Financial News

November 27, 2008

Stocks soar as Citigroup aid lifts spirits

Filed under: online — Tags: , , — Insurancent @ 5:39 pm

Stock markets in Toronto and New York rose sharply higher yesterday after the U.S. government rescued Citigroup Inc. with cash and guarantees, boosting investor confidence and resource prices.

In Toronto, the S&P/TSX composite index advanced 285.48 points, or 3.5 per cent, to 8,440.87 after gaining 5.6 per cent last Friday.

BCE Inc. shares rose nearly 10 per cent on optimism that the $52billion buyout of Canada’s largest telecom company will go ahead. Citigroup is a lead lender in the transaction, and BCE stock gained $3.39 to $37.94.

Wall Street soared, capping the best two-day run since the aftermath of the 1987 stock market crash.

The Dow Jones industrial average posted its biggest two-day rally since 1987, racing up 396.97 points, or 4.93 per cent, to 8,443.39. The S&P 500 index jumped 51.78 points, or 6.47 per cent, to 851.81. The Nasdaq composite index leaped 87.67 points, or 6.33 per cent, to 1,472.02.

Adding to the optimism, President-elect Barack Obama named his team of economic advisers – viewed as being favourable for Wall Street.

“There’s a relief rally,” said Paul Gardner, a money manager at Avenue Investment Management in Toronto. “The Citigroup bailout solved the immediate concern about short-term liquidity.”

Leading the TSX gains were energy stocks, ahead 7.6 per cent, as the January crude contract gained $4 business cards.57 (U.S.) to close at $54.50 a barrel in New York. Suncor Energy, the world’s second-largest oil-sands producer, gained 11 per cent, to $22.95 (Canadian).

Mining stocks were up 6.8 per cent and the gold index gained 1.5 per cent as December bullion rose $27.70 (U.S.) to $819.50 an ounce.

Financial stocks gained 4.7 per cent after Royal Bank of Canada said it will report a quarterly profit of $1.1 billion (Canadian). Shares in Canada’s largest bank, which reports Dec. 5, closed up $2.52 at $39.

The Canadian dollar surged 2.70 cents (U.S.) to 81 cents on a weaker greenback.

Citigroup received a U.S. government rescue package that shields the bank from losses on $306 billion of U.S. home loans and injects $20 billion of capital, bolstering the stock which fell 60 per cent last week.

The move by the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp. is the latest effort this year to support U.S. banks – adding to a $700 billion rescue for the financial sector, a bailout of AIG Group and the government takeover of mortgage lenders Fannie Mae and Freddie Mac.

From the Star’s wire services

Source

November 21, 2008

GTA home resales crash in November

Filed under: marketing — Tags: , — Insurancent @ 4:53 pm

The Toronto real estate market is seeing its worst resale numbers since the 1990s, and analysts say they are the direct result of the Bay Street jitters.

Figures released yesterday by the Toronto Real Estate Board show 1,991 houses sold in the greater Toronto region during the first 15 days of November, down almost 44 per cent from the 3,544 that sold during the same period last year.

The November results show the most significant change to the housing market since the global credit crisis began last summer and the results are beginning to drag the city’s year-to-date sale figures (70,474 sales in 2008, down from 84,994 last year) to pre-boom levels.

The hardest hit by the cooling housing market? The city of Toronto, where 830 homes have changed hands since Nov. 1. Last year, that figure was 1,643.

"A lot of the housing in Toronto relies on the financial market and financial services," said Toronto housing analyst Will Dunning.

According to Dunning, it’s the Bay Street types, the accountants and all those in the financial services who buy in the city’s core.

The mass uncertainty in the financial sector is lowering confidence among those potential homeowners, Dunning added.

"I think (the lack of consumer confidence) probably started around the middle of October as a lot of people just become very cautious, putting off decisions about the housing market because of all the uncertainty."

The sales numbers for the 905 area-code region, where the number of transactions has dropped from 1,901 to 1,161, might lead some to believe that homebuyers are more jittery about purchasing in the 416 area code.

But TREB says other factors might also be a factor.

