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| Market News: News Archive : Morning News Call Week ending |
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Feb 26, 2010
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FRIDAY, FEBRUARY 26, 2010, CANADIAN EDITION
TOP NEWS
• AIG posts Q4 loss of US$8.9 bln on charges, reserves
• GE talks to Santander over Garanti stake – reports
• Bridgewater Q4 EPS tops estimates, sees strong '10 rev
• Cascades warns of profit pressure after strong Q4
• FNX Mining Q4 profit beats estimates
BEFORE THE BELL
Toronto's main stock index may open flat on Friday as oil and gold remain little changed and investors wait for economic data. Current account deficit is expected at $8.50 billion, according to a Reuters poll. Wall Street is set for a slightly higher open as investors looked ahead to a raft of data, including economic growth, homes sales and manufacturing after a disappointing week so far for the economy. U.S. GDP for the quarter is expected to have risen by 5.7 percent and existing homes sales for January is seen at 5.50 million. European shares were higher and the continent's No. 2 telecom Telefonica posted full year profit in line with estimates. Asian stocks rose after data showed Japan's industrial output rose higher-than-expected in January. Oil held around US$78 a barrel after sliding more than 2 percent the day before, and gold slightly rose to trade around US$1109 an ounce.
COMPANIES REPORTING RESULTS
• Ainsworth Lumber Co. Ltd. (ANS). Expected to report Q4 loss 26 cents a share, according to Thomson Reuters I/B/E/S
• AltaGas Income Trust (ALA_u). Expected to report Q4 earnings 36 cents a share
• Red Back Mining Inc. (RBI). Expected to report Q4 earnings 17 U.S. cents a share
• Wajax Income Fund (WJX_u). Expected to report Q4 earnings 47 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Ainsworth Lumber Co Ltd. (ANS). The company's fourth-quarter loss narrowed 92 percent and said it continues to find ways to cut costs.
• Anvil Mining Ltd. (AVM). The company on Friday said it agreed to sell its majority interest in its Dikulushi copper-silver mine in the Democratic Republic of Congo to Australia's Mawson West Ltd for a 28 percent stake in the junior miner.
• BlackPearl Resources Inc. (PXX). The company's fourth-quarter loss narrowed by 95 percent and forecast 2010 oil and gas production averaging about 20 percent higher than 2009.
• Breakwater Resources Ltd. (BWR). The company on Thursday posted a fourth-quarter profit, helped by lower operating expenses.
• Bridgewater Systems Corp. (BWC). The company on Friday reported fourth-quarter earnings that beat analyst estimates and forecast strong 2010 revenue, driven by higher contribution from new products and license revenue from existing customers. The company also said its chief technology officer and founder Russ Freen will step down effective March 31.
• Cascades Inc. (CAS). The packaging and paper-products company’s fourth-quarter profit beat market estimates, as a drop in costs offset a fall in sales, but warned of its profitability being pressured in the short term.
• CCL Industries Inc. (CCLa) (CCLb). The label and package maker on Thursday posted an adjusted fourth-quarter profit that beat expectations, driven mainly by strong performance in its label and tube divisions, raised dividend, and said first-quarter outlook remained positive on improved demand.
• Compton Petroleum Corp. (CMT). The company said on Thursday proved reserves declined by 21 percent while reserve value declined by 31 percent from 2008.
• First Uranium Corp. (FIU). The gold and uranium producer said on Friday it was experiencing severe financial constraints and its board was continuing to review strategic alternatives.
• FNX Mining Co. Inc. (FNX). The nickel and copper miner on Friday posted a fourth-quarter profit that handily beat estimates, helped mainly by reduced costs and improved commodity prices.
• Gran Tierra Energy Inc. (GTE). The oil exploration and production company posted a fourth-quarter profit and a surge in its fund flow from operations, helped by higher production and unrealized gains on foreign exchange.
• Guardian Capital Group Ltd. (GCG). The company on Thursday reported a quarterly profit and said assets under management rose about 19 percent last year.
• Onex Corp. (OCX). The private-equity firm swung to a fourth-quarter profit and said it was well positioned to take advantage of investment opportunities.
• Storm Exploration Inc. (SEO). The company on Thursday reported a lower fourth-quarter profit and said firs-quarter production will be affected by the failure of a firetube in our refridge plant at parkland.
• Thompson Creek Metals Co Inc. (TCM). The pure molybdenum producer on Thursday reported better-than-expected fourth-quarter profit on a gain on an accounting change and a 19 percent fall in costs.
ECONOMIC CALENDAR
08:30 Current account-deficit for Q4 09: Prior -$13.12 bln Expected -$8.50 bln
CORPORATE EVENTS
08:30 Bridgewater Systems Corp. (BWC). Q4 earnings conference call
08:30 Thompson Creek Metals Co. Inc. (TCM). Q4 earnings conference call
10:00 Breakwater Resources Ltd. (BWR). Q4 earnings conference call
10:00 Cascades (CAS). Q4 earnings conference call
10:00 Compton Petroleum (CMZ). Q4 earnings conference call
10:00 Gran Tierra Energy Inc. (GTE). Q4 earnings conference call
10:00 North American Palladium (PAL). Q4 earnings conference call
11:00 AltaGas Income Trust (ALA-u). Q4 earnings conference call
11:00 CCL Industries Inc. (CCLa) (CCLa). Q4 earnings conference call
11:00 Red Back Mining Inc. (RBI). Q4 earnings conference call
11:00 Tesco (TESO). Q4 earnings conference call
13:00 Ainsworth Lumber Co. Ltd. (ANS). Q4 earnings conference call
14:30 Wajax Income Fund (WJX_u). Q4 earnings conference call
ANALYST RECOMMENDATION
• Bombardier (BBDb) rating cut to market perform from outperform at Raymond James
• Boralex Inc. (BLX) price target raised to $14 from $13.25; rating buy at Versant
• Cameco Corp. (CCO) price target cut to $34.90 from $36.85; rating outperform at Macquarie
• CIBC (CM) price target raised to $77 from $74; rating outperform at Macquarie
• First Uranium (FIU) price target raised to $2.30 from $1.50; rating market perform at Raymond James
• National Bank of Canada (NA) price target raised to $66 from $64.50; rating neutral at Macquarie
EXDIVIDEND
• Imperial Oil Ltd. (IMO). Amount $0.10
• PetroCorp Group Inc. (PCGh). Amount $0.11
• Russel Metals (RUS). Amount $0.25
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Fate of Obama healthcare up to Democrats
The fate of President Barack Obama's U.S. healthcare overhaul was in the hands of his own Democrats on Thursday after a summit in which Republicans demanded his plan be tossed out in favor of a smaller one.
Democrats and Republicans appeared to battle to a draw at a marathon seven-hour talkathon hosted by the White House.
Both sides defined several areas where they agree.
