Nokia syndrome: Rescue of BlackBerry not an issue of national pride
Nokia syndrome: Rescue of BlackBerry not an issue of national pride
Floating out there this morning is the suggestion that the collapse and rescue of BlackBerry Ltd. is a matter of national pride in Canada.
Says The Financial Times, for example: “We should not underestimate the role national pride is playing in the move by a consortium of Canadian investment companies led by Fairfax Financial to take BlackBerry private in a $4.7-billion leveraged buyout.”
And, of course, there are the inevitable comparisons to Nortel Networks, which so famously flamed out.
That’s like saying Britain somehow should be ashamed of the fact that a Canadian heads the Bank of England. And another, the Royal Mail. Or that Finland should be particularly troubled that a Canadian heads Nokia. (Okay, bad example, that last one.)
Canadians don’t define themselves by who owns their companies. We’re not crowing about the fact that Hudson’s Bay Co. is buying Saks. We may want to shop there, but we don’t much care who owns it. Nor do we care that HBC itself was turned around by an American.
The proposed rescue of BlackBerry is about keeping alive the company that gave the world the smartphone, savings jobs that can be saved, and, for Fairfax Financial Holdings Ltd., protecting its 10-per-cent investment in the company.
We’re in a new era. This isn’t about the Canadian flag. Nor is the Microsoft-Nokia deal about Finland’s national pride.
It ain’t over ‘til it’s over
Having said all that, this saga is far from over.
As Streetwise columnist Boyd Erman writes today, the proposed rescue by Prem Watsa’s Fairfax looks frail, at best.
The letter of intent between Fairfax and BlackBerry is sprinkled with so many ifs, ands and buts that it’s anything but a done deal.
As The Globe and Mail’s Tara Perkins, Tim Kiladze, Jacquie McNish and Sean Silcoff report, Fairfax will spend six weeks going through BlackBerry’s books before committing to the proposed $9-a-share deal. Then there’s the issue of the proposed Fairfax-led consortium, and then the financing.
Oh, yes, and whether that $9 is fair, and whether BlackBerry can do better.
“Our view is a takeover for BB is inevitable and that it should come at a higher price,” said analyst Todd Coupland of CIBC World Markets.
“Our price target of $12 is based on a sum of the parts analysis.”
Some other analysts believe the company, which is also sitting on patents and $2.6-billion in cash, is worth far less.
Mr. Coupland believes that the “discounted value” of BlackBerry’s assets is $9.65, excluding the company’s cash.
“Our view is this offer is the first but not the final one,” he said, though some other observers expect no further moves.
“We believe the chances of another bid are 50-50,” he added.
“Potential bidders might include a Lazaridis-led consortium. The Fairfax bid could also very well attract other ‘strategic’ [original equipment manufacturers] who up until now had time on their side and could wait for a ‘more attractive’ price.”
Mr. Coupland was referring to Mike Lazaridis, who founded what was then Research In Motion Ltd. and is rumoured to be trying to put together a bid with private-equity players.
Tara Perkins, Tim Kiladze, Jacquie McNish and Sean Silcoff: Fairfax hands BlackBerry $4.7-billion lifeline
Boyd Erman in Streetwise (for subscribers): Fairfax's BlackBerry rescue: Fairfax's BlackBerry rescue: An illusion at best?
Tara Perkins and Jacqueline Nelson: Watsa surprises again by riding to BlackBerry's rescue
The BlackBerry deal: 'This is a take-under but at least they got one bid'
Scott Barlow in ROB Insight (for subscribers): BlackBerry valuation hinges on patents, services
Tim Kiladze in Streetwise (for subscribers): Why the timing of BlackBerry's buyout is crucial
BlackBerry reels: Stock gored after shocking loss, BBM mishap
Omar El Akkad: BlackBerry's last stand: A big bet on corporate buyers
Sean Silcoff and Omar El Akkad: BlackBerry takes huge loss as sales collapse
China buys into potash concern
Enough about BlackBerry. Let’s talk potash, that other Canadian icon.
In a move that promises to affect Canadian interests, China is grabbing a 12.5-per-cent stake in Russian potash giant OAO Uralkali.
Uralkali is the company that pulled out of the Russian potash cartel, leaving North America’s Canpotex as the major group and driving down the stock prices of potash-related companies as investors anticipated lower prices.
Today, Uralkali announced that Chengdong Investment Corp., part of China Investment Corp., is swapping bonds for stock in the company.
That’s a signal of China’s interest in, and need for, potash, and in this way it can help influence prices in major contract negotiations.
Brenda Bouw: Agrium increases dividend, lowers outlook
It doesn’t seem to matter that Federal Reserve put to rest the “tapering” issue just last week. Second-guessing the Fed seems to be what it’s all about, and investors appear worried again over when the U.S. central bank will begin to cut its bond-buying stimulus program.
“The Federal Reserve is trying to keep investors in the dark as to what its next move will be,” said market analyst David Madden of IG in London.
“The decision to keep the bond-buying program unchanged at $85-billion per month pushed equities higher, but speculation is mounting about what the next meeting will bring.”
Amid this concern, Tokyo’s Nikkei slipped 0.1 per cent today, and Hong Kong’s Hang Seng 0.8 per cent.
In Europe, stocks are on the rise. London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 0.3 per cent and 0.7 per cent by about 8:45 a.m. ET.
Dow Jones industrial average and S&P 500 futures were little changed.
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Retail sales rise
Gas stations – those places we love to hate when we look at the price at the pump – helped boost retail sales in Canada in July.
Sales among retailers climbed 0.6 per cent, having been on an upward trend this year, Statistics Canada said today.
Eight of the 11 sectors measures posted increases, representing more than half of the total action across the country.
That was led by an increase of 3.2 per cent at gas stations.
“Higher prices at the pumps and more volume sold contributed to the increase,” the federal agency said.
“This was the third consecutive month of higher sales at gasoline stations.”
Shoppers in Ontario and Quebec led July’s charge, while sales inched up just 0.1 per cent in Alberta, where consumers had been expected to restock their shelves after the summer floods.
"In provincial terms, Ontario and Quebec were the biggest winners, with the latter likely benefiting from the end of the construction strike," said Emanuella Enenajor of CIBC World Markets. "In contrast, Alberta’s mere 0.1-per-cent increase suggests the post-flood 'bounce-back' to retail sales may not have been all that great."
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