"It’s particularly important to interpret the 416 area statistics in context, given the market surge we saw a year ago when buyers moved to avoid the new Toronto Land Transfer Tax," said Toronto Real Estate Board president Maureen O’Neill cash advance in one hour.

"At mid-month a year ago, transactions in the 416 area had increased 24 per cent over the same period in 2006."

The average price of a home in the GTA has also fallen, from $393,084 last November to $375,712 currently, with the average city of Toronto home having dropped by more than $32,000.

But O’Neill said homeowners need not worry about the falling value of their homes.

"I don’t think people will see huge declines from here in their house prices, but the market’s not going up yet. I think the confidence will come back, but right now it’s not there," she said.

"I think we’re into a real consumer confidence problem. All the economic fundamentals are sound, but people are watching CNN and having a wait-and-see attitude. When they’re listening to all the bad press they’re bound to, we have kind of a collective herd mentality.

"People will start to buy again, and we’ll see the numbers go back up."

Each month this year has seen lower sales than the coinciding month in 2007, a year in which housing sales were at a record high.

Dunning said the sales figures rallied back in the summer, but never reached the number of sales posted in the summer of 2007.

He said with 27,562 homes listed for sale on the Toronto MLS system compared with 20,173 available a year ago, the market has shifted to favour buyers.

Source

November 18, 2008

French Business Confidence Slumps to 21-Year Low

Filed under: legal — Tags: , , — Insurancent @ 5:23 pm

French manufacturing confidence dropped to a 21-year low in October as new orders fell because of the global financial crisis, suggesting the economy will probably contract in the fourth quarter, the Bank of France said.

The Paris-based central bank said its index of manufacturing confidence dropped to 77 from 86 in September, the lowest since records began in 1987. Economists expected the index to fall to 85, the median of 8 forecasts in a Bloomberg News survey showed.

“This crisis isn't over,'' European Central Bank council member Christian Noyer, who also heads the French central bank, said in a speech in Tokyo today. “Liquidity problems remain crucial at this stage of the crisis.''

Gross domestic product in the 15 euro nations shrank 0.2 percent for the second straight quarter in the three months through September, its first recession since the introduction of the single currency almost a decade ago.

“Industrial activity contracted further in October,'' the French central bank said in its monthly business survey. “Business managers' forecasts point overall to a further decrease in activity over the coming months.''

ECB Rates

The European Central Bank lowered its benchmark rate by a half-point to 3.25 percent on Nov. 6, the second such reduction in a month creditscore.com. As inflation ebbs, policy makers are now signaling further cuts when they meet in Frankfurt on Dec. 4.

French GDP will probably shrink by 0.5 percent in the fourth quarter, the Bank of France said. The French economy grew 0.1 percent in the third quarter after contracting 0.3 percent in the second, a government report showed last week. That would leave full-year growth at 0.9 percent in 2008, the central bank said.

French retail sales fell 0.8 percent in October from September, the Bank of France also said.

The economy may benefit from falling oil and food prices, Noyer said. Inflation in the 15 nations that use the euro slowed to 3.2 percent in October from a 16-year high of 4 percent in June and July.

“The oil and food shock which strongly penalized growth in the first half seems to be reversing,'' Noyer said. “If they are confirmed, these trends should spontaneously provide households with extra purchasing power, and contribute to a possible revival of consumption and investment.''

“These evolutions should contribute to stabilize the economy and allow a pickup in growth in the course of 2009,'' the French central banker also said.

Source

November 14, 2008

German Economy Enters Worst Recession in 12 Years

Filed under: marketing — Tags: , , — Insurancent @ 4:14 pm

The German economy, Europe's largest, contracted more than economists expected in the third quarter, confirming it has entered its worst recession in at least 12 years as the global financial crisis curbs exports.

Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell a revised 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters — the technical definition of a recession — in 1996.

German companies are scaling back production as slower global growth erodes export demand. Siemens AG, Europe's largest engineering company, plans to cut 16,750 jobs by 2010 as profit declines. Germany's benchmark DAX Index has tumbled more than 40 percent this year, business confidence fell to a five-year low last month and manufacturing orders plunged in September.