But neither was willing to forgo their overarching goals: Democrats want a sweeping bill that requires all Americans to buy insurance, and Republicans want a much smaller and more narrowly defined plan.
The stalemate leaves Democrats with a difficult decision to make.
They have a live option before them -- use a parliamentary tactic known as reconciliation to jam their plan through the U.S. Congress with a simple majority vote.
Obama did nothing to quell talk that this is the route Democrats will pursue, saying most Americans "think that a majority vote makes sense."
Using a muscle tactic on such a large piece of legislation carries political risks, however, as Democrats and Republicans position themselves for November congressional elections.
A Gallup poll found that Americans by 52 to 39 percent opposed Democrats using the procedure.
Both parties are keeping a wary eye on the elections, with Democrats eager for a victory to shore up their liberal base and Republicans reluctant to help them.
"If the bill is passed through reconciliation and it remains as unpopular with the public as it appears to be polling now, that's another huge talking point for the Republicans going into the fall elections," said Merle Black, a political science professor at Emory University in Atlanta.
Obama, who was judged the winner of a public debate with Republicans when he appeared at their retreat in Baltimore last month, may have been hoping for a similar victory to get Americans to take a fresh look at his proposals.
"I really don't think the summit will change the minds of any of the attendees, but its real effect will be if it changes public opinion in any real way," said Rick Weissenstein, an analyst at Concept Capital's Washington Research Group.
"So I think watching the polls after the summit will be important."
The Blair House healthcare summit, probably missed by many Americans since it took place during working hours, was a remarkable session with Obama showing a deep knowledge of the subject and a willingness to listen to the other side that was largely absent last year.
But an exchange with his Republican opponent from the 2008 campaign, Senator John McCain, showed a dismissive attitude.
McCain complained about some of the closed-door deals that had been contained in the Democratic legislation and expressed concern about the Obama administration's opposition to gaining U.S. access to cheaper generic prescription drugs from Canada.
"Let me just make this point, John, because we're not campaigning anymore," Obama told him. "The election's over."
"Well, I, I'm reminded of that every day," McCain said.
Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania, said the exchange could come back to haunt Obama.
"It could be problematic for the president," she said. "The McCain point is a point that people are sympathetic to, which is about re-importation of drugs, which doesn't seem to be asking anything unreasonable."
In the end, Obama gave the compromise effort a month to six weeks to play itself out to see if a deal can be reached.
He seemed willing to bet that Americans would not penalize Democrats at the ballot box in November by as much as Republicans hope.
"We have honest disagreements about the vision of the country and we'll go ahead and test those out over the next several months 'til November," he said.
--- Steve Holland, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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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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FRIDAY, FEBRUARY 26, 2010, CANADIAN EDITION
TOP NEWS
• AIG posts Q4 loss of US$8.9 bln on charges, reserves
• GE talks to Santander over Garanti stake – reports
• Bridgewater Q4 EPS tops estimates, sees strong '10 rev
• Cascades warns of profit pressure after strong Q4
• FNX Mining Q4 profit beats estimates
BEFORE THE BELL
Toronto's main stock index may open flat on Friday as oil and gold remain little changed and investors wait for economic data. Current account deficit is expected at $8.50 billion, according to a Reuters poll. Wall Street is set for a slightly higher open as investors looked ahead to a raft of data, including economic growth, homes sales and manufacturing after a disappointing week so far for the economy. U.S. GDP for the quarter is expected to have risen by 5.7 percent and existing homes sales for January is seen at 5.50 million. European shares were higher and the continent's No. 2 telecom Telefonica posted full year profit in line with estimates. Asian stocks rose after data showed Japan's industrial output rose higher-than-expected in January. Oil held around US$78 a barrel after sliding more than 2 percent the day before, and gold slightly rose to trade around US$1109 an ounce.
COMPANIES REPORTING RESULTS
• Ainsworth Lumber Co. Ltd. (ANS). Expected to report Q4 loss 26 cents a share, according to Thomson Reuters I/B/E/S
• AltaGas Income Trust (ALA_u). Expected to report Q4 earnings 36 cents a share
• Red Back Mining Inc. (RBI). Expected to report Q4 earnings 17 U.S. cents a share
• Wajax Income Fund (WJX_u). Expected to report Q4 earnings 47 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Ainsworth Lumber Co Ltd. (ANS). The company's fourth-quarter loss narrowed 92 percent and said it continues to find ways to cut costs.
• Anvil Mining Ltd. (AVM). The company on Friday said it agreed to sell its majority interest in its Dikulushi copper-silver mine in the Democratic Republic of Congo to Australia's Mawson West Ltd for a 28 percent stake in the junior miner.
• BlackPearl Resources Inc. (PXX). The company's fourth-quarter loss narrowed by 95 percent and forecast 2010 oil and gas production averaging about 20 percent higher than 2009.
• Breakwater Resources Ltd. (BWR). The company on Thursday posted a fourth-quarter profit, helped by lower operating expenses.
• Bridgewater Systems Corp. (BWC). The company on Friday reported fourth-quarter earnings that beat analyst estimates and forecast strong 2010 revenue, driven by higher contribution from new products and license revenue from existing customers. The company also said its chief technology officer and founder Russ Freen will step down effective March 31.
• Cascades Inc. (CAS). The packaging and paper-products company’s fourth-quarter profit beat market estimates, as a drop in costs offset a fall in sales, but warned of its profitability being pressured in the short term.
• CCL Industries Inc. (CCLa) (CCLb). The label and package maker on Thursday posted an adjusted fourth-quarter profit that beat expectations, driven mainly by strong performance in its label and tube divisions, raised dividend, and said first-quarter outlook remained positive on improved demand.
• Compton Petroleum Corp. (CMT). The company said on Thursday proved reserves declined by 21 percent while reserve value declined by 31 percent from 2008.
• First Uranium Corp. (FIU). The gold and uranium producer said on Friday it was experiencing severe financial constraints and its board was continuing to review strategic alternatives.
• FNX Mining Co. Inc. (FNX). The nickel and copper miner on Friday posted a fourth-quarter profit that handily beat estimates, helped mainly by reduced costs and improved commodity prices.
• Gran Tierra Energy Inc. (GTE). The oil exploration and production company posted a fourth-quarter profit and a surge in its fund flow from operations, helped by higher production and unrealized gains on foreign exchange.
• Guardian Capital Group Ltd. (GCG). The company on Thursday reported a quarterly profit and said assets under management rose about 19 percent last year.
• Onex Corp. (OCX). The private-equity firm swung to a fourth-quarter profit and said it was well positioned to take advantage of investment opportunities.
• Storm Exploration Inc. (SEO). The company on Thursday reported a lower fourth-quarter profit and said firs-quarter production will be affected by the failure of a firetube in our refridge plant at parkland.
