Banks leave analysts in dust, Sony girds for Apple – The Globe and Mail

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Banks leave analysts in dust, Sony girds for Apple

Apple's iPad

Apple’s iPad

Plus, Greece buys itself breathing room with bond issue. Housing market still going strong. And, Leonard Asper quits CanWest

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Michael Babad

Globe and Mail Update

Today’s top stories from Report on Business :

TD profit surges

Toronto-Dominion Bank (TD-T70.700.991.42%) beat analysts’ estimates with first-quarter results that doubled to $1.3-billion, lea by its personal and commercial banking operations in Canada. Revenue jumped to $5-billion. Of the banks that have reported so far in Canada, only Royal Bank of Canada (RY-T57.680.180.31%) has missed projections, and then just by a penny, while still reporting a 35-per-cent gain. The results of the major banks illustrate again the strength of Canada’s financial sector, particularly compared to its global competitors.

“TD reasserted the banks’ trend of positive surprises, handily beating forecasts and continuing to make us (analysts), as a group, look overly conservative,” said analyst John Aiken of Barclays Capital. “However, TD’s earnings reflected a different composition on how it beat estimates against the other banks. Credit was not as strong as had been reported by its peers, although provisions for credit losses did come in below expectations.”

Added Credit Suisse analysts Jim Bantis and Adam Chan: “We are increasing our 2010 [earnings per share] estimate from $5.40 to $5.85 largely due to this quarter’s earnings beat and the prospects of stronger domestic retail banking results relative to our original forecast. As such, we are updating our target price (from $61 to $67) to reflect our revised forward estimates … Major strengths of TD Bank include its defensive earnings mix with retail businesses representing roughly 80% of total operating earnings and solid risk-adjusted wholesale banking platform.” Read the story

Asper leaves CanWest

A conflict of interest has prompted Leonard Asper to resign as chief executive officer of CanWest Global Communications Corp. (CGS-X0.100.0055.56%) , ending an era at the media company founded by his late father Izzy Asper. The younger Mr. Asper is working on a rival bid, with Goldman Sachs Group Inc. (GS-N167.223.612.21%) and private equity firm Catalyst Capital Group, for CanWest’s major broadcast operations, though Shaw Communications Inc. (SJR.B-T20.640.170.83%) won court approval for a 20-per-cent stake, valued at $95-million for that part of the business. CanWest is operating under credit protection, and its newspapers are being auctioned separately. Read the story

Related: Black Press founder joins CanWest paper chase

Strong demand for Greek bond issue

Greece passed a crucial test today as a new bond issue drew huge demand, giving the country some credibility and market support as it fights its way out its debt crisis. The government said the issue drew €15-billion in offers, while it took €5-billion at a yield of 6.3 per cent. Greece’s finance ministry said the success of the issue illustrated that “investor confidence in the Greek economy remains strong.”

Greece has been the focus of a debt storm that has rippled through financial markets, and with its austerity measures now on the table, investors are looking elsewhere. It is the ‘G’ in what have become known as the PIIGS, the debt-burdened countries that also include Portugal, Ireland, Italy and Spain, and its reforms have sparked widespread unrest among the public service.

In Portugal today, public employees staged a nationwide strike over the government’s proposed wage freeze, while the government stood firm. According to the Associated Press, Goncalo Castilho dos Santos, the country’s secretary of state responsible for the civil service, said Portugal “cannot sacrifice the common good for the sake of individual well-being.”

As Greece calms somewhat, traders are now shifting their focus to the next basket case. Some banks and hedge funds, the New York Times reported today, are looking now at the remaining PIIGS, which promises to continue to roil markets. “What people are doing in the markets is no different from what they did with the banks,” Jim Caron, Morgan Stanley’s chief of interest rate strategy, told the newspaper. “First it was Bear Stearns, then it was Lehman Brothers and so on. That’s what people are worried about.”

Read

Greece raises badly needed money

The search for villains is on in Greece

Eric Reguly in Europe: Beware Greeks bearing Goldman’s gifts

New York Times: Traders, hedge funds turn attention to the next Greece

Why EU may be wary of Greece seeking IMF help

Portugal stands firm on austerity measures

Britain grapples with debt of Greek proportions

Canadian Natural Resources hikes dividend

Canadian Natural Resources Ltd. (CNQ-T74.222.263.14%) CNQ-T is hiking its dividend and splitting its stock. The Calgary-based energy producer also this morning posted a hefty drop in fourth-quarter profit to $455-million or 85 cents a share from $1.77-billion or $3.27 a share a year earlier. Still, at $3.32-billion, revenue topped analysts’ estimates. The company did not change its outlook. It boosted its quarterly dividend to 15 cents from 10.5 cents and, subject to approval by shareholders, announced a two-for-one stock split. UBS Securities Canada called it a “solid” quarter. Canadian Natural vice-chairman John Langille noted that “the commodity price environment in 2009 was challenging, particularly in the first half of the year, as a result of economic concerns that continued from 2008.” Read the story

Sony developing new devices

Sony Corp. is ramping up to take on Apple Inc. (AAPL-Q218.657.943.77%) with new handheld devices, the Wall Street Journal reported today. Among the new products, the newspaper reported online, is a phone that can download and play PlayStation games. The Japanese company is also working on a device that “blurs distinctions” among e-readers, the portable PlayStation and netbook computers, it said. Quoting sources, it said the new devices are expected to be released this year, and are part of chief executive officer Howard Stringer’s strategy to turn the electronics giant around.