“The German recession has begun in earnest and it's very serious,'' said Holger Schmieding, Chief European Economist at Bank of America Corp. in London. “It raises the risk of a German contraction of more than 1 percent next year and we will have to revise down our forecast for the euro area as well.''

Eurostat, the European Union's statistics arm, will publish third-quarter growth data for the euro region tomorrow. The euro dropped more than a cent to $1.2388 after the German report.

Exports Hurt

In the year, the economy grew 0.8 percent when adjusted for the number of working days, the statistics office said. The third-quarter slowdown was led by trade as exports weakened and imports rose. Consumer and government spending improved “slightly,'' the office said.

Last week, the International Monetary Fund predicted economic contractions in the U.S., Japan and euro area next year, with Germany's economy forecast to shrink 0.8 percent.

The European Commission said on Nov. 3 that the 15-nation euro region is probably already in a recession. Just over 40 percent of German exports go to other euro-area nations.

Households may spend less and save more as companies retrench. Continental AG, which makes auto parts, plans to jettison 5,000 temporary workers and extend holiday production breaks. General Motors Corp.'s Adam Opel brand closed plants in Eisenach and Bochum for three and two weeks respectively to reduce production, forcing workers to take a vacation.

`Shock Waves'

“The shock waves pushed out by the financial crisis have hit Germany full on, if later'' than other countries, the government's five independent economic advisers said yesterday payday advance services. They called on Chancellor Angela Merkel to expand a 50 billion- euro ($63 billion) fiscal stimulus package to help revive growth.

Siemens Chief Executive Officer Peter Loescher today said next year's profit goals have become “more ambitious'' after the company reported a bigger decline in fourth-quarter earnings than analysts had expected.

Deutsche Lufthansa AG, Europe's second-biggest airline, said it filled fewer seats on its aircraft last month as the cooling economy deterred business and leisure travel.

Ralph Solveen, an economist at Commerzbank AG in Frankfurt, expects a “marginal'' recovery in the second half of next year.

“The German economy would have cooled regardless of the financial crisis, which just gave it the final push into recession,'' he said. “The factors that slowed German growth earlier this year such as high inflation, a strong euro and tight monetary policy are all disappearing, which should feed through to the economy next year.''

Upward Revisions

The statistics office revised first-quarter growth to 1.4 percent from 1.3 percent and raised its second-quarter estimate from a 0.5 percent decline. It will publish a detailed breakdown for the third quarter on Nov. 25.

The turmoil that began with the U.S. housing slump drove Lehman Brothers Holdings Inc. into bankruptcy in September and caused the biggest global stock sell-off in 70 years. The world's largest financial companies have posted almost $1 trillion in writedowns since the start of last year, when the collapse of the U.S. subprime mortgage market triggered a credit shortage.

With growth slowing around the world, oil prices have collapsed to $56 a barrel yesterday from a peak of $147 in July, easing inflation pressure and giving central banks from Washington to Beijing room to slash interest rates. The euro has dropped 20 percent against the dollar in the past four months.

Investors expect the European Central Bank to lower its benchmark rate by at least half a percentage point at its next meeting on Dec. 4, Eonia forward contracts show. That would be the sharpest rate reduction in the bank's 10-year history after its two half-point cuts in the past month to 3.25 percent.

Germany still faces “a long, drawn-out recession,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt, who forecasts the economy will shrink 1.5 percent next year, the most since the aftermath of World War II. “Unfortunately, we don't see any respite any time soon. Where should the growth come from?''

Source

November 11, 2008

A ray of sunshine for solar energy

Filed under: marketing — Tags: , — Insurancent @ 8:28 pm

John Paul Morgan was a cutting-edge engineer at JDS Uniphase Corp., back when the optical telecom giant was a market titan and solar power was still perceived by many as a backwoods technology for off-grid tree huggers.

Seven years later, the high-tech whiz kid has become a solar hotshot. Morgan has developed a new type of solar panel that, like many other systems on the market, concentrates the sun’s rays on to high-efficiency solar cells. The big difference is the simplicity of his design and the lower-cost materials used to build it could soon make power from the sun as affordable as electricity from fossil fuels.

All he has to do now is prove it. "We have to show this technology is bankable," he says.

