Every Saturday, The Globe and Mail runs a feature in its sports section on athletes who experienced a good or bad week. The comments always make entertaining reading so I've decided to borrow it for the IWB, with thanks to The Globe's sports editors for the idea. Here's the first of what will be a periodic good week/bad week column highlighting companies, securities, and business leaders. Good week
British Petroleum (NYSE: BP). If we are to believe the headlines, BP's long Gulf of Mexico nightmare appears to be winding down. After more than 100 days, the Deepwater Horizon well has finally been capped. As The Washington Post colorfully put it on Thursday, the well is now "barely more of a threat to spew oil into the Gulf of Mexico than to start gushing lemonade". Meanwhile, it is reported that about 75% of the oil that gushed into the Gulf has been dispersed and there was TV coverage of fishing boats venturing out once again. I'm suspicious of that encouraging number, given that residue from the Exxon Valdez spill is still turning up on the Alaska coast two decades later. But the PR spin is great for BP.
Meantime, the company bit the bullet and is dumping the unfortunate Tony Haywood as CEO, effective Oct. 1. Don't shed any tears for him; he'll be able to spend the rest of his life in comfortable retirement thanks to a huge settlement. Meantime, his designated successor, American Robert Dudley, has become the company's new face in spearheading the clean-up effort, so far without a missed step.
All this is doing good things for BP stock, which trades on New York as an ADR under the symbol BP. The shares hit a 10-year low of US$26.75 on June 28 but are now on the rebound and closed Friday at US$41.33. That's still a long way from the 52-week high of US$62.38 so there could be a lot more upside here for aggressive investors. But be wary: we have not seen all the legal fallout from this spill and the court battles could cut into BP's profits for many years to come.
Enbridge Inc. (TSX, NYSE: ENB). Enbridge's Michigan pipeline spill near the town of Marshall was a pipsqueak compared to the BP disaster. In fact, as far as I can tell, it garnered more publicity in Canada than it did in the U.S., outside of the Michigan area. That's because of the company's Northern Gateway Pipeline application, which is creating a lot of controversy and becoming more high profile all the time.
Obviously, it was in Enbridge's best interests to mitigate the damage from the Michigan spill as quickly as possible, especially after Governor Jennifer Granholm made some critical comments about the company's initial response. Enbridge CEO Pat Daniel was on the scene quickly and by all accounts did a masterful job of placating worried Michigan residents and corporations as his clean-up team went to work. Meanwhile, Enbridge set up a special website with daily progress reports on the clean-up and opened community centres in Marshall and nearby Battle Creek (home of the Kellogg Corporation) to deal with questions and problems.
On Tuesday, the company took the unusual (perhaps unprecedented) step of offering to buy the homes of anyone in the affected area who wants to sell. Mr. Daniel made the announcement at a daily press briefing saying the company would pay full list price for homes within the "red zone" or within 200 feet of the river that had been put on the market before the spill.
"For people who own homes within the same area, who are concerned with regard to reduction in value or simply want to move as a result of the spill, we will provide them with an option to purchase their homes at the appraised value before the spill," he added. "This offer is going to be open for at least a year and we will discuss longer terms if required."
Gov. Granholm has now changed her tune and is praising Enbridge for its response. The stock, which briefly dropped below $50 after the news broke, is now back close to its 52-week high, closing on Friday at C$51.72, US$50.43.
Oil spills are never good news for anyone but both BP and Enbridge appear to be in recovery mode at this point.
Bad week
Research in Motion (TSX: RIM, NDQ: RIMM). The folks at RIM seem to be snake-bitten. They announce a slick new smart phone, the BlackBerry Torch 9800, to compete with iPhone and Android only to be upstaged by a growing international crisis over security that threatens to make the Canadian company an unwelcome guest in such key markets as India, Indonesia, and the UAE. It's nice to have Hilary Clinton go to bat for you but Washington doesn't seem to have the clout it used to when countries consider that their internal security is at stake.
