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| Market News: News Archive : Morning News Call Week ending |
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Nov 27, 2009
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THURSDAY, NOVEMBER 26, 2009, CANADIAN EDITION
TOP STORIES
• BHP denies Rio backsliding on iron ore tie-up
• Magna seeks 400 mln euros as Porsche drops deal - report
• Dubai debt worry stirs cautious investors
• Sony says 3D TVs to account for half of shipment
BEFORE THE BELL
Toronto's main stock index may open lower on Thursday as the resource-heavy index could be hurt by retreating gold and oil prices. Trading is expected to be thin as investors began closing up their positions on Wednesday, a day ahead of U.S. Thanksgiving holiday. Debt problems in Dubai weighed on financial and auto stocks in Europe, dragging the index down. Asian stocks also fell with Nikkei average closing at a four-month low, as exporters were pressured from strengthening yen. Gold eased about half a percent after touching a new record high of US$1,194 an ounce earlier and oil fell almost a percent to trade at about US$77.33 a barrel.
COMPANIES REPORTING RESULTS
• MOSAID Technologies (MSD). Expected to report Q2 earnings of 59 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Heritage Oil (HOC). The British oil explorer on Thursday said it commenced drilling at the Miran West-2 appraisal well in the Kurdistan region of Iraq.
• Magna International (MGa). The auto parts maker wants at least 400 million euros in compensation from sports car maker Porsche for cancelling a contract, a newspaper reported on Thursday.
• Onex Corp. (OCX). The private-equity firm said on Wednesday it had sold another part of its interest in Emergency Medical Services Corp in a secondary offering, for proceeds of about US$151 million.
• Redknee Solutions Inc. (RKN). The company said on Wednesday it expects full year revenue of $53.3 million.
• Sensio Technologies Inc. (SIO). The company on Wednesday entered into an agreement with Clarus Securities, which would purchase and sell $2.7 million common shares at a purchase price of $2.60 each. The company intends to use the net proceeds of the offering for sales and marketing, working capital and for general corporate purposes.
• Stonefire Energy Corp. (SFEa). The company on Wednesday reported third-quarter FFO of 8 cents per basic share and said its production average rose 33 percent to 1,247 boe per day, during the quarter.
• WesternZagros Resources Ltd. (WZR). The company on Thursday said it appointed Greg Stevenson as the CFO of the firm, effective from December 1.
08:30 March Networks Corp. (MN). Q2 earnings conference call
17:00 MOSAID Technologies Inc. (MSD). Q2 earnings conference call
ANALYST RECOMMENDATIONS
• Corridor Resources (CDH) price target raised to $5 from $4; rating raised to outperform from sector perform at RBC
• Fairborne Energy (FEL) price target raised to $6 from $5.75; rating outperform at Raymond James
• Mullen Group (MTL) coverage started with sector perform with price target of $17 at RBC
EXDIVIDEND
• AG Growth International Inc. (AFN). Amount $0.17
• Alaris Royalty Corp. (AD). Amount $0.07
• Amica Mature Lifestyles Inc. (ACC). Amount $0.06
• Groupe Aeroplan Inc. (AER). Amount $0.125
• Inmet Mining Corp. (IMN). Amount $0.10
• Killam Properties Inc. (KMP). Amount $0.0467
• Leon's Furniture Ltd. (LNF). Amount $0.20
• Prime Dividend Corp. (PDV). Amount $0.0625
• Rocky Mountain Dealerships Inc. (RME). Amount $0.045
• Sentry Select Primary Metals Corp. (PME). Amount $0.05
• Superior Plus Corp. (SPB). Amount $0.135
• Timbercreek Mortgage Investment Corp. (TMC). Amount $0.068
Note: All values in Canadian currency, unless otherwise statedCORPORATE EVENTS
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INSIGHT
COLUMN - Stop the Dubai World, I want to get off
At long last, Dubai has admitted what has been obvious to everyone else for months: it can't pay its debts.
This painful admission of reality, the signal to Dubai World's creditors that they won't see any of their money until at least next May, pulls the magic carpet out from under companies investors had thought would not default.
The straw that broke the Dubai camel's back is a US$3.5 billion sukuk bond. It had been due to be repaid on December 14. It won't be.
The government's argument will be scant comfort to bondholders. The plan is to restructure the emirate's flagship firm and its sprawling portfolio, which includes plum assets like ports operator DP World, as well as a few dogs like the bizarre Palm developments built in the sea off the Dubai coast.
The task of unpicking this web falls to Deloitte partner Aidan Birkett. Sheikh Mohammed bin Rashid al Maktoum, Dubai's ruler, may find himself making up the rules as Birkett goes along, since nothing as remotely embarrassing has been seen in Dubai before.