• Thompson Creek Metals Co Inc. (TCM). The pure molybdenum producer on Thursday reported better-than-expected fourth-quarter profit on a gain on an accounting change and a 19 percent fall in costs.
ECONOMIC CALENDAR
08:30 Current account-deficit for Q4 09: Prior -$13.12 bln Expected -$8.50 bln
CORPORATE EVENTS
08:30 Bridgewater Systems Corp. (BWC). Q4 earnings conference call
08:30 Thompson Creek Metals Co. Inc. (TCM). Q4 earnings conference call
10:00 Breakwater Resources Ltd. (BWR). Q4 earnings conference call
10:00 Cascades (CAS). Q4 earnings conference call
10:00 Compton Petroleum (CMZ). Q4 earnings conference call
10:00 Gran Tierra Energy Inc. (GTE). Q4 earnings conference call
10:00 North American Palladium (PAL). Q4 earnings conference call
11:00 AltaGas Income Trust (ALA-u). Q4 earnings conference call
11:00 CCL Industries Inc. (CCLa) (CCLa). Q4 earnings conference call
11:00 Red Back Mining Inc. (RBI). Q4 earnings conference call
11:00 Tesco (TESO). Q4 earnings conference call
13:00 Ainsworth Lumber Co. Ltd. (ANS). Q4 earnings conference call
14:30 Wajax Income Fund (WJX_u). Q4 earnings conference call
ANALYST RECOMMENDATION
• Bombardier (BBDb) rating cut to market perform from outperform at Raymond James
• Boralex Inc. (BLX) price target raised to $14 from $13.25; rating buy at Versant
• Cameco Corp. (CCO) price target cut to $34.90 from $36.85; rating outperform at Macquarie
• CIBC (CM) price target raised to $77 from $74; rating outperform at Macquarie
• First Uranium (FIU) price target raised to $2.30 from $1.50; rating market perform at Raymond James
• National Bank of Canada (NA) price target raised to $66 from $64.50; rating neutral at Macquarie
EXDIVIDEND
• Imperial Oil Ltd. (IMO). Amount $0.10
• PetroCorp Group Inc. (PCGh). Amount $0.11
• Russel Metals (RUS). Amount $0.25
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Fate of Obama healthcare up to Democrats
The fate of President Barack Obama's U.S. healthcare overhaul was in the hands of his own Democrats on Thursday after a summit in which Republicans demanded his plan be tossed out in favor of a smaller one.
Democrats and Republicans appeared to battle to a draw at a marathon seven-hour talkathon hosted by the White House.
Both sides defined several areas where they agree.
But neither was willing to forgo their overarching goals: Democrats want a sweeping bill that requires all Americans to buy insurance, and Republicans want a much smaller and more narrowly defined plan.
The stalemate leaves Democrats with a difficult decision to make.
They have a live option before them -- use a parliamentary tactic known as reconciliation to jam their plan through the U.S. Congress with a simple majority vote.
Obama did nothing to quell talk that this is the route Democrats will pursue, saying most Americans "think that a majority vote makes sense."
Using a muscle tactic on such a large piece of legislation carries political risks, however, as Democrats and Republicans position themselves for November congressional elections.
A Gallup poll found that Americans by 52 to 39 percent opposed Democrats using the procedure.
Both parties are keeping a wary eye on the elections, with Democrats eager for a victory to shore up their liberal base and Republicans reluctant to help them.
"If the bill is passed through reconciliation and it remains as unpopular with the public as it appears to be polling now, that's another huge talking point for the Republicans going into the fall elections," said Merle Black, a political science professor at Emory University in Atlanta.
Obama, who was judged the winner of a public debate with Republicans when he appeared at their retreat in Baltimore last month, may have been hoping for a similar victory to get Americans to take a fresh look at his proposals.
"I really don't think the summit will change the minds of any of the attendees, but its real effect will be if it changes public opinion in any real way," said Rick Weissenstein, an analyst at Concept Capital's Washington Research Group.
"So I think watching the polls after the summit will be important."
The Blair House healthcare summit, probably missed by many Americans since it took place during working hours, was a remarkable session with Obama showing a deep knowledge of the subject and a willingness to listen to the other side that was largely absent last year.
But an exchange with his Republican opponent from the 2008 campaign, Senator John McCain, showed a dismissive attitude.
McCain complained about some of the closed-door deals that had been contained in the Democratic legislation and expressed concern about the Obama administration's opposition to gaining U.S. access to cheaper generic prescription drugs from Canada.
"Let me just make this point, John, because we're not campaigning anymore," Obama told him. "The election's over."
"Well, I, I'm reminded of that every day," McCain said.
Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania, said the exchange could come back to haunt Obama.
"It could be problematic for the president," she said. "The McCain point is a point that people are sympathetic to, which is about re-importation of drugs, which doesn't seem to be asking anything unreasonable."
In the end, Obama gave the compromise effort a month to six weeks to play itself out to see if a deal can be reached.
He seemed willing to bet that Americans would not penalize Democrats at the ballot box in November by as much as Republicans hope.
"We have honest disagreements about the vision of the country and we'll go ahead and test those out over the next several months 'til November," he said.
--- Steve Holland, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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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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THURSDAY, FEBRUARY 25, 2010, CANADIAN EDITION
TOP NEWS
• CIBC Q1 profit tops estimates
• Magna International posts surprise Q4 loss
• Coke to buy CCE's North American operations
• Tim Hortons Q4 profit rises, boosts dividend
• Biovail Q4 net income falls
BEFORE THE BELL
Toronto's main stock index may open lower on Thursday as commodity prices are pressured by stronger greenback amidst concerns over a potential downgrade of Greece's credit rating. However, strong results from Canada's fifth-largest bank Canadian Imperial Bank of Commerce could cap some of the losses. Wall Street is also set for a lower open ahead of Federal Reserve Chairman Ben Bernanke's second-day testimony on monetary policy and the state of the economy. European shares fell dragged by oil majors and miners. Almost all the major Asian markets were down, with Nikkei shedding about a percent. Oil fell below US$80 a barrel as rise in U.S. crude oil stocks dampened sentiment. Gold was also down at US$1093 an ounce.
COMPANIES REPORTING RESULTS
• Enerplus Resources Fund (ERF_u). Expected to report Q4 earnings of 20 cents a share, according to Thomson Reuters I/B/E/S
• Gerdau AmeriSteel Corp. (GNA). Expected to report Q4 earnings of 5 U.S. cents a share
• Great Basin Gold (GBG). Expected to report Q4 loss of 1 cent a share
• Intermap Technologies Corp. (IMP). Expected to report Q4 loss of 7 U.S. cents a share
• Lundin Mining Corp. (LUN). Expected to report Q4 earnings of 11 U.S. cents a share
• Mullen Group Ltd. (MTL). Expected to report Q4 earnings of 25 cents a share
• North American Palladium Ltd. (PDL). Expected to report Q4 loss of 5 U.S. cents a share
• Onex Corp. (OCX). Expected to report Q4 loss of 1 cent a share
• RONA Inc. (RON). Expected to report Q4 earnings of 21 cents a share
• Stantec Inc. (STN). Expected to report Q4 earnings of 49 cents a share
• Thompson Creek Metals Co. Inc. (TCM). Expected to report Q4 earnings of 8 U.S. cents a share
• Transforce Inc. (TFI). Expected to report Q4 earnings of 15 cents a share
STOCKS TO WATCH THIS MORNING
• Biovail Corp. (BVF). The company said on Thursday its fourth-quarter net income fell due to a series of one-time items that hurt results.