As far as Torch is concerned, reviews were tepid at best. Some critics dumped all over the device for what they said was antiquated software and a primitive screen display. Walter Mossberg of The Wall Street Journal liked the slide-out keyboard and the new operating system and commented that "RIM is hardly dead or dying". But he, like many others, was critical of the paucity of apps for the company's products and remarked that Torch is really more a catch-up to iPhone and Android, "not a radical move forward".
Topping off RIM's bad week was the news that U.S. sales of wireless phones using Google's Android mobile operating system topped BlackBerry as well as iPhone in the second quarter. "Android is feasting on BlackBerry and on Windows," said Roger Entner, head of telecom research at Nielsen, in an interview with Bloomberg. That's not exactly what Jim Balsillie and his friends at RIM want to hear. The stock fell $6.09 on the TSX in three trading sessions from Tuesday to Thursday before bouncing back by $1.87 on Friday to finish the week at C$54.93 (US$53.45). We're maintaining our hold guidance for now but if the shares fall below $50 it's time to leave.
Manulife Financial (TSX, NYSE: MFC). At one time, not so long ago, Canadian insurance companies were thought to be the strongest pillars in our financial system. Unfortunately, even though they looked formidable, their foundations were full of cracks which emerged for all to see when the credit crunch hit and stock markets collapsed.
Manulife was the most badly bruised of all, forced to cut its dividend in half - a move which will haunt the company for years to come in the eyes of institutional investors. We were criticized by some readers when contributing editor Tom Slee advised selling the stock in July 2009 at C$19.22, US$16.53 (he had recommended the shares at a split-adjusted price of C$14.20). At the time, he suggested using the proceeds to buy TD Bank, then trading at C$55.71, US$48.60.
Manulife closed on Friday at C$14.03, US$13.66 after announcing a record second-quarter loss of $2.4 billion and being stripped of its prized AAA credit rating. CEO Donald A. Guloien described as the results as "disappointing". That's an understatement if there ever was one!
Manulife wasn't the only insurer with problems. Sun Life Financial (TSX, NYSE: SLF) also reported a weak second quarter, with earnings down 64% from last year. But at least Sun made a profit and never cut its dividend. Manulife investors can only dream!
Oh, as for TD it finished on Friday at C$73.09, US$71.12. That represents gains of 31% and 46% respectively since Tom Slee advised switching.
British Petroleum (NYSE: BP). If we are to believe the headlines, BP's long Gulf of Mexico nightmare appears to be winding down. After more than 100 days, the Deepwater Horizon well has finally been capped. As The Washington Post colorfully put it on Thursday, the well is now "barely more of a threat to spew oil into the Gulf of Mexico than to start gushing lemonade". Meanwhile, it is reported that about 75% of the oil that gushed into the Gulf has been dispersed and there was TV coverage of fishing boats venturing out once again. I'm suspicious of that encouraging number, given that residue from the Exxon Valdez spill is still turning up on the Alaska coast two decades later. But the PR spin is great for BP.
Meantime, the company bit the bullet and is dumping the unfortunate Tony Haywood as CEO, effective Oct. 1. Don't shed any tears for him; he'll be able to spend the rest of his life in comfortable retirement thanks to a huge settlement. Meantime, his designated successor, American Robert Dudley, has become the company's new face in spearheading the clean-up effort, so far without a missed step.
All this is doing good things for BP stock, which trades on New York as an ADR under the symbol BP. The shares hit a 10-year low of US$26.75 on June 28 but are now on the rebound and closed Friday at US$41.33. That's still a long way from the 52-week high of US$62.38 so there could be a lot more upside here for aggressive investors. But be wary: we have not seen all the legal fallout from this spill and the court battles could cut into BP's profits for many years to come.
Enbridge Inc. (TSX, NYSE: ENB). Enbridge's Michigan pipeline spill near the town of Marshall was a pipsqueak compared to the BP disaster. In fact, as far as I can tell, it garnered more publicity in Canada than it did in the U.S., outside of the Michigan area. That's because of the company's Northern Gateway Pipeline application, which is creating a lot of controversy and becoming more high profile all the time.