He will have his work cut out, and the indication that he can do this by next May looks like wishful thinking. Dubai World's debts total US$59 billion, including the borrowings of its Palm-owning subsidiary, Nakheel.
Dubai's own restructuring is only just beginning. Some estimates put the emirate's total external debts at almost US$80 billion, money spent to finance its extravagant attempt to build a financial metropolis in the Gulf desert.
Dubai was already struggling to find external sources of new finance. Wednesday's shock news will effectively close the markets, leaving it dependent on its petrodollar-rich neighbour Abu Dhabi. Abu Dhabi has already stumped up US$10 billion. Only hours earlier on Wednesday, two of its banks had subscibed US$5 billion for new bonds. Presumably, they did so in the knowledge of what was about to happen.
Investors are finding out the hard way about the risks of buying into a city state built on shifting sand that is not underpinned by oil. Dubai's lot now rests entirely on the firmer foundations of its neighbours.
--- Alexander Smith, a Reuters columnist. The opinions expressed are his own
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 26, 2009
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THURSDAY, NOVEMBER 26, 2009, CANADIAN EDITION
TOP STORIES
• BHP denies Rio backsliding on iron ore tie-up
• Magna seeks 400 mln euros as Porsche drops deal - report
• Dubai debt worry stirs cautious investors
• Sony says 3D TVs to account for half of shipment
BEFORE THE BELL
Toronto's main stock index may open lower on Thursday as the resource-heavy index could be hurt by retreating gold and oil prices. Trading is expected to be thin as investors began closing up their positions on Wednesday, a day ahead of U.S. Thanksgiving holiday. Debt problems in Dubai weighed on financial and auto stocks in Europe, dragging the index down. Asian stocks also fell with Nikkei average closing at a four-month low, as exporters were pressured from strengthening yen. Gold eased about half a percent after touching a new record high of US$1,194 an ounce earlier and oil fell almost a percent to trade at about US$77.33 a barrel.
COMPANIES REPORTING RESULTS
• MOSAID Technologies (MSD). Expected to report Q2 earnings of 59 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Heritage Oil (HOC). The British oil explorer on Thursday said it commenced drilling at the Miran West-2 appraisal well in the Kurdistan region of Iraq.
• Magna International (MGa). The auto parts maker wants at least 400 million euros in compensation from sports car maker Porsche for cancelling a contract, a newspaper reported on Thursday.
• Onex Corp. (OCX). The private-equity firm said on Wednesday it had sold another part of its interest in Emergency Medical Services Corp in a secondary offering, for proceeds of about US$151 million.
• Redknee Solutions Inc. (RKN). The company said on Wednesday it expects full year revenue of $53.3 million.
• Sensio Technologies Inc. (SIO). The company on Wednesday entered into an agreement with Clarus Securities, which would purchase and sell $2.7 million common shares at a purchase price of $2.60 each. The company intends to use the net proceeds of the offering for sales and marketing, working capital and for general corporate purposes.
• Stonefire Energy Corp. (SFEa). The company on Wednesday reported third-quarter FFO of 8 cents per basic share and said its production average rose 33 percent to 1,247 boe per day, during the quarter.
• WesternZagros Resources Ltd. (WZR). The company on Thursday said it appointed Greg Stevenson as the CFO of the firm, effective from December 1.
08:30 March Networks Corp. (MN). Q2 earnings conference call
17:00 MOSAID Technologies Inc. (MSD). Q2 earnings conference call
ANALYST RECOMMENDATIONS
• Corridor Resources (CDH) price target raised to $5 from $4; rating raised to outperform from sector perform at RBC
• Fairborne Energy (FEL) price target raised to $6 from $5.75; rating outperform at Raymond James
• Mullen Group (MTL) coverage started with sector perform with price target of $17 at RBC
EXDIVIDEND
• AG Growth International Inc. (AFN). Amount $0.17
• Alaris Royalty Corp. (AD). Amount $0.07
• Amica Mature Lifestyles Inc. (ACC). Amount $0.06
• Groupe Aeroplan Inc. (AER). Amount $0.125
• Inmet Mining Corp. (IMN). Amount $0.10
• Killam Properties Inc. (KMP). Amount $0.0467
• Leon's Furniture Ltd. (LNF). Amount $0.20
• Prime Dividend Corp. (PDV). Amount $0.0625
• Rocky Mountain Dealerships Inc. (RME). Amount $0.045
• Sentry Select Primary Metals Corp. (PME). Amount $0.05
• Superior Plus Corp. (SPB). Amount $0.135
• Timbercreek Mortgage Investment Corp. (TMC). Amount $0.068
Note: All values in Canadian currency, unless otherwise statedCORPORATE EVENTS
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INSIGHT
COLUMN - Stop the Dubai World, I want to get off
At long last, Dubai has admitted what has been obvious to everyone else for months: it can't pay its debts.