• Boralex Inc. (BLX). The power producer on Thursday posted a more than three-fold rise in fourth-quarter profit, partly helped by higher power generation in its wind power segment.
• Calloway REIT (CWT_u). The trust on Wednesday reported a drop in fourth-quarter funds from operations that was in line with market estimates as higher interest costs offset improved operating results.
• Cameco Corp. (CCO). The uranium miner's fourth-quarter profit rose 20 fold, beating analyst estimates, as higher profit in gold countered the impact of weakness in uranium sales. The company however said it expects this year's consolidated revenue to fall 5 percent to 10 percent.
• Canadian Imperial Bank of Commerce (CM). Canada's fifth-largest bank posted a more than four-fold rise in its first-quarter profit, helped by volume growth in its retail markets and wholesale banking, handily beating market estimates.
• Eaglewood Energy Inc. (EWD). The company on Wednesday raised its size of private placment up to 13.5 million special warrants at a price of $1.75 each.
• Equitable Group Inc. (ETC). The mortgage lender’s fourth-quarter profit nearly doubled, helped by an increase in net interest margin and a one-time income tax benefit.
• Fraser Papers Inc. (FRPPF). The company said it finalized the terms for the sale of its specialty papers business to a company sponsored by its secured creditors and also got an extension of its creditor protection to April 9.
• Ivernia Inc. (IVW). The company said on Wednesday Magellan mine processing plant restarted and it expects it will produce about 60,000 tonnes of contained lead in concentrates during 2010. It said there will be a staged ramp-up of production during the second and third quarters of 2010.
• Labopharm Inc. (DDS). The biotechnology company on Thursday reported fourth-quarter loss of 11 cents a share, on revenue of $6.7 million.
• Magna International Inc. (MGa). The auto parts supplier on Thursday reported a narrower fourth-quarter loss as the company benefited from higher light vehicle production in North America and Europe, but charges related to impairment continued to hurt the company.
• March Networks Corp. (MN). The company's third-quarter loss more than doubled hurt by economic environment in Dubai and U.S. and strong Canadian dollar.
• Pacific Rubiales Energy Corp. (PRE). The company on Thursday said the combined proved plus probable reserves for some of its blocks in Colombia increased by 34.3% in 2009.
• Paladin Labs Inc. (PLB). The company on Thursday reported fourth-quarter earnings of 5 cents, before items, on revenue of $29.3 million which, which rose 27 percent and forecast full year revenue of at least $120 million.
• Pason Systems Inc. (PSI). The provider of specialized rental oilfield instrumentation systems on Wednesday posted a surprise fourth-quarter profit helped mainly by lower costs.
• Pristine Power Inc. (PPX). The company on Wednesday posted 76 percent narrowed fourth-quarter loss. It reported loss of 3 cents a share, on revenue of $4.5 million.
• Tim Hortons (THI). The iconic Canadian coffee shop chain raised its dividend 30 percent on Thursday as it reported a jump in its fourth-quarter results.
CORPORATE EVENTS
08:30 Biovail Corp. (BVF). Q4 earnings conference call
08:30 Labopharm Inc. (DDS). Q4 earnings conference call
08:30 MDC Partners Inc. (MDCa).. Q4 earnings conference call
08:30 March Networks Corp. (MN). Q3 earnings conference call
09:00 Great Basin Gold (GBG). Q4 earnings conference call
09:00 Transforce Inc. (TFI). Q4 earnings conference call
09:30 Cameco (CCO). Q4 earnings conference call
10:00 Boralex Inc. (BLX). Q4 earnings conference call
10:00 Equitable Group Inc. (ETC). Q4 earnings conference call
10:00 SFK Pulp Fund (SFK_u). Q4 earnings conference call
10:30 Atrium Innovations Inc. (ATB). Q4 earnings conference call
10:30 Tim Hortons Inc. (THI). Q4 earnings conference call
11:00 Calloway REIT (CWT_u). Q4 earnings conference call
11:00 Enerplus Resources Fund (ERF_u). Q4 earnings conference call
11:00 Mullen Group Ltd. (MTL). Q4 earnings conference call
11:00 Pason Systems Inc. (PSI). Q4 earnings conference call
11:30 Lundin Mining Corp. (LUN). Q4 earnings conference call
13:00 RONA Inc. (RON). Q4 earnings conference call
13:30 National Bank of Canada (NA). Q1 earnings conference call
14:30 Gerdau AmeriSteel Corp. (GNA). Q4 earnings conference call
16:00 Stantec Inc. (STN). Q4 earnings conference call
16:30 Intermap Technologies Corp. (IMP). Q4 earnings conference call
ANALYST RECOMMENDATION
• Canadian Oil Sands Trust (COS_u) price target cut to $30 from $32; rating neutral at UBS
• Canam Group (CAM) price target raised to $9.25 from $9; keeps buy rating at Canaccord Adams
• Centerra Gold (CG) price target cut to $14.50 from $15; rating buy at UBS
• TransAlta (TA) price target cut to $26 from $27; rating outperform at Macquarie
EXDIVIDEND
• Brookfield Properties Corp (BPO). Amount US$0.14
• BPO Properties (BPP). Amount $0.10
• Husky Energy (HSE). Amount$0.30
• Sprott Inc. (SII). Amount $0.025
• Transalta Corp. (TA). Amount $0.29
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
COLUMN-Investor confidence not too helpful
Once again someone in charge -- Mary Schapiro of the U.S. Securities and Exchange Commission this time -- is going on about how they are making changes in order to "preserve investor confidence."
As if this were in some way a good thing.
I would feel a whole lot better if instead the SEC were talking about making investors more sceptical.
The SEC on Wednesday moved by a 3-2 vote to place additional limits on short selling of stocks, the practice of betting on a decline in a given stock by borrowing shares, selling them and contracting to buy them back later at what the seller hopes will be a lower price.
The new curb would serve as a so-called circuit breaker for shares that have fallen 10 percent or more in a trading session.
"It is a rule that is designed to preserve investor confidence and promote market efficiency," said Schapiro, the SEC's chairman.
