Thomson Financial: Examples of Daily Reports on Canadian Equity Markets


Canadian Shares Turn Lower, as Nortel Announces Job Cuts

Tuesday, June 27, 2006, 4:15 PM EST (Thomson Financial Corporate Services): After its M&A-fueled triple-digit rise on Monday, the TSX moved lower today, as the U.S. posted mixed economic news and telecommunications giant Nortel declared that it would cut over a thousand jobs. In sector movement, gold, material, mining and technology shares were decidedly lower. Otherwise, the markets in Toronto and worldwide were hushed, awaiting the meeting of the US Federal Reserve later this week. The S&P/TSX Stock Exchange Composite Index fell 78.30 points, or 0.69%.

Topping corporate headlines, Nortel Networks Corporation is planning to reduce its workforce worldwide by 1900 people, while creating about 800 jobs at operations centres (mostly in Mexico and Turkey). Battered by the bursting of the tech bubble, its own bookkeeping scandals in 2003, and major M&A activity in recent weeks among its competitors, the company is also restructuring its pension and health plans, all in an attempt to save US$175 million by 2008.

About 375 more job cuts will be made by Nova Chemicals Corp., as it restructures to align resources and cut costs.  In addition to the cuts, which should save C$65 million a year, Nova will spin off a unit called Styrenix for its styrene plastics production. Its stock edged upwards at the news.

Oil edged upwards, closing the day at nearly US$72. Meanwhile, oilfields services company Saxon Energy said that it was purchasing Kinnell Drilling Ltd and Kinnell Resource Consultants for C$61.5 million. The senior management of drilling contractor Kinnell is joining Saxon to help manage the merged businesses, and the move will expand Saxon’s total drill rigs in Canada to nine, making a total of 29 working rigs in North America.

There was also good news involving drilling for Niko Resources: it made a major deepwater discovery off the east coast of India in the D6 block, with positive results for oil and gas in its first Cretaceous test. The successful completion of the new well, at a depth of over 3,500 meters, bolstered the firm’s shares.

The gold sector moved lower, as gold fell US$3.30 to US$584.40, after a morning surge to almost US$599. Gold miner Miramar was very active in the markets with a volume of over four million.

Elsewhere in the yellow metal markets, Bema Gold Corp. teamed up with the Arizona Star Resource Corp. to purchase the Barrick Gold Corp.’s 51% stake in Compania Minera Casale, owner of the Aldebaran property in northern Chile. This includes the Cerra Casale, one of the world’s largest undeveloped gold and copper deposits.  Bema and Arizona Star will give US$10 million when a decision is cleared by the Chilean government to sink a mineshaft, and then further payments in ounces of gold or cash as the digging continues.

In U.S. economic headlines, the Consumer Confidence Index topped predictions south of the border, rising to 105.7 in June, according to the Conference Board. The May reading had been revised upward to 104.7from 103.5. The latest result beat analysts’ predictions of 103.5. The Board’s estimates are considered longer-term and less affected by increases in fuel costs than the University of Michigan’s consumer sentiment reports.

Finally, sales of existing homes in the U.S. in May dropped 1.2% to a seasonally adjusted annual rate of 6.67 million units, the steepest decline since January, according to the National Association of Realtors. The latest figure was below the 7.14 million posted a year ago. The drop is very regionalized and was expected as part of an overall softening of the US housing market; higher interest rates are resulting in a slowing rate and a small oversupply of new homes.

TSX Jittery after North Korean Missile Launch, Investors Take Refuge in Gold; Oil Tops US$75

Wednesday, July 5, 2006, 4:15 PM EST (Thomson Financial Corporate Services): With Canada Day and the Fourth of July breaks behind it, investors returned on Wednesday to a nervous trading day, as North Korea launched seven missiles in defiance of world opinion. In local news, the Phelps Dodge and softwood tariff deals generated more twists; Tim Hortons had encouraging earning news; and gold ended solidly higher, with oil reaching a record.

The S&P/TSX Stock Exchange Composite Index dropped 106.75 points, or 0.91%.

The Phelps Dodge-Inco-Falconbridge merger inched closer to completion as Inco won approval from the European Commission to acquire Falconbridge, on the condition that Inco sold Falconbridge’s Nikkelverk Refinery in Norway to LionOre to avoid monopoly problems. Anglo-Swiss Xstrata, still working on a hostile takeover, got mixed news, as Falconbridge investors have not committed to Inco’s C$19.5 billion stock-and-cash bid, while Industry Canada decided to delay its decision on Xstrata’s bid for another thirty days.