Morgan’s path from telecom to solar panels wasn’t a straight line. A graduate of engineering science from the University of Toronto, he joined JDS in 2001 while in his mid-20s. Within three days at JDS he impressed higher-ups with his first invention and within three months broke the company record for most inventions in a year.

But the telecom market crashed and Morgan grew bored. As his older brother, Nicolas Morgan, explains, "developing products to make the Internet faster didn’t inspire him." He quit JDS in 2003, and travelled a year through South America, Australia and Asia before heading back to UofT to get his graduate degree in electrical and biomedical engineering.

Following through on a lifelong goal, Jean Paul then went to the Democratic Republic of the Congo where he handled logistics and construction projects for Doctors Without Borders. To him, the work was loaded with meaning, and while he returned a year later, he spoke of going back to continue with the cause.

That’s when his father, Eric Morgan, stepped in. He talked his son out of going back, arguing that if he really wanted to help people he had an obligation to use his smarts to solve bigger problems.

Jean Paul stepped up to the challenge. While working as a research associate at the Catholic University of Chile (where his family has roots), he decided that the best place to focus on was energy.

"I came to realize electricity was a fundamental human right and if you don’t have electricity you’re living in the dark ages," he recounts. "I decided there to devote my life to the problem of developing inexpensive, ubiquitous electricity. Solar was the obvious choice."

At first, Jean Paul looked for solar companies he might like to work for, but after researching the market he quickly found there was a technology gap that needed to be filled. Most of the solar-system designs that appealed to him were clumsy and complicated. He decided his goal should be to come up with a novel design that eliminates that complexity.

So began another adventure. Within just a few months an invention emerged, several patents were filed, and by June 2007 Morgan Solar Inc. was founded. Jean Paul, who turns 30 in December, now has six employees working out of a nondescript office near Richmond St. and Bathurst St., and his company has a prototype that was displayed for the first time last month at an international solar conference in San Diego.

As more people see it, "we know we’re going to blow people out of the water," says brother Nicolas, who heads up the company’s business development. Their father, a senior executive at managing consulting firm Capgemini, has thrown in some angel capital and provides guidance as chair.

It’s not that Morgan Solar is alone in its mission. The biggest expense today in manufacturing a solar panel is the materials, usually silicon, that make up the solar cells within. Researchers are racing to discover and commercialize methods to reduce that cost.

Some companies have developed ways to make solar cells using high volume roll-to-roll processes. This is similar in many ways to how we print newspapers or paper currency, and companies such as First Solar, Nanosolar, Konarka and OptiSolar – all U.S. companies, by the way – are leading the pack.

Thin-film solar cells use less material but are generally less efficient than traditional cells. This shortfall, however, is supposed to be offset by their lower cost of production. In other words, low-cost volume makes up for the loss of high-cost efficiency.

At the other end of the spectrum are companies trying to dramatically improve the efficiency of solar cells, such as Ottawa-based Cyrium Technologies Inc., which uses a number of exotic materials in addition to silicon to make multi-layered solar cells that can absorb more energy-rich light. Spectrolab and Emcore are two U.S. companies leading this side of the market, but their product is pricey Faxless pay advances.

Morgan Solar is attempting to build a bridge between low cost and high efficiency by concentrating an immense amount of solar energy on to a tiny thumbnail space lined with a superefficient cell from a Cyrium, Emcore or Spectrolab.

The idea is that such a small fraction of the costly solar cell is needed and so much of the sun’s energy is focused on it, that material costs can be kept to a minimum and efficiency can be increased.

It’s an approach dubbed "concentrating photovoltaics," or CSP, and a number of companies are in the race, among them U.S. ventures GreenVolts, Energy Innovations, and SolFocus, as well as Ottawa-based Menova Energy.

Some, like SolFocus, use mirrors to focus the light on a solar cell as if 500 suns are shining down. Others claim the same goals by using specially designed lenses or prisms that concentrate the light like a magnifying glass on the cell.

It’s a tricky thing to do. The target, often a tiny little chip no larger than a square centimetre, must be hit with pinpoint precision. Structures must be able to handle strong wind and special tracking systems are needed to make sure the sun is always shining directly. Being off by a few millimetres isn’t good enough. Also, the heat that results from focusing 500 suns, and up to 2,000 suns for some technologies, requires some creative cooling to keep the cells from melting.