This painful admission of reality, the signal to Dubai World's creditors that they won't see any of their money until at least next May, pulls the magic carpet out from under companies investors had thought would not default.
The straw that broke the Dubai camel's back is a US$3.5 billion sukuk bond. It had been due to be repaid on December 14. It won't be.
The government's argument will be scant comfort to bondholders. The plan is to restructure the emirate's flagship firm and its sprawling portfolio, which includes plum assets like ports operator DP World, as well as a few dogs like the bizarre Palm developments built in the sea off the Dubai coast.
The task of unpicking this web falls to Deloitte partner Aidan Birkett. Sheikh Mohammed bin Rashid al Maktoum, Dubai's ruler, may find himself making up the rules as Birkett goes along, since nothing as remotely embarrassing has been seen in Dubai before.
He will have his work cut out, and the indication that he can do this by next May looks like wishful thinking. Dubai World's debts total US$59 billion, including the borrowings of its Palm-owning subsidiary, Nakheel.
Dubai's own restructuring is only just beginning. Some estimates put the emirate's total external debts at almost US$80 billion, money spent to finance its extravagant attempt to build a financial metropolis in the Gulf desert.
Dubai was already struggling to find external sources of new finance. Wednesday's shock news will effectively close the markets, leaving it dependent on its petrodollar-rich neighbour Abu Dhabi. Abu Dhabi has already stumped up US$10 billion. Only hours earlier on Wednesday, two of its banks had subscibed US$5 billion for new bonds. Presumably, they did so in the knowledge of what was about to happen.
Investors are finding out the hard way about the risks of buying into a city state built on shifting sand that is not underpinned by oil. Dubai's lot now rests entirely on the firmer foundations of its neighbours.
--- Alexander Smith, a Reuters columnist. The opinions expressed are his own
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 25, 2009
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WEDNESDAY, NOVEMBER 25, 2009, CANADIAN EDITION
TOP STORIES
• Opel denies report GM plans 5,300 German job cuts
• Banks face US$7 trillion debt maturities by end-2012 - report
• ING investors set to approve breakup, rights issue
• Tiffany profit higher than expected; outlook raised
• Russia Central bank to add Canadian dollar to reserves
BEFORE THE BELL
Toronto's main stock index may open higher on Wednesday as the resource-heavy market may benefit from record gold prices and firm U.S. crude. Gold hit another record high boosted by a report that India may consider buying more bullion from the International Monetary Fund, and the weaker dollar. The Canadian dollar rose to a one-week high versus the greenback after Russia's Central Bank said it is preparing to invest some of its foreign exchange reserves in Canadian dollars. Wall Street is also set to open higher ahead of data that could offer insight into how firmly a recovery is taking hold. European and Asian markets rose as a revised U.S. growth forecast for 2010 by the Federal Reserve boosted optimism about an economic recovery, with commodity stocks among the top gainers. Oil rose slightly, above US$76 a barrel while gold was trading above US$1,181 an ounce.
COMPANIES REPORTING RESULTS
• March Networks Corp. (MN). Expected to report Q2 loss of 2 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Aecon Group Inc. (ARE). The construction company has reached an agreement with the municipality of Quito over the collection of fees from a new airport it is building in Ecuador's capital city, the company said on Tuesday.
• Coalcorp Mining Inc. (CCJ). The company and Glencore International A.G. agreed to settle to any and all disputes with respect to these two coal contracts, without any admission of liability.
• D-Box Technologies Inc. (DBOa). The company on Tuesday reported second-quarter loss of 2 cents, on revenue of $908,795.
• Fairborne Energy Trust (FEL). The company said it signed a letter of intent with the Government of Alberta that awards the Alberta Carbon Trunk Line project $495 million in funding from the Carbon Capture and Storage program, in addition to $63 million from the Federal government.
• Gerdau Ameristeel Corp. (GNA). The company said on Tuesday its unit would borrow $610 million from Gerdau Holdings Inc, a unit of Gerdau SA, on arm's length terms to prepay debt.
• NAL Oil & Gas Trust (NAE_u). The company said on Tuesday it would raise $100 million by offering convertible debentures on a bought-deal basis and use part of the proceeds to repay debt.
• Nortel Networks (NRTLQ). Ericsson, the world's top mobile network gear maker, agreed to buy part of the North American GSM business of the bankrupt company to help boost its presence in the key U.S. market.