The deal signed July 1st in Geneva between Canada and the US, clarifying the details on the April softwood lumber agreement, received a vote of confidence from Canfor, but is being disputed by many provincial associations and agencies, including the Alberta Softwood Lumber Trade Council, the Lumber Manufacturer’s Association and Forest Industries Association of Ontario, and the government of British Columbia. The sticking point appears to be the termination clause, which permits either side to cancel the deal after 23 months, with one month’s notice and a one-year “peace” after said cancellation—but only if the American side cancels. International Trade Minister David Emerson is trying to placate the industry before PM Steven Harper’s visit to Washington D.C. tomorrow.

Tim Hortons’ caramel-chocolate doughnuts and iced cappuccinos were among the products that led to a second-quarter increase in same-store sales of 6% to 6.1% in Canada, and 8.1% to 8.3% in the U.S. Also on Tuesday, current majority stockholder Wendy’s set a date of October 1 to complete spinning off its remaining stake in the company, pending a tax ruling.

In the healthcare sector, regulatory findings from May and June disclosed that Biovail founder and Chairman Eugene Melnyk sold over 1 million shares of his holdings, at prices between US$22.02 to US$26.79, yielding about US$27.4 million. Mr. Melnyk is resigning as executive chairman but will remain as a chairman and insists he has not lost interest in the company; he is still its largest shareholder with nearly 22 million shares.

While gold stocks ebbed on the TSX, worldwide nervousness over the North Korean missile tests made gold itself skyrocket as investors flocked to the safe haven of the yellow metal. Gold prices closed at a one-month high of US$629.70.

Oil also soared, hitting US$75.19, as problems at a Texas refinery, a postponement of talks between Iran and the European Union on nuclear issues, and the North Korean missile launch combined to set crude at a record high.

TSX Dips on Gold and Oil Markets; Canadian Companies Announce International Deals

Tuesday, July 18, 2006, 4:15 PM EST (Thomson Financial Corporate Services): Largely favourable earnings news from the States and major deals involving Nortel and Encana were not quite enough to keep Bay Street afloat, as gold sector shares dropped sharply. Merrill Lynch, United Technology, and Coca-Cola all beat earnings expectations but did not enjoy a big bounce on the Dow, which rose slightly. The tech and mining sectors got a boost in Toronto. The markets are now waiting to hear earnings from IBM after trading hours today and Inco tomorrow.

The S&P/TSX Stock Exchange Composite Index slipped 8.93 points, or 0.08%.

Inco decided to move up its second-quarter earnings report from July 25th to tomorrow, eight days before July 27th, when its just-sweetened bid for Falconbridge expires and the latter also loses its poison pill option. Xstrata’s chairman, meanwhile, is poised to pounce on the shares if and when they reach the open market on the 28th, and made it clear he wants to own 100% of Falconbridge rather than the 20% he has now. Echoing the head of Falconbridge, the CEO of Inco, Scott Hand, told investors, “This is a hell of a good offer. People should be tendering on the 27th…I would urge the Falconbridge shareholders to get on the bandwagon and move on.” Inco also is offering a special one-time dividend to Falconbridge shareholders of C$0.75 per share—but it will not go to those who vote for the Xstrata bid.

Sun Life Financial signed a deal in China to distribute their “enterprise annuities”, resembling corporate pension or 401K plans, with one of the largest state-owned banks in the county. Sun Life is already one of the top-ten life insurers in the market, and its team-up with the China Everbright Group will open the door to a retirement fund market that is expected to grow from C$13 million to C$55 billion in the next four years.

Technology stocks rallied today, firmly supported by giant Nortel Networks on news it signed a four-year deal with Microsoft to “accelerate the delivery of unified communications,” according to Nortel chief Mike Zafirovski. The companies plan to combine Nortel’s networking experience with Microsoft’s software to create new solutions in e-mail, instant messaging, conferencing, and telephony. Mr. Zafirovski estimated that the partnership would generate more than C$1 billion in sales.

The city of Wood Buffalo, Alberta, has asked for a delay of a year for government approval of Suncor’s Voyaguer project, which would boost the company’s daily production of bitumen from 260,000 barrels per day to 550,000 by 2012. The region is arguing that the infrastructure, particularly medical facilities, cannot take the influx of workers, and to promise that Voyaguer will comply with the Oil Sands Conservation Act.

As the markets worry about stability in the oilfields of the world, eyes are turning to the Danish territory of Greenland, which is estimated to have huge fields of gallons of offshore crude. However, harsh weather and a strong environmental movement have hampered extensive exploration since the 1970s. Encana has just won the first license for offshore gas and oil research in the Disko Bay area off the capital city, Nuuk, according to Oil Minister Joergen Waever; it hopes to find deposits worth C$400 million to C$1.2 billion.

