these business have not worked, and may not work in the future.
CONFIDENCE
While CIT has isolated its better businesses from bankruptcy, there is still a risk that customers will run to more stable rivals, leaving the lender with a reduced business once it exits bankruptcy.
Many clients of CIT's roughly US$42 billion factoring business, among its better-performing units, remain concerned about the lender's longer-term ability to provide financing, analysts said.
"It's a question of whether or not the bankruptcy restores customers' confidence -- and that's very questionable," said Michael Stanley, a managing director at competing factoring company Rosenthal & Rosenthal, noting that his company is adding clients from CIT.
One thing helping CIT now, though, is the lack of alternatives for many borrowers, as banks tighten their belts and scale down their loan books.
CIT's other struggle will be to regain a credit rating that will allow it to issue debt at reasonable rates to finance other lending businesses, such as railcar leasing. CIT Group is unlikely to emerge from bankruptcy with an investment-grade credit rating, which is usually a necessity for a financial firm.
Regaining investment-grade ratings could take some time, said Scott Peltz, managing director of restructuring at consulting firm RSM McGladrey.
"They need to have a capital structure that allows for a profitable business going forward," Peltz said.
CIT tried to sell some of its lending businesses including its railcar leasing unit this year and last year but without success. If prices were low enough, though, some buyers may grow interested now.
Large regional banks such as U.S. Bancorp and PNC Financial Services, or other companies with experience in leasing and commercial lending, like General Electric or Wells Fargo & Co, are possible candidates to acquire CIT units, according to analysts.
"The most likely outcome for CIT is to sell off what they can, run off what they can't, then clean up the tag-end pieces by selling to a GE-type of company," said Egan.
--- By Elinor Comlay, Reuters
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
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Nov 2, 2009
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MONDAY, NOVEMBER 2 , 2009, CANADIAN EDITION
TOP STORIES
• CIT files for bankruptcy, among biggest in U.S.
• Ford posts profit, sees solid profit in 2011
• Humana earnings jump, but sees lower 2010 profit
• Dean Foods profit rises on lower costs
• Oil explorer Denbury to buy Encore for US$3.2 bln
BEFORE THE BELL
Toronto’s main stock index could open positive on Monday on higher commodity prices, following a sharp fall in the previous session. Wall Street is poised for a rebound from Friday's steep losses, ahead of key data that is expected to show U.S. manufacturing grew for a third consecutive month. The banking sector will be in the spotlight after CIT Group, a U.S. lender to hundreds of thousands of small and medium-sized businesses, filed for bankruptcy on Sunday. European shares recovered from a four-week low to trade flat, while Asian stocks slipped to a one month low. Oil rose towards US$78 a barrel on bullish manufacturing data from China. Gold rose above US$1,050 an ounce, wiping out most of the previous week's losses, as dollar weakness made bullion cheaper for holders of other currencies.
COMPANIES REPORTING RESULTS
• Absolute Software Corp. (ABT). Expected to report Q1 loss of 4 cents a share, according to Thomson Reuters I/B/E/S
• Amerigo Resources Ltd. (ARG). Expected to breakeven in Q3 (U.S.)
• Cameco (CCJ). Expected to report Q3 earnings of 33 cents a share
• Davis Henderson Income Fund (DHF_u). Expected to report Q3 earnings of 40 cents a share
• Enbridge Income Fund (ENF_u). Expected to report Q3 earnings of 5 cents a share
• Kinross Gold (K). Expected to report Q3 earnings of 13 U.S. cents a share
• West Fraser Timber Co. (WFT). Expected to report Q3 loss of $1.09 a share
STOCKS TO WATCH THIS MORNING
• AEterna Zentaris Inc. (AEZ). The pharmaceutical company on Monday said the ovarian cancer drug, which is in its phase 2 study, met its primary efficacy endpoint of 5 or more responders in 41 evaluable patients.
• Atco Ltd. (ACOx). The company on Friday reported third-quarter adjusted EPS of 92 cents.
• Capital Power Corp. (CPX). The company on Friday reported third-quarter EPS of 64 cents, on revenue of $525 million.
• Castle Gold Corp. (CSG). The company’s president and CEO Thomas Atkins resigned on Friday and Milton Baehr would take the role on an interim basis and James Mark Plaxton would assume the role of interim president.
• Electrovaya Inc. (EFL). The battery systems maker on Monday entered into an agreement with Nippon Kouatsu Electric Co Ltd as it plans to enter the stationary power and smart grid energy storage market in Japan.
• Imperial Metals Corp. (III). The miner said on Friday shareholders of Selkirk Metals Corp (SLK) has approved merger with the company.