• Primaris Retail Real Estate Investment Trust (PMZ_u). The company on Tuesday said it would purchase two retail properties, Sunridge Mall and Woodgrove Centre from Ivanhoe Cambridge for $357.7 million.
• QLT Inc. (QLT). The company said it will pay US$20 million to Massachusetts General Hospital in a royalty settlement.
• Richmont Mines Inc. (RIC). The company said Oxbridge bank and Trust SCC agreed to acquire 2.2 million common shares of Richmont at a price of $3.50 per share.
• Teck Resources (TCKb). The company, which has spent the past year digging itself out from a mountain of debt taken on to purchase Fording Canadian Coal Trust, expects to have debt levels back within target ranges soon, it's CEO Don Lindsay said on Tuesday.
• Transglobe Energy Corp. (TGL). The company set its 2010 capital budget at $46.1 million on Wednesday.
12:00 EnCana Corp. (ECA). Shareholders meeting
ANALYST RECOMMENDATIONS
• Aecon Group Inc. (ARE) price target raised to $16.50 from $16; rating outperform at Blackmont
• Canfor Pulp Income Fund (CFX_u) rating cut to market perform from outperform at Raymond James
• Dollarama Inc. (DOL) coverage started with outperform rating; price target of $23 at Raymond James
• Nuloch Resources (NLRa) coverage started with buy rating; price target of $1.45 at Genuity
EXDIVIDEND
• Barrick Gold (ABX). Amount US$0.20
• Finning International Inc. (FTT). Amount $0.11
Note: All values in Canadian currency, unless otherwise statedCORPORATE EVENTS
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INSIGHT
COLUMN - Fed audit push gives impetus to gold rally:
Auditing the Federal Reserve may or may not be a good idea, but one thing seems pretty sure: just discussing it seriously will tend to drive the price of gold higher.
The U.S. House of Representatives Financial Services Committee last week voted to approve an amendment that would bring about an audit of the Fed, its monetary policy and lending programs, since when gold has gone its merry way higher, hitting an all-time high of US$1,174 per ounce on Monday.
The amendment, a provision to a broader financial services reform bill that is still under consideration, was co-sponsored by Republican Representative Ron Paul, author of the book "End the Fed," and the man least likely to be found chairing a panel at Jackson Hole or Davos.
The Fed, understandably, hates the idea, saying it will compromise its hard-won independence, the administration loathes it, and really it will almost certainly never become effective in a recognizable form.
Even so, and even interpreting the vote as a populist cry of the heart against Washington and Wall Street, the fact that it has gotten this far will cause some serious people without an ideological dog in the Federal Reserve fight to buy a bit of gold, which is really a sort of anti-currency, as a hedge against increased political influence in the process of making monetary policy.
Undoubtedly many people who think keeping the Fed on a short leash attached to an elected body is a good thing also think the Federal Reserve should have been much less aggressive in creating money and risking inflation. History shows that the risks are actually skewed the other way: tighter political control of central banks more often means more inflation and a higher risk of a debased currency.
In other words, the people who support this because they think the Fed shouldn't debase the currency are probably raising the risk that the currency is debased. This just adds to the bid for gold, which is already being supported by concerns that current monetary policy and deficits put inflation and the dollar at risk. These risks are not high, they are tiny, but they are disturbingly more worth discussing now than two years ago.
Thus we are in the bizarre situation of watching the price of gold being driven higher both by people who don't trust the Federal Reserve and people who don't trust the people who don't trust the Federal Reserve.
HOW HIGH IS HIGH?
It has to be said; the very idea of buying gold, which adds nothing to the creation of wealth or innovation and is only conceivably a hedge against bad actions of other people, is dispiriting. If you buy gold you cannot tell yourself that you are doing well by doing good, as perhaps you can with a biotech or fertilizer company. You are simply limiting the damage that can be done to you, and then only in very particular circumstances. What's more many of the people who advocate it as an asset show a disconcerting monomania; the type who if they sit next to you on a commuter train makes you consider pretending the next stop is yours.
Gold's real virtue is negative. It is not used for much industrially but there is limited supply and real physical constraint on producing more. Unlike, say dollars, you can't simply flip a switch and make more.
Dylan Grice, strategist at Societe Generale in London (who, by the way, I'd happily sit next to on a train) points out that the value of the gold held by the Fed only equals 15 percent of the U.S. monetary base and that the price would have to rise to US$6,300 per ounce to make the currency fully backed by gold reserves.
Of course, gold is not just going up against the dollar, it is going up against an array of major and minor currencies, indicating that the worries are not simply about the Federal Reserve or U.S. policy but about the interplay between fiat currencies and policy around the world. A tremendous amount of debt has been created and socialized and a lot of money has been created.