The market for yellow metal dropped so steeply that the precious metals sector downturn rippled through the entire TSX. As investors grabbed their gold profits and poured them into other safe havens, like the U.S. dollar and treasury bonds, gold plunged to US$629.50, down 3.44%.

Food and energy prices helped swell U.S. producer prices 0.5% in June. Core prices, however, rose only 0.2%. The data dampened hopes that the Fed might conclude inflation was not rising enough to justify an 18th consecutive rise in interest rates. Chairman Benjamin Bernanke is testifying before Congress tomorrow, and analysts will be combing his words for hints of the Fed’s direction.

Bay Street Jittery As Terror Plot Uncovered

Thursday, August 10, 2006, 4:15 PM EST (Thomson Financial Corporate Services): A thwarted terrorist plot to destroy U.S.-bound U.K. planes rippled through the markets as well as the airports of North America and Europe today, making oil fall sharply and bringing down almost all other sectors. The main bright spot was Research In Motion, which floated the tech sector when it inked a deal with Apple to make its new BlackBerries compatible with their new operating system’s security. Canada’s trade surplus increased while the U.S. trade deficit eased slightly. As earnings season wound down, two key cyclicals reported a loss, while Biovail overcame legal troubles to deliver good news.

The S&P/TSX Stock Exchange Composite Index fell 49.10 points, or 0.41%.

Biovail reported a stronger second-quarter profit despite the prospect of generic Wellbutrin on the horizon, earning C$80.6 million, or C$0.50 per share, compared with C$3.7 million, or C$0.02 per share last year, (which included some restructuring and other one-time expenses). This exceeded expectations of C$0.46 per share, and Biovail was upbeat despite the court decision last week favoring Anchen’s sale of generic Wellbutrin. Its revenue was up 17% to C$252.8 million.

Turning to industrials, CAE rallied after the firm announced a profit jump of 57%, posting C$32.7 million, or C$0.13 per share, up from C$20.8 million, or C$0.08 per share last year.

Research In Motion lifted the tech sector largely by itself as it made a deal to create BlackBerries compatible with a new Mac CRYPTO-server 6.4 technology. The technology was designed to protect Mac’s latest operating system, the OSX v. 10.4 Tiger.

Shares of the Bank of Montreal dropped today as it reeled from a C$110 million class action lawsuit alleging it charged high exchange fees to convert foreign funds into Canadian dollars, after the change in the Income Tax Act of 2001 that allowed investors to hold foreign currency without charge. The suit was filed by a major investor in Ontario Superior Court.

Soon after inking a major deal with the official Chinese pension agency, Sun Life Financial President Jim Prieur abruptly resigned from the insurance company and will be taking a position as CEO of U.S. insurer Conseco, Inc. His successor has not been appointed.

In cyclical sector earnings news, IMAX reported profits of C$3.5 million, up from C$1.1 million last year. However, shares plunged dramatically since it also announced its five-month auction process did not produce a buyer. The entertainment giant beat analyst estimates of C$0.07 per share with C$0.08 per share, up from C$0.04 last year.  A rather smaller loss was posted by the Four Seasons Hotel chain, which revealed a slip to C$9.1 million for the second quarter from C$15.8 million a year earlier. Total revenues were C$67.8 million, down from C$74.5 million last year.

The oil market dropped drastically as the plot to destroy U.S.-bound airlines was uncovered, dragging down many sectors with it, as the travel industry realized that a decline in plane travel and consumer sentiment would mean a decline in fuel needed. Hitting its lowest level in nearly two weeks, oil closed down US$2.35 to US$74.00 a barrel.

After a brief rally in the morning in response to the terrorist plot, gold closed down at US$641.90 as South Africa reported a decrease in gold production by nearly 10%.

On the economic front, Statistics Canada declared that the trade surplus was up from C$4.1 billion in May to C$4.7 billion in June, the second consecutive month of growth. The trade deficit with the U.S. fell slightly. The forecast had been C$4.4 billion; industrial materials and energy, as well as the high loonie, were credited.

South of the border, the Commerce Dept. reported the U.S. trade deficit fell slightly as record sales of mostly farm products offset soaring oil prices, dipping 0.3% to US$64.8 billion in June, down from US$64.97 in May.

TSX Still Down on Resources

Thursday, September 7, 2006, 4:15 PM EST (Thomson Financial Corporate Services): Resource stocks continued to drag down the TSX as oil hit a five-month low, and the loonie edged downwards. Meanwhile, the Bloc Quebecois rode to the rescue of the Tories in support of the softwood lumber deal. In corporate news, BlackBerry aficionados have a new toy—although Canadians will have to wait a bit longer for it.

The S&P/TSX Stock Exchange Composite Index dropped 104.70 points, or 0.87%.