Now Schapiro is in part talking about confidence among investors that markets are fair, efficient and not subject to abuse. That's absolutely crucial and the SEC should be ferocious in going after abuse and in ensuring transparency. The SEC's reason for existing is to ensure that U.S. markets are places where everyone gets a fair shake. That makes people willing to give their capital to strangers who have promised to use it productively and share the fruits.
This urge to buttress confidence however, sadly often bleeds into an effort to prop up confidence among investors that everything is in pretty good shape after all, or even worse in attempts to deny investors access to information that might make them believe that the prospects of a specific company are poor.
Short sellers are the much needed vinegar in the overwhelmingly sickly sweet sauce that passes for analysis in financial markets. They give investors valuable clues that all might not be well with a given company, and so long as they don't sell shares that they can't actually lay their hands on, spread false rumors or fail to disclose they ought to be mostly left alone, though tightly monitored.
If you read through the submissions to the SEC by members of the public -- usually in the securities business or in companies who raise money through it -- who support the new rules there is a recurring theme: that short selling might ruin a business by giving people the idea that it is in trouble and impairing its access to capital.
Well, duh.
Ultimately that is what short sellers are hoping and ultimately we will all be better off if less capital is allocated to weak firms rather than to strong ones. Among the loudest in complaining about short selling in 2008 were representatives of the securities industry. Executives at both Lehman Brothers and Bear Stearns were both vociferous in blaming their problems on short sellers. But neither firm was brought low by short sellers; they were brought low by reality, a reality which short sellers grasped before the rest of us.
AN OVERCONFIDENT INDUSTRY
The entire securities industry is hugely biased towards over-confidence; in fact you could make an argument that its revenues depend in substantial part on over-confidence. Buy ratings on U.S. stocks are five times more common than sell ratings, even now after tighter regulation of Wall Street and following the worst bear market since the Depression. That ratio was certainly even higher two years ago and much higher over the past decade, a period in which precious few investors in stocks in the United States have been able to avoid losing money.
And the overconfidence isn't just among analysts trying to gauge company performance, it is crucially rampant among investors who wrongly think that they, rather than their neighbor, will be able to beat the market by active investing.
That confidence, that an investor will somehow not only be able to identify a good active manager but also know when that manager will change from good to bad, underlies the entire active investing industry. In aggregate this confidence proves to be misplaced.
So, in an industry with so much demonstrable over-confidence the question has to be asked: why expend so much energy clamping down on some of the few negative voices?
My guess is that people confuse the power that confidence has in interpersonal relationships with some real power that is independent of psychology. You might be able to convince your neighbor that you can fly, but it works less well with the air, much less the ground.
It is also true that the systemic overconfidence benefits the people who work in the system more than those who trust their capital to it.
--- James Saft
(James Saft is a Reuters columnist. The opinions expressed are his own)
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
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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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WEDNESDAY, FEBRUARY 24, 2010, CANADIAN EDITION
TOP NEWS
• Thomson Reuters Q4 profit falls
• Google execs convicted in Italy for Down's video
• Toll Brothers posts narrower-than-expected Q1 loss
• H&R Block says unable to meet 2010 outlook
• Toyota faces grilling in Congress, probe in Japan
BEFORE THE BELL
Toronto's main stock index may open lower on Wednesday as weak commodity prices weigh on the resource-laden market. Investors will also take clues from Wall Street, which is set for a slightly higher open before the congressional testimony from Federal Reserve Chairman Ben Bernanke. European shares fell for a third consecutive session, with banking stocks bearing the brunt. Asian shares were also down as investors grew worried after China implemented fresh measures to clamp down on excessive lending which it fears could create destabilizing asset bubbles. Oil fell below US$79 a barrel and gold was down about a percent to trade around US$1093 an ounce.
COMPANIES REPORTING RESULTS
• Atrium Innovations Inc. (ATB). Expected to report Q4 earnings of 40 U.S. cents a share, according to Thomson Reuters I/B/E/S
• Calloway Real Estate Investment Trust (CWT_u). Expected to report Q4 earnings of 5 cents a share
• Cameco Corp. (CCO). Expected to report Q4 earnings of 46 cents a share
• Maple Leaf Foods (MFI). Expected to report Q4 earnings of 22 cents a share, according to Thomson Reuters I/B/E/S
• March Networks Corp. (MN). Expected to report Q3 loss of 6 cents a share
• MDC Partners Inc. (MDZa). Expected to report Q4 loss of 7 cents a share
• Pason Systems Inc. (PSI). Expected to report Q4 loss of 1 cent a share
• SFK Pulp Fund (SFK_u). Expected to report Q4 earnings of 1 cent a share
• Sherritt International Corp. (S). Expected to report Q4 earnings of 16 cents a share
• Transalta Corp. (TA). Expected to report Q4 earnings of 49 cents a share
STOCKS TO WATCH THIS MORNING
• Arehada Mining Ltd. (AHD). The company on Tuesday agreed to sell its unit to a Shandong based Chinese mining company Shanjin Mining.
• Boston Pizza Royalties Income Fund (BPF_u). The fund and Boston Pizza International Inc said on Tuesday a syndicate investment dealers agreed to purchase 1.35 million units of the company at $11.95 a share.
• Canam Group Inc. (CAM). The construction products company on Wednesday reported fourth-quarter earnings that narrowly missed analysts' estimates as the company's revenue fell by a third due to slowdown in non-residential construction in North America and lower raw materials costs.
• Centerra Gold (CG). The company said on Tuesday its fourth-quarter profit more than tripled, helped by higher production and a 40-percent jump in the price it received for its gold.
• CI Financial Corp. (CIX). The fund-manager reported sharply higher earnings on Tuesday and said it will likely increase its dividend and buy back shares in 2010 to return profit to shareholders.
• D-Box Technologies Inc. (DBOa). The company on Tuesday reported third-quarter loss of $0.139 a share.
• Eaglewood Energy Inc. (EWD). The company said on Tuesday it would raise $21 million through a private placing and expects to use the proceeds to fund ongoing exploration and development expenditures.
• Extendicare Real Estate Investment Trust (EXE_u). The long-term care provider said on Tuesday it returned to fourth-quarter profit, while revenues were pressured by a stronger Canadian dollar.
• Finning International Inc (FTT). The world's largest Caterpillar equipment dealer said on Tuesday it returned to fourth-quarter profit after taking a big charge a year earlier.
• Genco Resources Ltd. (GGC). The company said on Tuesday it adopted a shareholders rights plan and set the trigger at 20 percent.
• GlobeStar Mining Corp. (GMI). The company on Tuesday reported total gold production of 12,060 ounces for 2009.
• IESI-BFC Ltd (BIN). The waste management company on Tuesday reported a lower-than-expected fourth-quarter profit on higher costs and forecast 2010 revenue below estimates.
• Minera Andes Inc. (MAI). The company said its CFO Henry John would retire on April 5 and Perry Ing, who has been appointed as vice president finance, will take John's position for an interim period.