Which brings us back to the Federal Reserve and the politics of monetary policy, or as perhaps we will begin to see it the politics of politics. The betting has to be that the Federal Reserve emerges with its independence intact, if not its power as a regulator. From a markets point of view the Senate confirmation hearings for Ben Bernanke's second four-year term as chairman kick off next week and offer the next opportunity for populist fireworks.
I am looking forward to having fewer conversations about gold, but I am not expecting it.
--- James Saft, a Reuters columnist. The opinions expressed are his own
(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund)
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 24, 2009
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TUESDAY, NOVEMBER 24, 2009, CANADIAN EDITION
TOP STORIES
• BMO profit up 16 percent as loan losses ease
• Citigroup to sell BMO a Diners Club business
• Lloyds prices record US$22 bln issue at big discount
• Porsche aims to end Magna's Boxster contract
• GM pays back Germany, signals fewer job cuts
BEFORE THE BELL
Toronto's main stock index may open higher on Tuesday as Bank Of Montreal, the fourth-biggest Canadian bank, posted a 16 percent jump in its quarterly profit. Wall Street is also set for a slightly higher open, ahead of a raft of economic data. The second release of GDP for the third-quarter is expected to be revised down to 2.9 percent from the first release, which showed an expansion of 3.5 percent. November consumer confidence is likely to remain unchanged from the previous month's 47.7. Traders will also await the FOMC minutes, which is due later in the day. European shares turned positive paring some earlier losses as commodity shares recovered after crude prices cut some of its losses and prices of some base metals bounced back. Asian equities were down as investors took light profits on recent rallies. Oil slipped slightly, held down by a firmer dollar, to trade around US$77.33 a barrel, while gold rose above US$1170 an ounce.
COMPANIES REPORTING RESULTS
• Alimentation Couche-Tard Inc. (ATDa)(ATDb). Expected to report Q2 earnings of 33 U.S. cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• AEterna Zentaris Inc. (AEZ). The global biopharmaceutical company on Monday said its targeted cytotoxic peptide conjugate, AEZS-108, met its predefined primary efficacy endpoint in phase 2 study in a preliminary evaluation.
• Altius Minerals Corp. (ALS). The company said on Monday Newfoundland and Labrador Refining Corp, in which it owns 37 percent, is to emerge out of bankruptcy as NLRC received a court approval for its creditor proposal.
• Bank of Montreal (BMO). The bank said on Tuesday that fourth-quarter profit rose 16 percent as it set aside less money for bad loans. Separately, Citigroup Inc said on Tuesday that it would sell its Diners Club North America credit card business to BMO Financial Group, as part of its strategy to shed noncore or unwanted assets. The agreement gives BMO exclusive rights to issue Diners Club cards in the U.S. and Canada.
• Cathay Forest Products Corp. (CFZ). The company said on Monday it would raise about $15.3 million in bought deal financing to fund the Canadian forestry company's expansion activities in Russia.
• Magna International (MGa). The Canadian auto parts maker said on Monday that it has won a contract to make the third generation of frames for General Motors Co's full-size light-duty pickups and sport utility vehicles. The frames will be built at plants owned by Magna's Cosma unit in St. Thomas, Ontario, and Saltillo, Mexico. Separately, Germany's Porsche aims to cancel a deal that would have the Canada's Magna build the Porsche Boxster model series under contract, a source familiar with the situation told Reuters on Tuesday.
• Manulife Financial Corp. (MFC). The life insurer said it agreed to buy a 49 percent stake in ABN AMRO TEDA Fund Management Co in China for US$156 million in cash, following up on pledges to hit the acquisition trail.
• MKS Inc. (MKX). The software and services provider on Tuesday reported second-quarter EPS of 16 U.S. cents, on revenue of US$14.7 million, which fell 10 percent. Separately, MKS said its COO, Michael Harris has been appointed as the company's CEO, replacing Philip C. Deck, who took charge as executive chairman.
• RioCan Real Estate Investment Trust (REI_u). The company said on Monday it plans to sell about 5.5 million units at $18.35 a piece for gross proceeds of $100.9 million.
• Sangoma Technologies Corp. (STC). The company on Monday reported first-quarter EPS of 2 cents, on revenue of $3.12 million.
• Western Coal Corp. (WTN). The company said on Tuesday it was aware of a proposed class action lawsuit that alleges inaccurate disclosure in the group's second-quarter 2007 financial report.