Research in Motion unveiled its new BlackBerry Pearl to the press, pending its American release on September 12. It will be available on the Canadian market in October. The new handset combines a digital camera, music player, and expandable memory slot as well as the classic BlackBerry functions, in a smaller, lighter package with only fourteen buttons.

MDS reported a net profit of C$21 million, or C$0.14 per share, in the third quarter, up from C$19 million, or C$0.14 per share, last year. Still, the most recent result fell below the average analyst expectation. The biopharmaceutical giant saw revenue up 2% to C$377 million. It also announced a deal to sell its diagnostics division to the Ontario Municipal Employees Retirement Board for nearly C$900 million, in the final step of a restructuring that has seen it sell off various divisions.

The Bloc Quebecois came out in favour of the softwood lumber deal, so the Tory government should not fall in a vote of confidence this autumn. The Liberals and NDP, which have vowed to block the deal, have 131 seats in Parliament, but the BQ has 50, which will combine with the Conservative’s 125 to let the agreement through.

Turning to the industrial sector, Bombardier has sold ten turboprop planes to Denver’s Frontier Airlines, netting US$256.8 million. Furthermore, Frontier has the option to double the order in the future for more of Bombardier’s Q400 aircraft.

Elsewhere, Transat A.T. posted a third-quarter profit of C$0.12 a share, up sharply from C$0.02 a share a year ago. Revenues rose to C$611.1 million from last year’s C$552.9 million.

Business-solutions provider Cognos is to cut 210 jobs, attributing the move to the strength of the loonie. It now expects second-quarter earnings to beat its earlier forecasts.

The U.S. Energy Department announced that oil inventories dropped by 2.2 million barrels, but a marked rise in distillates and gasoline, combined with hurricane-free skies and no news from negotiations with Iran, pressured crude. Oil prices closed down US$0.18 to end at US$67.32.

Gold also continued to cool from its perhaps-artificial heights of August, losing US$16 to close at US$625.80.

U.S. economic statistics for today: Growth in the service sector accelerated in August, according to the Institute for Supply Management; the index of activity came in at 57.0, compared to 54.8 last month, handily beating forecasts of 55.0. This is the 41st continuous month of expansion in the sector. Also, job claims, according to the Labor Dept., dropped by 9,000 to 310,000 last week, the lowest level since late July.

Bay Street Continues Gains as Bargain Hunters Descend

Thursday, September 28, 2006, 4:15 PM EST (Thomson Financial Corporate Services): Seven minutes into trading, the Dow briefly broke through its all-time record; the TSX also stayed up all day, as oil and gold climbed and bargain hunters continued to snap up resource stocks. Bombardier trumpeted a US$1.65 billion dollar contract in Africa and Bank of Montreal lifted Financials as it bought up another U.S. bank. In resource news, Teck is preparing for a possible strike while a Norwegian energy giant is scanning the oil sands for new opportunities and a partner to help them out.

The S&P/TSX Stock Exchange Composite Index rose 65.86 points, or 0.56%.

In August, due largely to cheaper metal and oil, Canadian industrial product prices dropped unexpectedly by 0.5% (a 0.1% fall was predicted); the loonie fell accordingly today.

Turning to the U.S., after revisions, the GDP grew at 2.6% in the second quarter, less than the 2.9% estimated in July, due mostly to the slowing housing market and less inventory building by businesses. The markets now await Canada’s July GDP figures tomorrow.

Teck Cominco’s stock shrugged off a strike threat at Highland Valley copper mine in B.C. If Teck cannot come to an understanding with United Steel Workers, 900 workers may walk off the job this Sunday.

Meanwhile, yesterday, the Bank of Montreal announced plans to buy Indianapolis-based First National Bank & Trust for US$920 million, as it continues to expand in the U.S. Midwest. The Bank’s Harris Financial Corp. is already the second-largest bank in Chicago. The deal, if cleared by American and Canadian regulators, would close in January.

Goldcorp’s CEO, Ian Telfer, dismissed yesterday’s demand from founder Rob McEwen about letting shareholders vote in the Glamis Gold takeover bid, saying “it was unfortunate that he was using the event to talk about his own investment portfolio.”

Bombardier boosted Industrials, after it won a US$1.65 billion contract to build and maintain a rapid rail transit system in Gauteng Province, South Africa. The railroad will connect Johannesburg, Tshwane (aka Pretoria) and the Johannesburg International Airport.

Gold soared upwards for the second day in a row as oil’s rise again made the yellow metal a desirable hedge against inflation. At the end of the trading day it was up US$7.60 to close at US$610.90.

Even as the head of OPEC denied them, rumours flew of production cuts when Reuters mistakenly announced one in a release. While never approaching yesterday’s near-two-dollar spike, oil hovered above US$63 briefly before settling down at US$62.76, off US$0.20.