• Miranda Technologies (MT). The maker of components for the television broadcast industry on Wednesday posted fourth-quarter earnings that missed market expectations, hurt by a massive decline in sales in Canada.
• Superior Plus Corp. (SPB). The company said on Tuesday it will publicly offer $150 million worth of convertible unsecured subordinated debentures, at an interest of 5.75 percent per annum. The company also set a price of $1,000 per debenture.
• Thomson Reuters Corp. (TRI). The company on Wednesday reported a lower fourth-quarter profit and said it expects 2010 revenue to be flat or to fall slightly because of the impact of negative net sales last year.
CORPORATE EVENTS
08:30 IESI BFC Ltd. (BIN). Q4 earnings conference call
09:00 Canam Group Inc. (CAM). Q4 earnings conference call
09:00 Miranda Technologies Inc. (MT). Q4 earnings conference call
10:00 Cott Corp. (BCB). Q4 earnings conference call
10:00 Extendicare Real Estate Investment Trust (EXE_u). Q4 earnings conference call
11:00 Centerra Gold Inc (CG). Q4 earnings conference call
11:00 FirstService (FSV). Q4 earnings conference call
11:00 Transalta Corp. (TA). Q4 earnings conference call
13:00 Dundee Real Estate Investment Trust (D_u). Q4 earnings conference call
13:00 Finning International Inc. (FTT). Q4 earnings conference call
14:00 Sherritt International Corp. (S). Q4 earnings conference call
14:30 Maple Leaf Foods (MFI). Q4 earnings conference call
ANALYST RECOMMENDATION
• Crew Energy (CR) price target raised by $2.50 to $20; rating outperform at Macquarie
• George Weston (WN) price target raised to $75 from $74; rating sector perform at RBC
• MKS Inc. (MKX) rating cut to neutral from buy at Versant
• Suncor Energy (SU) price target cut to $35 from $38; rating hold at Collins Stewart
EXDIVIDEND
• Ag Growth International Inc. (AFN). Amount $0.17
• Amica Mature Lifestyles Inc. (ACC). Amount $0.06
• Black Diamond Group Ltd. (BDI). Amount $0.09
• Canaccord Financial Inc. (CF). Amount $0.05
• Canadian Banc Recovery Corp. (BK). Amount $0.0625
• Killam Properties Inc. (KMP). Amount $0.0467
• Superior Plus Corp. (SPB). Amount $0.135
• Sylogist Ltd. (SYZ). Amount $0.015
• TMX Group Inc. (X). Amount $0.38
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
BREAKINGVIEWS - America's small bank problem looks manageable
Killing zombies isn't just a job for horror-movie heroines. It's also Sheila Bair's primary task. And the Federal Deposit Insurance Corp chief's challenge has increased as the number of scary banks on the regulator's watch list has spiked. Thankfully, there's no financial excuse to keep FDIC from quickly exterminating the industry's living dead.
On Tuesday, the agency reported 702 institutions on its "problem" list at the end of the fourth quarter -- up from 552 in the third quarter. Moreover, total assets for banks on the list increased to US$403 billion, or 3 percent of GDP. While these are terrifying figures, the FDIC also managed to collect US$46 billion of fresh cash from banks, bringing its total cash and liquid securities to US$66 billion.
That may not sound like enough. After all, the average estimated loss rate for failures since 2007 -- excluding the collapse and simultaneous sale of Washington Mutual to JPMorgan is 23 percent of assets. On that basis, FDIC's kitty would appear to be some US$27 billion shy of being able to handle its current list of troubled institutions.
But not all of the banks FDIC diagnoses as sick will need to be seized. As is often the case, many banks work their way through their difficulties, raise fresh private capital or are taken over by healthier rivals. And the FDIC can levy another special assessment on banks before asking the U.S. taxpayer for help anyway. Add it all up and the FDIC has no financial excuse not to get busy cleaning up the mess.
Yet the pace of bank seizures -- up by half in the past year -- hasn't kept pace with the growth of the problem bank list, which has nearly tripled. The worry is that has left too many zombies hobbling along, sucking up deposits and hoarding capital that might otherwise be lent by healthy institutions, thereby helping the economy to rebound.
True, the "Snowmaggedon" storms that closed Washington earlier this month complicated travel plans for FDIC staff. But the key lesson from the savings and loan debacle was that delay in closing insolvent banks increases the resolution costs for FDIC and, ultimately, taxpayers. With spring just around the corner, Bair needs to set her sights on a big zombie hunting trip.
CONTEXT NEWS
-- The Federal Deposit Insurance Corp released its quarterly banking profile Feb. 23. The list of problem institutions increased to 702 at Dec. 31 compared to 552 at Sept. 30 and 252 at Dec. 31, 2009. Assets at problem banks totaled US$403 billion, up from US$346 billion in the third quarter and US$159 billion a year ago.
-- FDIC also reported that it has US$66 billion of cash and marketable securities on hand after it collected US$46 billion from banks that prepaid three years of regularly scheduled assessments. The Deposit Insurance Fund's balance was listed as negative US$20.9 billion because FDIC is carrying a contingent loss reserve of US$44 billion. For accounting reasons the US$46 billion of collected cash is not counted as part of the fund's balance.
--- Rolfe Winkler
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own).
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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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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TUESDAY, FEBRUARY 23, 2010, CANADIAN EDITION
TOP NEWS
• Sears Canada's Q4 earnings jump on lower expenses
• African Barrick Gold in US$1 bln London IPO
• Home Depot Q4 profit beats Street; outlook strong
• Medco Q4 profit edges past Wall St estimate
• Sears profit more than doubles; revenue slips
BEFORE THE BELL
Toronto's main stock market index could open lower on Tuesday as weak gold and energy prices weigh on the commodity-laden bourse. However, reports of a US$1 billion initial public offering by a subsidiary of Canada's Barrick Gold Corp could temper the losses. Investors' confidence would also see-saw on events on the Wall Street, which is set for a lower open, ahead of key economic data. European shares edged down, with weakness in banks offsetting gains in food producers. Investors jittered as German business sentiment fell for the first time in almost a year in February, suggesting a harsh winter may send Europe's largest economy sliding back into contraction in the first quarter. Most Asian stock markets recouped early losses. Oil fell more than a dollar to trade near US$79 a barrel, breaking a five-day rally. Gold eased to trade at around US$1,113 an ounce as the euro lost ground versus the dollar.
COMPANIES REPORTING RESULTS
• TransCanada Corp. (TRP). Expected to report Q4 earnings of 51 cents a share, according to Thomson Reuters I/B/E/S
• IESI-BFC Ltd. (BIN). Expected to report Q4 earnings of 18 U.S. cents a share
• Dundee Real Estate Investment Trust (D_u). Expected to report Q4 earnings of 14 cents a share
• Centerra Gold Inc. (CG). Expected to report Q4 earnings of 54 U.S. cents a share
• Finning International Inc. (FTT). Expected to report Q4 earnings of 15 cents a share
• Extendicare REIT (EXE_u). Expected to report Q4 earnings of 28 cents a share
STOCKS TO WATCH THIS MORNING
• Augusta Resource Corp. (AZC). The company on Tuesday said it is offering common shares worth $32.5 million at a price of $2.75 per share, in a bought deal, and plans to use the proceeds to advance the development of the Rosemont copper property.