Morgan Solar has come up with a completely different approach that relies on what it calls a light-guided solar optic. Basically, pieces of acrylic or glass are designed to capture sunlight as it hits a triangular surface less than a centimetre thick. Once inside the material, the sunlight is trapped and corralled through a bottom layer to one corner, where a tiny sliver of solar cell is positioned to absorb the barrage of concentrated light.

The triangles are packaged together to form a square about the size of a Compact Disc case and dozens of these squares make up a single panel.

"It’s bloody amazing," says William Masek, president and chief technology officer of Brockville-based Upper Canada Solar Generation Ltd., which has plans to build 50 megawatts of solar farms in Ontario. In the next few weeks he will begin field-testing Morgan Solar’s prototypes. "They probably have the most breakthrough solar technology announced in a long time."

Masek says the cost savings for him could be enormous if the technology, as claimed, can affordably convert more of the sun’s energy to electricity per square metre than conventional solar panels. "With traditional solar panels we’ll need over a thousand acres of property. But if we switch to their system, we can cut that land requirement in half and also substantially cut our costs," he says.

The materials that make up the panels are nothing fancy or expensive, Nicolas Morgan says during an interview at the company’s office. The solar panels are flatter than the competition, lighter, cheaper to build and can concentrate the light at up to 1,500. "This is completely new. Nobody has done it this way," he says.

Now comes the tough part – turning it all into a commercial product without falling into the valley of death, that point in the life of a technology start-up where the difficulty of finding funding ends up starving promising companies.

Morgan Solar’s office shows that the company is prepared to operate lean, making the most of the $600,000 is has raised so far from Eric Morgan and a grant from the Ontario Centres of Excellence. In one presentation room an old wooden door found in a nearby alley is being used as a conference table. On the wall, plastic shower lining purchased at Home Depot functions as a makeshift whiteboard for brainstorming sessions.

Nicolas says the company is talking to venture capitalists but doesn’t plan to raise private equity until its prototype has been proven to work. This will depend on the results of several demonstration projects, including two in Spain and one at the Earth Rangers Centre in Woodbridge. Commercial production of the product, dubbed Sun Simba, is targeted for 2010.

Jean Paul realizes tremendous work lies ahead, but his goal of developing cheap solar power for the developing world keeps him focused and driven.

"It’s what motivates me to work 14 hours a day every day, and I don’t get tired, because I know this work is important," he says.

Source

November 9, 2008

Soft drink maker Cott posts loss

Filed under: management — Tags: , — Insurancent @ 10:22 pm

Cott Corp. dropped to a third-quarter loss of US$87.6 million as the soft drink maker booked $95.8 million in goodwill and other charges while revenue fell 9.5 per cent to $420.5 million.

Toronto-based Cott, which reports results in U.S. dollars, said Thursday its loss amounted to $1.25 per share, versus a year-earlier loss of eight cents per share or $5.8 million.

The quarter's special charges were a $69.2-million writeoff of goodwill associated with Cott's U.K. business and a $26.6-million reduction related to the estimated fair value of its North American carbonated soft drink concentrate production capabilities.

"Difficult macroeconomic and competitive conditions have caused us to revisit the value of our goodwill and other intangible assets" resulting in the charges, said chief financial officer Juan Figuereo.

"However, our adjusted operating profit of $12 million in the third quarter of 2008 was up 6.2 per cent from $11.3 million in the prior year third quarter and our liquidity showed improvement during the quarter as compared to the second quarter of 2008."

The company also received listing requirement non-compliance notification from the New York Stock Exchange as the 30 trading-day average price of its stock fell below US$1.

Cott, the world's largest retailer brand soft drink provider, said overall filled beverage volume for eight-ounce equivalent cases was down 10 1 hour cash advance.1 per cent to 198.5 million as compared to the third quarter of 2007.

"Continued volume declines in the carbonated soft drink category and heavy promotional activity by national brands in North America, coupled with poor weather in the U.K. and Canada and the previously disclosed operating issues in our international business, impacted our results in our third quarter," interim CEO David Gibbons said in a statement.