14:00 Bank Of Montreal (BMO). Q4 earnings conference call
15:30 Alimentation Couche-Tard Inc. (ATDa)(ATDb). Q2 earnings conference call
16:00 MKS Inc. (MKX). Q2 earnings conference call
ANALYST RECOMMENDATIONS
• Canadian Western Bank (CWB) price target raised to $27 from $23; rating buy at Genuity
• Candente Resource (DNT) rating raised to outperform from market perform at Raymond James
• Cinch Energy Corp. (CNH) price target raised raised to $2 from $1.40; keeps market perform rating at Raymond James
• Laurentian Bank of Canada (LB) price target raised to $50 from $46; rating buy at Genuity
• Stonefire Energy (SFEa) rating cut to neutral at Macquarie
EXDIVIDEND
• Linamar Corp. (LNR). Amount $0.03
Note: All values in Canadian currency, unless otherwise statedCORPORATE EVENTS
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INSIGHT
Murdoch courts trouble if he blocks Google on news
Rupert Murdoch has spent months complaining that Google is ruining the newspaper business, and now he wants to do something about it.
But, his proposal is a gamble, and one that could hurt News Corp instead of helping it.
Murdoch is considering removing News Corp's news from Google's Web search results, and is talking to Microsoft Corp about listing the stories with its Bing search engine instead. Microsoft would pay for the privilege, sources have told Reuters, but it was not clear how much.
If Murdoch pulled this off, he will likely be followed by other newspaper publishers looking for ways to make money when all the old ones are waning in the digital age.
Newspaper owners resent Google because the Internet company makes money from the advertisements that it displays next to news search results.
News Corp's proposal is a way to get a cut of the action. Risks include destroying ad revenue most news websites depend on if traffic goes down because Google users can't find the stories. It's also not clear how regulators would feel about such a move.
"You're immediately cutting off audience," said Jeff Jarvis, media blogger and author of the book "What Would Google Do?"
Google brings as much as 14 percent of incoming traffic to News Corp's U.S. news websites, including the New York Post and Fox News, Bernstein analyst Jeffrey Lindsay estimated.
If News Corp blocked access to Google, he wrote in a note to investors, it would hurt only News Corp.
Many people find their news on Google, which has 65 percent of the U.S. search market according to comScore. Newspaper publishers whose websites depend on advertising sales want lots of visitors, and need Google to supply them.
Google provides news organizations about 100,000 clicks a minute, said company spokesman Gabriel Stricker. "Each of those visits offers a business opportunity for the publishers to show ads, win loyal readers and sell subscriptions," he said.
Making Microsoft's Bing search engine the only way to look for news would slice away visitors and lower the amount of money news websites could charge advertisers.
There is little chance people will abandon Google, which has become such a giant that its name is also a verb.
"Consumers do not expect search engines to be exclusive," Forrester analyst Shar VanBoskirk wrote. "If they can't find something through search, it may as well not exist."
WEB SUICIDE?
Microsoft declined to comment, but in theory would like partnering with News Corp to increase Bing's share of the lucrative search advertising market at Google's expense. Microsoft had a 10 percent share of the U.S. search market in September, according to comScore.
Some shareholders worry Microsoft might pay more money to News Corp and publishers than the privilege is worth.
"I don't want Microsoft to throw a lot of money towards News Corp, and I don't know why News Corp would do this to themselves," said Kim Caughey, senior analyst at investment fund Fort Pitt Capital Group, which holds Microsoft shares.
There could also well be U.S. government scrutiny over an exclusive deal between News Corp and Microsoft, or any sort of joint action by news publishers, at the expense of other Internet companies or consumers.
News Corp declined to comment, and sources close to the discussions emphasized talks so far are ideas, nothing more. Nine of the largest U.S. newspaper publishers also refused to comment.
Other U.S. publishers, if they joined in, would feel more pain because they are far smaller than News Corp and depend on ad sales more than anything else, analysts said.
"It's nothing short of suicidal," Jarvis said.
Risking suicide might not seem so crazy to publishers. Many people say they face creeping death as readers drop print subscriptions and ad revenue falls.
As many deal with looming piles of debt, they must consider some radical moves after laying off thousands of workers.
"They cannot survive at the scale they are accustomed to online unless they can find a new economic model," said Tom Rosenstiel, head of the Project for Excellence in Journalism.
"If it works, Google might say, 'wait a second, it's very important for us to maintain our market share of search'," he said. "Google has an interest in the news industry surviving."
CARTEL
Betting on that is risky.
"The only way such a strategy would hurt Google in our view is if all of the major newspapers and the major news sources including the AP and Reuters were to agree to a watertight cartel," Lindsay wrote in his Bernstein note.
Jarvis agreed. "It would be a mosquito bite on the elephant's butt," he said.