Obviously, it was in Enbridge's best interests to mitigate the damage from the Michigan spill as quickly as possible, especially after Governor Jennifer Granholm made some critical comments about the company's initial response. Enbridge CEO Pat Daniel was on the scene quickly and by all accounts did a masterful job of placating worried Michigan residents and corporations as his clean-up team went to work. Meanwhile, Enbridge set up a special website with daily progress reports on the clean-up and opened community centres in Marshall and nearby Battle Creek (home of the Kellogg Corporation) to deal with questions and problems.
On Tuesday, the company took the unusual (perhaps unprecedented) step of offering to buy the homes of anyone in the affected area who wants to sell. Mr. Daniel made the announcement at a daily press briefing saying the company would pay full list price for homes within the "red zone" or within 200 feet of the river that had been put on the market before the spill.
"For people who own homes within the same area, who are concerned with regard to reduction in value or simply want to move as a result of the spill, we will provide them with an option to purchase their homes at the appraised value before the spill," he added. "This offer is going to be open for at least a year and we will discuss longer terms if required."
Gov. Granholm has now changed her tune and is praising Enbridge for its response. The stock, which briefly dropped below $50 after the news broke, is now back close to its 52-week high, closing on Friday at C$51.72, US$50.43.
Oil spills are never good news for anyone but both BP and Enbridge appear to be in recovery mode at this point.
Bad week
Research in Motion (TSX: RIM, NDQ: RIMM). The folks at RIM seem to be snake-bitten. They announce a slick new smart phone, the BlackBerry Torch 9800, to compete with iPhone and Android only to be upstaged by a growing international crisis over security that threatens to make the Canadian company an unwelcome guest in such key markets as India, Indonesia, and the UAE. It's nice to have Hilary Clinton go to bat for you but Washington doesn't seem to have the clout it used to when countries consider that their internal security is at stake.
As far as Torch is concerned, reviews were tepid at best. Some critics dumped all over the device for what they said was antiquated software and a primitive screen display. Walter Mossberg of The Wall Street Journal liked the slide-out keyboard and the new operating system and commented that "RIM is hardly dead or dying". But he, like many others, was critical of the paucity of apps for the company's products and remarked that Torch is really more a catch-up to iPhone and Android, "not a radical move forward".
Topping off RIM's bad week was the news that U.S. sales of wireless phones using Google's Android mobile operating system topped BlackBerry as well as iPhone in the second quarter. "Android is feasting on BlackBerry and on Windows," said Roger Entner, head of telecom research at Nielsen, in an interview with Bloomberg. That's not exactly what Jim Balsillie and his friends at RIM want to hear. The stock fell $6.09 on the TSX in three trading sessions from Tuesday to Thursday before bouncing back by $1.87 on Friday to finish the week at C$54.93 (US$53.45). We're maintaining our hold guidance for now but if the shares fall below $50 it's time to leave.
Manulife Financial (TSX, NYSE: MFC). At one time, not so long ago, Canadian insurance companies were thought to be the strongest pillars in our financial system. Unfortunately, even though they looked formidable, their foundations were full of cracks which emerged for all to see when the credit crunch hit and stock markets collapsed.
Manulife was the most badly bruised of all, forced to cut its dividend in half - a move which will haunt the company for years to come in the eyes of institutional investors. We were criticized by some readers when contributing editor Tom Slee advised selling the stock in July 2009 at C$19.22, US$16.53 (he had recommended the shares at a split-adjusted price of C$14.20). At the time, he suggested using the proceeds to buy TD Bank, then trading at C$55.71, US$48.60.
Manulife closed on Friday at C$14.03, US$13.66 after announcing a record second-quarter loss of $2.4 billion and being stripped of its prized AAA credit rating. CEO Donald A. Guloien described as the results as "disappointing". That's an understatement if there ever was one!
Manulife wasn't the only insurer with problems. Sun Life Financial (TSX, NYSE: SLF) also reported a weak second quarter, with earnings down 64% from last year. But at least Sun made a profit and never cut its dividend. Manulife investors can only dream!
Oh, as for TD it finished on Friday at C$73.09, US$71.12. That represents gains of 31% and 46% respectively since Tom Slee advised switching.