• Intermap Technologies Corp. (IMP). The 3D digital mapping company said on Monday it has licensed shaded terrain products which leverage the nationwide NEXTMap 3D mapping database to MapQuest, Inc.
• Magna (MGa). The auto parts maker wants Herbert Demel, the head of its Austrian car development and assembly plant, to become head of Opel, a German magazine said on Sunday, citing sources.
• McGraw-Hill Ryerson Ltd. (MHR). The company on Friday reported third-quarter net income of $3.65 a share, on revenue of $38.2 million.
• Paladin Energy Ltd. (PDN). The uranium producer on Monday appointed Garry Korte as new CFO, effective from Nov 16.
• Petrominerales Ltd. (PMG). The subsidiary of Petrobank Energy and Resources Ltd (PBG) said on Monday they have cased their Percheron-1 well as a potential oil well and test results are expected by the end of November.
• SFK Pulp Fund (SFK_u). The company on Friday reported a third-quarter loss hurt by weaker pricing and lower sales of its recycled bleached kraft pulp.
• SunOpta Inc. (SOY). The company, which processes natural and organic food products, said on Monday it has entered into a new credit facility to provide for asset-based and revolving credit facilities of up to US$80 and $20 million, respectively, subject to borrowing base availability.
CORPORATE EVENTS
10:00 Cameco (CCJ). Q3 earnings conference call
10:00 SFK Pulp Fund (SFK_u). Q3 earnings conference call
17:00 Absolute Software Corp. (ABT). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• Canyon Services Group (FRC) price target raised to $3 from $2.75; rating outperform at Raymond James
• Cogeco Cable (CCA) price target raised to $35 from $40; rating cut to sector perform from outperform at National Bank Financial
• Heroux-Devtek (HRX) price target cut to $6 from $6.50; rating outperform at Raymond James
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
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INSIGHT
U.S. investors alarmed about tax assets
U.S. investors are becoming increasingly alarmed about a new wave of writedowns that may be looming in an obscure corner of banks' balance sheets.
At least two banks in recent weeks have written down assets which essentially represent cash flow expected from future tax benefits.
Banks must reduce the value of these, known as "deferred tax assets," if they are unsure that they will generate enough taxable income in the future to realize the benefits.
When a bank or other company posts a big loss, the result is a theoretical reduction in their future tax bill, which they can record as an asset on their books. After multiple quarters of losses, many banks have big deferred tax assets.
The issue is likely to come up soon as banks prepare their fourth-quarter financial statements, and auditors pressure them to come clean on valuations after multiple quarters of losses.
Several investors that spoke to Reuters said that concerns about deferred tax assets have weighed on bank stocks in recent sessions. Bank stocks fell about 9 percent this week, compared with a 4 percent decline in the broader market.
"It could become an issue as bank profitability moves further out into the future, and we rack up more and more losses for now," said James Ellman, president of hedge fund Seacliff Capital.
"The consensus was banks would come back to profitability fast, but that seems less likely now," Ellman added.
Writedowns can have a substantial impact on a company's net worth, hurting an industry that globally has recorded more than US$1 trillion of losses since the credit crunch began.
Accounting expert Robert Willens estimates that Citigroup could have to take a US$10 billion writedown on the value of its US$38 billion deferred tax asset in the fourth-quarter, or about 7 percent of the value of the company's equity on its books.
Other analysts are not so sure that the bank will have to write down that much, and the bank said it did not know where Willens' figures came from.
But the possibility of such a big hit spooked the market, and Citigroup's shares fell 5.1 percent to US$4.09 on Friday.
TRICKY RULES
The rules for writing these assets down are myriad and complicated and depend on the subjective assessments of auditors and management. Banks can partially adjust the value of their deferred tax assets without writing them off entirely.
In a conference call organized by Morgan Stanley, accounting expert Tony Catanach said that banks could be pressed to write down their deferred tax assets if they have recorded losses for the past several years, and are likely to in the future.
A write down may also be in order if there are questions about whether a bank is likely to remain a going concern, or if the bank lost a major customer.
Banks can follow strategies to retain tax assets, such as selling assets that can generate taxable income. Catanach said Citigroup's plan to keep its deferred tax assets seems reasonable.
"It sounds doable, it really sounds doable," he said.
Concerns about deferred tax assets first cropped up last week, when Synovus Financial Corp and the South Financial Group took big charges.
Synovus took a US$149 million charge linked to its deferred tax assets, about 5 percent of its net worth as a company, while the South Financial Group took a US$203 million charge that wiped out more than 10 percent of its equity value.
--- By Dan Wilchins, Reuters
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
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(Please note Canadian quotes are delayed 15 min)
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