Also, consumers could complain about media companies choking off access to news, something that would spark ire from Congress to the White House, analysts said.
It could carry the whiff of collusion among news outlets to fix prices, something publishers fear being accused of.
"None of this sounds to me to be pro-competitive or efficient," said David Balto of the Center for American Progress, a former Federal Trade Commission policy director.
One possible outcome of News Corp threatening to drop Google could be detente: a common way for publishers to get paid for news that search engines from Google to Yahoo make available to readers, said Outsell analyst Ken Doctor.
"I don't think the endgame for anybody here is to expect that Google's going to get turned off... although you never know," he said.
--- Robert MacMillan, 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 23, 2009
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MONDAY, NOVEMBER 23, 2009, CANADIAN EDITION
TOP STORIES
• Kraft weighs higher Cadbury bid as rivals circle
• Terra board rejects latest CF bid
• TD Bank hit with lawsuit in Florida Ponzi case
• Ciena buys Nortel ops for US$769 mln - report
• Miner First Quantum buys Kiwara for US$260 mln
BEFORE THE BELL
Toronto's main stock index could open higher on Monday as the resource-heavy market may gain momentum following stronger oil and gold prices. On the macro front, investors would follow September retail sales that is expected at 0.5 percent, according to a Reuters poll. Wall Street, which is also set for a higher open, may influence the trade in Canada, on a day when not many economic or corporate events are scheduled. Markets will be closely watching for more development on the proposed acquisition of Cadbury, as the battle to acquire the British confectioner heats up. European markets were up, snapping a four-day losing streak, underpinned by commodity stocks. Asian markets were mostly up, though volumes were light with Japan out on holiday. Weak dollar drove gold to a new record high at US$1,167.45 an ounce and oil rose more than a percent to trade above US$78 a barrel.
STOCKS TO WATCH THIS MORNING
• Alamos Gold Inc. (AGI). The company on Monday said it is extending the due diligence period for its acquisition of the Agi Dagi and Kirazli gold projects, until the close of business on December 7, 2009.
• Brookfield Renewable Power Inc. (BRC_u). The company entered into a 20 year power sales contract with Ontario Power Authority, under which it will sell all output from 16 of the company's Ontario hydro facilities.
• Catalyst Paper Corp. (CTL). The company said on Friday it has settled the arbitration proceeding relating to its 20-year Energy Services Agreement with Island Cogeneration No. 2. Inc. The company said the settlement terminated the Energy Services Agreement and all of Catalyst's related obligations including its contingent liability.
• Cossette Inc. (KOS). The homegrown ad firm urged shareholders late on Friday to accept a buyout offer from Mill Road Capital, saying a higher proposal from another firm did not yet constitute an official bid.
• First Quantum Minerals Ltd. (FM). The company has agreed to buy Kiwara Plc in a cash and share deal worth US$260 million to expand its copper mining operations in Zambia, the firms said on Monday.
• Freewest Resources Canada Inc. (FWR). The company on Monday said Cliffs Natural Resources Inc will acquire Freewest for a total estimated value of $150.6 million, or $0.70 per share.
• Heritage Oil (HOC). The British oil explorer is in talks to sell its Ugandan assets to Italian oil group Eni SpA for between US$1.3-US1.5 billion, a person familiar with the matter said on Sunday.
• Moydow Mines International Inc. (MOY). The company said on Friday it completed partial sale of Ntotoroso Royalty for US$13 million to Franco-Nevada.
• Nortel Networks Corp. (NRTLQ). Ciena Corp will buy Nortel's optical networking and carrier ethernet business for $769 million after outbidding Nokia Siemens Networks in a three-day auction, sources told Reuters on Sunday.
• Toronto-Dominion Bank (TD). The bank was hit with a multimillion-dollar lawsuit on Friday calling it the "financial epicenter" of an alleged Ponzi scheme run by disgraced Florida lawyer Scott Rothstein.
ECONOMIC CALENDER
08:30 Retail sales for Sept: Prior 0.8% Expected 0.5%
08:30 Retail ex-autos for Sept: Prior 0.5% Expected 0.4%
ANALYST RECOMMENDATIONS
• Brookfield Asset Management (BAMa) rating raised to buy from hold at Genuity
• Eastern Platinum (ELR) price target raised to $1.25 from $1.18; rating buy at Canaccord Adams
• George Weston Ltd. (WN) price target cut to $74 from $75; rating outperform at RBC
EXDIVIDEND
• Calian Technologies Ltd. (CTY). Amount $1.17
• OPMEDIC Group Inc. (OMG). Amount $0.01
• Sun Life Financial Inc. (SLF). Amount US$0.3386
• Utility Corp. (UTCc). Amount $0.065
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Obama jobs forum to seek growth boost on the cheap
President Barack Obama's December jobs forum may be better at serving his political need to show the White House cares about sky-high U.S. unemployment, than discovering new ways to cheaply boost economic growth.