"We continue to make progress with the implementation of our plan to refocus on private label. In North America, we are expanding our customer base and benefiting from retailers' renewed focus on their own brands as consumers increasingly search for value in a slowing economy."

Cott, restructuring under pressure from activist shareholder Crescendo Partners, wants to return to its core business of producing store-branded private label soft drinks, rather than developing new products such as energy drinks.

The troubled company is in the process of cutting jobs, streamlining operations and focusing on its private label business in a move to reduce operating costs by up to $43 million a year and improve the bottom line.

Source

November 8, 2008

U.S. auto makers plead for help from lawmakers

Filed under: money — Tags: , , — Insurancent @ 3:46 pm

WASHINGTON – The leaders of General Motors, Ford, Chrysler and the president of the United Auto Workers union came to Capitol Hill Thursday to discuss billions of dollars more in financial help for the companies, which have struggled under a weakened economy.

House Speaker Nancy Pelosi was meeting with the chief executives of Detroit's automakers to hear their expected plea for an additional $25 billion in federal loans for future health care payments for retirees.

Pelosi told reporters at the start of the meeting that they would discuss "how we can work together to go forward to ensure the viability of that important industry, looking out for the taxpayer and looking out for the worker.''

The executives also plan to seek help in accessing money from the Treasury Department or the Federal Reserve.

Congress last month approved $25 billion in low-interest loans for domestic automakers and suppliers to retool plants to build fuel efficient vehicles. But congressional allies of the industry have said the money will not be available fast enough to help the companies.

U.S. auto sales declined to their lowest level in more than 17 years last month, prompting some auto executives to predict dire consequences if the economy doesn't improve. The companies are hoping Pelosi will include funding for the industry in an economic stimulus package if she decides to call the House back in for a lame-duck session.

Alan Reuther, the UAW's legislative director, said the executives and UAW president Ron Gettelfinger "will be making the case why additional assistance from the federal government is needed to help the companies through this severe economic credit crisis."

The Pelosi meeting with Chrysler CEO Bob Nardelli, Ford CEO Alan Mulally and GM Chairman and CEO Rick Wagoner comes at a precarious time for the industry. General Motors Corp. and Ford Motor Co. are expected to post dismal third-quarter results Friday that will show losses in the billions of dollars. Additional job cuts by both automakers also are expected Friday.

A top GM executive said Wednesday that the next 100 days will be critical for GM and the industry companies making payday loans.

"We must be adaptable and ready to make needed changes quickly, particularly over the next 100 days," said Troy Clarke, GM's president for North America.

GM has been talking to Cerberus Capital Management LP, the majority owner of Chrysler LLC, about acquiring Chrysler. GM is reportedly seeking Chrysler's $11 billion in cash and federal aid to make the deal happen.

Auto industry officials said the companies do not intend to ask Pelosi for Congress' help in financing a merger. Gettelfinger has expressed concern that a GM acquisition of Chrysler would lead to massive job losses.

The new $25 billion in loans that the automakers want from Congress would help them make required payments to health care trust funds that were created as part of the 2007 labour deal.

Reuther said the companies are required to provide $15 billion to the fund in January 2010 and an additional $15 billion by 2012. He said the $25 billion from Congress would give the companies a better chance of immediately lining up other financing because most of the health care trust fund payments would have been covered.

"It's very important that those monies be contributed so retirees continue to have health care," he said. "The financial community is looking at that liability, and it's a major factor in their willingness to provide loans to the companies.''

The executives and Gettelfinger also want help from Congress in winning access to the $700 billion financial bailout being run by the Treasury Department and to low-rate emergency borrowing from the Federal Reserve's discount window, used in normal times by banks.

President-elect Obama expressed support for an additional $25 billion in loans on the condition that the money would go toward helping the industry build fuel efficient cars. Obama has said he would meet with industry leaders and the UAW quickly to talk about helping automakers, but a meeting has not yet been scheduled.

Source

November 7, 2008

Domtar net earnings rise, sales at $1.6B

Filed under: marketing — Tags: , , — Insurancent @ 1:46 am

MONTREAL–Domtar Corp. has booked third-quarter net earnings of $43 million or eight cents per share, compared with a year-ago profit of $36 million, seven cents per share.