• Barrick Gold Corp. (ABX). The subsidiary of the Canadian company African Barrick Gold has launched a London listing to raise about US$1 billion that values its assets at about US$4 billion, people familiar with the matter said on Tuesday.
• Brookfield Asset Management Inc. (BAMa). The company is preparing to bid for a large stake in No. 2 U.S. mall owner General Growth Properties Inc, aiming to outbid Simon Property Group Inc, the WSJ reported on Monday.
• Chariot Resources Ltd. (CHD). The junior miner company said on Monday it is in talks with a third party to sell all its shares.
• Greystar Resources Ltd. (GSL). The company on Monday appointed Steve Kesler as the president and CEO of the company, as a replacement to the retiring David Rovig.
• Guestlogix Inc. (GXI). The company on Monday broke-even for its fourth-quarter, on revenue of $5.2 million.
• Maxim Power Corp. (MXG). The company said on Monday its unit agreed to provide 74 MW of electrical peaking services to Electricite de France for a term of eight years, with a total investment of $10 million.
• MKS Inc. (MKX). The software and services provider on Tuesday reported third-quarter earnings of 11 cents a share, on revenue of $15.3 million. The company also said it expects a long term decline in the interoperability business of approximately 10 percent annually.
• NuVista Energy Ltd. (NVA). The company said on Monday it cut its capital for exploration and development program to about $84 million and said proved and probable reserves increased by 26 percent.
• Orsu Metals Corp. (OSU). The London-based explorer said on Monday it reached an agreement to settle a class action claim with Pysznyj Corp. The company reached an agreement to settle the claim for $2.2 million, which is shared equally between Orsu and Orsu's insurer.
• Questerre Energy Corp. (QEC). The company said on Monday natural gas average rate of flow at Utica well was 6 mmcf/d, during the test and it is still under extended production test.
• Sears Canada Inc. (SCC). The department-store chain said on Tuesday its fourth-quarter profit jumped 29 percent helped by lower expenses.
• SouthGobi Energy Resources Ltd. (SGQ). The company said on Monday it partially exercised over-allotment option and will purchase additional 228,110 shares at 17 each.
CORPORATE EVENTS
15:00 TransCanada Corp. (TRP). Q4 earnings conference call
16:00 CI Financial Income Fund (CIX_u). Q4 earnings conference call
16:00 MKS Inc. (MKX). Q3 earnings conference call
ANALYST RECOMMENDATION
• Alamos Gold (AGI) price target raised to $15.50 from $15; rating buy at UBS
• Baytex Energy Trust (BTE_u) price target raised to $33.50 from $32; rating outperform at Raymond James
• Canaccord Financial (CF) rating cut to neutral from outperform at Macquarie
• First Uranium (FIU) price target cut to $1.50 from $1.80; rating market perform at Raymond James
• GMP Capital (GMP) rating cut to neutral from outperform at Macquarie
• Gran Tierra Energy (GTE) rating raised to buy from neutral at UBS
• Suncor Energy (SU) price target cut to $43 from $49; rating outperform at Raymond James
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
BREAKINGVIEWS - Obama health plan travels further down wrong path
President Barack Obama's very own health plan wasn't much worth the wait.
It travels further down the wrong policy and political paths than versions cooked up by Congress. The latest proposal spends more, controls costs less and introduces greater government regulation. Moreover, the partisan scheme being used to pass the legislation will deepen the congressional schism. Even a tactical win might become a strategic loss for Obama.
The new proposal would cost US$950 billion over its first decade, compared with the US$871 billion price of the failed Senate plan. It would also reduce the budget deficit by roughly US$100 billion over the same period. That's not as much as it sounds when considering the U.S. national debt will swell by some US$10 trillion in that time.
Ultimately, government healthcare spending will have to be cut dramatically to put the budget onto a sustainable fiscal path. The Obama plan fails to do that. Worse, the spending cuts and tax hikes are being used to expand coverage instead of making the social insurance system more fiscally sustainable.
One smart element of the Senate proposal was an excise tax on pricey insurance plans. This important cost-control measure would start to reduce the tremendous tax preference afforded healthcare benefits over wage income. But the Obama plan makes the tax less onerous than the Senate version, starting it later and applying it to higher premium levels.
Then there's the creation of a federal Health Insurance Rate Authority to help states review "unreasonable" insurance cost increases. Price caps imposed by government distort market forces and could push companies to ration care. It's also a stark departure from Obama's original goal to reduce spending by changing healthcare delivery.
The politics look dangerous too. There is every indication Democrats intend to use a parliamentary maneuver generally reserved for narrow budget purposes to help get the president's measure passed. The tactic will stiffen Republican spines against other issues such as financial reform and climate change. Just as the fractious disagreements on healthcare derailed Obama's agenda in 2009, so it could be in 2010 too.
CONTEXT NEWS
-- President Barack Obama published his healthcare proposal on Feb. 22, offering a plan intended to make insurance coverage more affordable and to bolster government authority to regulate premium hikes. The proposal will be pushed at a bipartisan White House healthcare summit on Feb. 25 in a last-ditch bid to break an impasse in the Congress and rally support for a sweeping overhaul that would tighten regulations on insurers and expand coverage to tens of millions of Americans.
-- The White House said Obama's plan would make it easier to bypass Republicans if necessary, and get the legislation passed using a process that requires a simple majority in the 100-member Senate rather than the 60 votes needed to clear procedural hurdles.
-- The new proposal would cost US$950 billion over 10 years -- up from the US$871 billion price tag on the Senate's plan. It would reduce the deficit by about US$100 billion over the same span, White House officials estimated. The plan offered several changes to the Senate bill to attract support from wavering Democrats but did not incorporate Republican ideas to limit medical malpractice lawsuits, an item of major emphasis for the party.
-- Obama's revised plan would expand tax credits for middle-class workers to make insurance more affordable, and would extend taxes for Medicare, the federal health insurance program for the elderly and disabled, to unearned income. It provides U.S. government authority to block insurance premium hikes.