Real estate remains strong

Canada’s housing market “kept humming along in February,” BMO Nesbitt Burns says, citing sales results from Toronto and Vancouver. While national numbers won’t reported until later this month, BMO noted this morning that resales in Toronto rose 77 per cent in February from a month earlier, while prices jumped 19 per cent. In Vancouver, sales rose 67 per cent and prices 20 per cent. BMO projected the real estate market will remain strong in advance of Ottawa’s tightening of mortgage standards, the harmonized sales tax in Ontario and British Columbia, and the inevitable rise in interest rates. “However, the year-over-year numbers will start to plunge as the comparisons (right now being made to the depths of recession) become much tougher,” BMO said. “The key to watch this spring is supply – it is slowly starting to come back as we speak, but will it be able to meet seemingly insatiable demand?”

Building permits, meanwhile, took a surprising fall in January, marking their third monthly drop in a row, Statistics Canada said this morning. But this was driven by declines in the non-residential sector, which marked a 21-per-cent decline. Residential permits increased 4.1 per cent, another sign of strength in the housing market.

Central banks hold firm

Both the European Central Bank and the Bank of England held their benchmark interest rates at historic lows today, as expected, while new ECB forecasts showed the economies of the 16-nation euro zone will continue to rebound only modestly from the recession. The ECB projected the economy will expand by just 0.8 per cent this year and 1.5 per cent in 2011. The ECB held its key rate at 1 per cent, while the Bank of England stayed at its record low of 0.5 per cent. Read the story

Stronger signs in U.S. jobs market

While it’s just one week’s reading, there are optimistic signs this morning from the U.S. jobs market. With more than 8 million workers tossed out of their jobs during the recession, new claims for unemployment benefits in the United States fell last week, by 29,000, while continuing claims fell more than expected to the lowest in over a year, 4.5 million. “Overall, this was a somewhat encouraging report, as it suggests that the recent spike in claims over the past few weeks was mostly due to temporary factors, and not a sign that the improvement in the U.S. labour market has lost traction,” said TD Securities economics strategist Millan Mulraine.

U.S. retail sales strong

U.S. retailers this morning are reporting solid February sales, indicating Americans shook off their recession blues, and the heavy snows that battered the East Coast. Several retailers reported better than expected sales, though analysts still caution the low consumer confidence and high unemployment will hold spending in check. Separately today, Wal- Mart Stores Inc. WMT-N boosted its annual dividend by 11 per cent, to $1.21 (U.S.) a share. Read the story

What changes to telecom ownership rules could mean

Analysts are weighing in on the outlook for Canada’s telecom industry after the government announced yesterday it planned to allow greater ownership in the sheltered sector, though many questions remain. Here’s what some analysts say:

“Even if foreign ownership restrictions were lifted today, we do not see much foreign strategic interest in Canadian incumbents. This is because large U.S. carriers like AT&T, Verizon and Comcast still seem focused on domestic operations. In addition, Canadian telcos and cablecos currently trade at significant premiums to U.S. and European peers. Consequently we reiterate that an easing of restrictions would probably benefit new entrants like Globalive, DAVE and Public Mobile to the detriment of incumbents. Finally, we see no reason why [the] throne speech should drive consolidation amongst incumbents.” Dvai Ghose, Genuity Capital Markets

“Here are the potential implications: 1. Wireless new entrants will benefit from greater access to foreign capital. Good for Wind, Public Mobile and Dave (Mobilcity). 2. With foreigners in, there could be a stronger case for BELUS (a merger of Bell Canada and Telus) or it could happen earlier. 3. If BELUS were to take place, cables will likely be next to consolidate. Rogers + Shaw + Cogeco. 4. Cables are regulated by the Broadcasting Act, not the Telecommunications Act. Therefore, some legislation changes will be needed to allow cables to get the same treatment as their telecom peers. 5. Under this scenario, consolidatees are likely to benefit most from an investment pTerspective: TELUS (voting and non-voting shares will also collapse), MTS, Cogeco Cable, Shaw. Note the cables are family controlled and the ultimate decisions rest with the families.” Jeff Fan, Scotia Capital

“It’s going to force them to be more competitive. If at the end of the day it’s going to force them to strike a deal with an outside player or amalgamate, so be it.” Ronald Gruia, Frost and Sullivan, referring to the incumbent players

“There’s a difference between opening the door part of the way and letting cats and dogs through and opening it all the way and letting the elephants in … It is my hunch they are not going to let AT&T buy Bell tomorrow.” Duncan Stewart, Deloitte Canada, to The Canadian Press

“I think this is long overdue. There is a possibility a Verizon or Deutsche Telekom, or NTT Docomo, some of the large global players that have been investing in other markets, might see Canada as more open to business.” University of Ottawa professor Michael Geist, to The Canadian Press

“We believe opening the doors to foreign investment in Canada will benefit the new wireless entrants in the near term by providing them with greater access to capital and allowing them to simplify their business structures …For widely-held companies such as BCE and Telus, they may benefit in the longer term from potential takeout by foreign strategic players (although they may need to divest their media businesses in doing so – foreign ownership rules for broadcasting does not appear to be addressed). For family-controlled businesses (e.g. Rogers, Shaw, Cogeco, Quebecor), the benefit is less certain until there’s greater visibility to the families’ intentions. We also note that the Canadian telecom sector may be less attractive to foreign strategic players today versus several years ago as the industry is maturing and growth is slowing, and their shares are generally trading at a discount to their Canadian peers.” Phillip Huang, UBS Securities Canada.” Read the story

Posted via web from Toronto Real Estate News | Blog

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About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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