Obama said last week he was interested in measures to speed job creation without spending money and warned that running up more debt could risk a double-dip recession.
The White House has already stressed that the Dec. 3 jobs conference will not be about a second stimulus package.
Obama is under pressure to tackle the highest U.S. unemployment in a generation, which, at 10.2 percent, is dragging down his once lofty poll ratings and could hurt his fellow Democrats in congressional elections next year.
There is a long history of presidents hosting "economic summits" to show their concern about the economy, including Bill Clinton's in December 1992 -- before he had even taken office -- and George W. Bush's in August 2002.
But economists say that by appearing to rule out significant additional spending to lift the economy, Obama will limit what the forum can achieve, and he risks making it look like an exercise in public relations.
"You need more demand for goods and services in order to have people willing to hire people," said Chad Stone, chief economist at the Center on Budget and Policy Priorities, a liberal think-tank in Washington.
"I don't know how you do it without things that are really effective at stimulating demand growth," he said.
Obama signed a US$787 billion emergency stimulus bill in February that, among other things, extended unemployment benefits, aided cash-strapped state and local governments to help them avoid laying off workers, and spent money on infrastructure, education and healthcare.
TIPTOEING TOWARD MORE STIMULUS
Stone advocated extending jobless benefits again and continuing to help out the states.
This could be cast as an extension of aid already agreed under Obama's first spending package, rather than a new stimulus bill, although the money involved could add up to US$100 billion if all the expiring programs were renewed, Stone said.
Likewise, the largest U.S. labor federation, the AFL-CIO, recommends extending unemployment insurance and aid to states.
It also wants more money for food stamps, spending on schools and infrastructure, and diverting resources from a US$700 billion bank bailout fund to help small businesses get credit.
The jobs forum, which will gather business, labor and financial experts, will include six separate so-called breakout sessions on creating green jobs; boosting credit for small businesses; more infrastructure spending; U.S. exports; retraining workers; and a discussion about how to encourage businesses to hire.
Obama has already voiced openness to some of these suggestions. He told Fox News in an interview last Wednesday that he was aware some states need money to help them avoid firing public workers, and that a tax provision to encourage businesses to hire sooner rather than later may have merit.
The Economic Policy Institute, another liberal Washington think-tank, estimates a 15 percent new job tax credit could create 2.8 million jobs in 2010 at a cost of US$28 billion.
But critics of this approach worry that the government would inevitably wind up subsidizing some positions that would have been filled anyway, making it difficult to judge how many new jobs had actually been created.
This issue has already caused problems for the Obama administration, which is under fire for overstating the number of jobs saved or created by the first stimulus.
SUPPLY SIDE
Some favor a more aggressive supply-side approach.
"The President should focus and begin by doing no harm," said Glenn Hubbard, dean of the Columbia Business School in New York who was a top adviser to former President George W Bush.
"Proactively, support for training ... and a cut in the payroll tax and corporate tax are the ways to go," he said, arguing that there were ways to stimulate employment without hitting the long-run deficit.
The first Obama stimulus is being delivered against the backdrop of a record US$1.4 trillion budget deficit, and more debt-financed government spending may do more harm than good.
Investors could take fright at the threat of the government issuing a flood of Treasury bonds, driving long-term borrowing costs higher and hobbling economic growth. But demand for another fiscal jolt may be politically hard to resist.
"I think the first (stimulus package) was absolutely needed and that stopped the slide. But I do think we are going to need a little more to ensure that the recovery doesn't drag on," said John Irons, research and policy director at the EPI. "We need to make sure the recovery is a strong recovery."
Underlining the political cost of rising unemployment, a recent Quinnipiac University poll showed Obama's job approval rating dropping to 48 percent nationally, the first time it had dipped under 50 percent. His approval rating for his handling of the economy was even lower at 43 percent.
The forum will gather figures from business and labor to examine "all good ideas" to boost job creation, the White house says. Obama will then embark on a national White House to Main Street Tour to escape the Beltway bubble and share ideas.
To his critics, this will be pure political theater.
"Are there any free things to do? Wouldn't that be nice, and why have we not done them before?" said Alex Brill of the conservative American Enterprise Institute.
"I am not aware that there is anything that can be done (cheaply), so that leads me to conclude that this must be about politics," he said.
--- Alister Bull, Reuters
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(Please note Canadian quotes are delayed 15 min)
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