--- James Pethokoukis
(The author is a Reuters Breakingviews 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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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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Feb 22, 2010
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MONDAY, FEBRUARY 22, 2010, CANADIAN EDITION
TOP NEWS
• Schlumberger buying Smith Int'l in US$11.3 bln deal
• Lowe's Q4 profit beats estimates; sees sales rising
• Toyota memo raises stakes for chief in US hearings
• Constellation Energy Q4 EPS beats, revenue trails
• Obama to target rate increases in health plan
BEFORE THE BELL
Toronto's main stock index may open higher on Monday, extending gains from last week, as oil and gold jump on speculation over a quick bailout for debt-laden Greece. With no major economic or corporate events scheduled, investor sentiments would also be guided by Wall Street, which is set for a higher open. Asian stocks rose to their highest in nearly a month as risk appetite improved. However, European shares dipped slightly snapping five consecutive days of gains, with GlaxoSmithKline hit by calls for a key drug to be withdrawn on safety grounds. Oil jumped pass US$80 a barrel and gold hit its highest in a month but later pared some gains to trade around US$1122 an ounce.
COMPANIES REPORTING RESULTS
• Boralex Power Income Fund (BPT_u). Expected to report Q4 earnings of 1 cent a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Explor Resources Inc. (EXS). The company said on Friday it will acquire 30 mineral units in Restigouche County, also known as Tardif Brook for $5000 and 50,000 common shares.
• Gran Tierra Energy Inc. (GTE). The company said on Monday it produced about 5.7 million barrels of working interest oil and nearly 0.1 billion cubic feet of working interest gas was produced in 2009. The company also added its proved oil reserves increased 14.6 pct to about 22.1 million barrels.
• Petrominerales Ltd. (PMG). The company said on Friday its proved plus probable reserve increased 44 percent to 53.1 million barrels of oil in 2009.
• Rainy River Resources Ltd. (RR). The company on Friday raised its size of options to underwriters in a bought deal financing to about $15 million from about $10 million.
• Silvercorp Metals Inc. (SVM). The company on Monday agreed to buy Silvertrip, an advanced stage silver-lead-zinc project in British Columbia from Silver Standard Resources Inc (SSO) for $15 million.
• Suncor Energy (SU). The company said it expects its damaged oil sands upgrader to return to production in April, adding that the fire early this month would hurt its 2010 production forecast.
• Verena Minerals Corp. (VML). The company said on Friday its CFO, Jeff Dawley, agreed to step down and added Mark Eaton would replace Stephen Roman as the president and the CEO of the company.
• World Color Press Inc. (WC). The company said on Friday it adopted shareholder rights plan and set the trigger at 15 percent.
CORPORATE EVENTS
10:00 Boralex Power Income Fund (BPT_u). Q4 earnings conference call
ANALYST RECOMMENDATION
• Canfor Pulp Income Fund (CFX_u) rating raised to strong buy from outperform at Raymond James
• Pacific Rubiales Energy (PRE) price target raised to $21 from $19; rating strong buy at Raymond James
EXDIVIDEND
• Gennum (GND). Amount $0.035
• Manulife Financial Corp. (MFC). Amount $0.13
• Utility Corp. (UTCc). Amount $0.065
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Despite outrage, AIG bonus fiasco could happen again
To many Americans, it's a matter of common sense: traders who failed so spectacularly at their jobs that they nearly brought down the global economy should be fired, not rewarded with handsome bonuses.
Yet AIG, the fallen insurer, paid out an additional US$100 million this month, much of it to the very financial products division whose rampant risk-taking took the firm to the brink. And there's another US$75 million coming.
So far, the government has yet to enact concrete steps to prevent it from happening all over again.
Regulators still lack the authority to wind down large financial firms, and the private sector continues to use compensation contracts that preclude renegotiation when performance sours.
Treasury Secretary Timothy Geithner has called on Congress to pass a tax on financial institutions, which he says could be used to help recoup the money.
But experts say this approach ignores a key lesson from the crisis: the need to ensure that contracts for executive pay are written in such a way that encourages prudent behavior and accountability, not unabashed risk-taking.
"All pay plans should require checks and balances, including the use of 'circuit breakers' which prohibit any payments when the company is in a financial crisis or similar problem situation -- i.e. AIG and most of Wall Street," said Paul Dorf, a managing director at consulting firm Compensation Resources.
Many analysts say such restrictions, sometimes known as clawbacks, should extend well beyond finance, pointing to scandals at firms like Enron and Worldcom.
Geithner, and pay czar Kenneth Feinberg, say that while lamentable, the AIG payments must legally be honored. President Barack Obama has argued that high executive pay is a natural outcome of the "free market."
This explanation doesn't sit well with many Americans, who are upset at what they see as an unfair system that rewards incompetence.
And then there is the staggering price tag: the AIG bailout, which gave the government a 79.9 percent stake in the firm, cost some US$182 billion -- enough to employ more than 12 million minimum wage workers for a full year.
"I just don't think it's right," said Tom Harpenau, president of a meat company in Iowa. "In any business, if you own 51 percent or more, you make the rules."
While executive pay tends to be far higher in the United States than in other rich nations, European governments have taken a tougher stance. Britain has announced a 50 percent levy on large bank bonuses and France appears to be moving in a similar direction.
CLAWBACKS, WITH TEETH
In AIG's case, remuneration contracts were written in a way that largely blocks any sort of legal dispute after the fact.
That does not mean, however, that the policymakers who drafted the bailouts, including top officials at the Treasury and the Federal Reserve, could not have done more to prevent AIG's top brass from getting paid.
Geithner, who was then head of the New York Federal Reserve Bank, played an important role in the negotiations and has come under fire for a decision to pay out AIG's creditors in full when it came time to settle its dangerously complex credit derivative contracts. Geithner has maintained he played no role in the decision on creditor payments.
Legal and compensation experts say top government officials, including then-Treasury Secretary Henry Paulson, also the former head of Goldman Sachs, could have attached more strings to bailout cash from the Treasury's US$700 billion financial rescue fund.
"The legislation actually made it easier to pay these bonuses out," said Miriam Cherry, a law professor and compensation expert at University of the Pacific's McGeorge School of Law in Sacramento, California.
The Treasury could at least have stalled the payments by forcing the executives to sue for their bonuses in court, said Cherry, the law professor.
"They could have made the executives do the work. They could have made the executives have to sue to get those bonuses," she said. "They didn't negotiate that and that's problematic. They thought it would fall under the radar screen."
Not even contracts that include clawbacks are foolproof. For them to be effective, regulators must ensure that they are not only widely used but also adequately constructed.
"Many financial firms have already announced they will be using clawbacks going forward, but unfortunately they have not given outsiders the ability to assess whether the clawbacks are effective or merely cosmetic," said Lucien Bebchuk, a professor at Harvard Law School and a leading expert on the subject of compensation. "The devil is in the details."
The best way to make sure pay is commensurate with effort is to draft contracts that truly reward long-term contributions.
"Incentives are more effective than bonuses, since the former requires identification of expectations -- what are the goals to be achieved, what activities and actions are prohibited," said Compensation Resources' Dorf.
-- By Pedro Nicolaci da Costa, 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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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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(Please note Canadian quotes are delayed 15 min)
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