The paper and lumber producer's sales for the quarter were $1.6 billion.

Excluding one-time items, Domtar said it earned $51 million or 10 cents per share, up from $32 million a year earlier.

"I am encouraged by the results, which we achieved despite high input costs, weak fine paper demand and a worsening economic environment," stated CEO Raymond Royer.

"Our earnings increased from last year's third quarter, our free cash flow is strong, our balance sheet is sound with no upcoming debt maturities and we were recently upgraded by credit agencies in tough credit market conditions pay day loan lenders."

Domtar offered a muted outlook for the current quarter, forecasting flat paper prices and lower lumber prices, with volumes “down from the third quarter across all businesses due to the weaker economy and typical seasonality."

However, management also expects a favourable foreign exchange rate, lower energy costs, and savings from its ongoing synergy program. Domtar said Tuesday it will permanently close its paper machine and converting operations in Dryden, Ont., cutting 195 jobs.

For 2009, Royer said, "the depth and duration of the economic slowdown and the impact this may have on office employment and demand for our products are uncertain."

Source

November 5, 2008

Stocks droop again on concern slump will harm earnings

Filed under: news — Tags: , , — Insurancent @ 7:45 pm

NEW YORK — Stocks fell Monday after drifting between gains and losses before the presidential election, on the worst contraction in manufacturing since 1982 and forecasts that the sagging economy will reduce profits.

Halliburton Co., the second-biggest U.S. oilfield services provider, led a retreat in 35 of 40 energy companies in the Standard & Poor’s 500 index after Goldman Sachs Group Inc. cut the shares to "neutral" and oil slid almost $4 a barrel. Walt Disney Co. lost 3.4 percent after Merrill Lynch & Co. said the economic slowdown will hurt theme-park and television income. AT&T Inc. jumped 3.9 percent after Wachovia Corp. said its valuation is "compelling."

"Investors are all looking for safe spaces," said Robert Lutts, president of Cabot Money Management in Boston, which oversees $400 million. "It’s been harder than usual for investors to find those safe areas."

The S&P 500 lost 2.45 points, or 0.3 percent, to 966.3. The Dow Jones industrial average slipped 5.18 points to 9,319.83. The Nasdaq composite index increased 5.38, or 0.3 percent, 1,726.33.

The S&P 500 retreated a day after posting its first back-to-back gains in more than a month.

Halliburton fell 7.2 percent to $18.36, leading a 2 percent decline in S&P 500 energy companies. The oilfield-services provider was cut to "neutral" from "buy" at Goldman.

Crude oil fell 5.8 percent to $63.91 after the Institute for Supply Management said manufacturing in the U.S. contracted last month at the fastest pace in 26 years loan till payday.

Disney lost 87 cents to $25.04. Merrill cut its share-price estimate for the world’s largest theme-park operator by 11 percent to $24.

General Motors Corp. fell 14 cents to $5.65. The largest U.S. automaker said sales of cars and light trucks tumbled 45 percent last month, which the company called the worst month since World War II.

The London interbank offered rate, or Libor, that banks charge for three-month loans in dollars, dropped 17 basis points to 2.86 percent, the lowest level since the collapse of Lehman Brothers Holdings Inc. on Sept. 15. The rate has declined for 16 straight days.

S&P 500 companies are on pace for their fifth straight quarter of declining profits. Earnings are down 9 percent for the 341 companies that have reported third-quarter results so far.

AT&T climbed 3.9 percent to $27.81 for the biggest gain in the Dow average. Verizon Communications Inc. added 3.6 percent to $30.75.

Hartford Financial Services Group Inc. jumped $5.96, or 58 percent, to $16.28 for the biggest advance in the S&P 500 after saying it has enough capital to withstand further market declines.

Nordstrom Inc. fell 9.2 percent to $16.38. Goldman Sachs Group Inc. lowered earnings estimates. Goldman Sachs fell 3.7 percent to $89.09.

Office Depot Inc. slid the most in the S&P 500, losing 20 percent to $2.88.

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