Skip to main content

The Globe and Mail

Oil sands crude not as ‘dirty’ as many think, journal Nature says, urging Keystone okay

These are stories Report on Business is following Thursday, Jan. 31, 2013.

Follow Michael Babad and the Globe's top business stories on Twitter.

Journal urges Keystone XL approval
The scientific journal Nature is urging President Barack Obama to "face down critics" and approve the controversial Keystone XL pipeline, though it does cite pollution issues in Canada.

Story continues below advertisement

In an editorial on energy security and the climate debate this week, Nature said the president should issue powerful rules governing power plants and warn the coal industry to "clean up or fade away."

Where TransCanada Corp.'s proposed Keystone XL is concerned, approval would "bolster his credibility" in the industry among the nation's conservatives.

Keystone XL, which would move more than 800,000 barrels a day of bitumen from Alberta's oil sands to Gulf Coast refineries, is a flashpoint for environmentalists.

"The administration should face down critics of the project, ensure that environmental standards are met and then approve it," the journal urged.

"As Nature has suggested before … the pipeline is not going to determine whether the Canadian tar sands are developed or not," it added.

"Only a broader - and much more important - shift in energy policy will do that. Nor is oil produced from the Canadian tar sands as dirty from a climate perspective as many believe (some of the oil produced in California, without attention from environmentalists, is worse). Tar-sands development raises serious air- and water-quality issues in Canada, but these problems are well outside Obama's jurisdiction."

The administration initially rejected the project, forcing TransCanada to reroute the planned pipeline around an environmentally sensitive region in Nebraska.

Story continues below advertisement

The issue was then punted until after November's presidential election.

RIM tumbles again
Shares of Research In Motion Ltd. plunged again today, continuing yesterday's rout that shaved 12 per cent off their value despite strong reviews for its new smartphones.

RIM shares have declined sharply since running up above $18 earlier this month.

As The Globe and Mail's Iain Marlow and Omar El Akkad report, the embattled Waterloo, Ont.-based smartphone maker unveiled its new BlackBerry 10 models yesterday to rave reviews that suggest RIM has a winner.

The company is reinventing itself with new offerings meant to put it back in the game alongside Apple Inc., Samsung Electronics Co. and Google Inc., whose iPhone, Galaxy and Android-system models have sparked fierce competition.

RIM is changing its name to BlackBerry, and its stock symbols to BBRY on Nasdaq and BB on the Toronto exchange.

Story continues below advertisement

While yesterday's global launch was long awaited, and by all accounts was successful, investors began to drive down RIM shares just after chief executive officer Thorsten Heins began speaking in New York, announcing that the first BlackBerry Z10 touchscreen models will be available in Britain beginning today and Canada in early February, but in the United States not until March. They will be followed by a keyboard version.

That U.S. date prompted some analysts, such as those at Raymond James, to slightly change their shipments, and thus earnings, projections for the quarter.

"BlackBerry has demonstrated truly unique software innovation within BB10, including hub, balance, its virtual keyboard, and heavy use of multitasking," Raymond James said.

"However, convincing the many BlackBerry users who have abandoned the platform for iOS and Android over the last few years to return will be a difficult challenge as Microsoft and Nokia can surely attest to," it said in its research note, referring to the Apple and Google operating systems.

"Early tech media reviews are mixed, with essentially universal love for the virtual keyboard, praise for the differentiated user interface and multi-tasking capabilities, but concerns about missing a number of key apps (Pandora, Netflix, etc.), battery life, and general concern about the dramatic change it will be for traditional BB users," the report added.

Analyst Peter Misek of Jefferies & Co., whose reports have moved RIM stock in the past, said yesterday's launch "gets them back in the game."

The biggest sore spot appears to be the longer-than-expected wait in the United States.

"The biggest disappointment was the delay in the U.S., that it will take so long before the devices get going there," Eric Jackson of Ironfire Capital LLC in New York told Reuters.

"I'm still confident that a lot of the subscriber base are going to want the upgrade to BlackBerry 10," he added.

"It's a very strong improvement over what they currently have. This is not going to cause mass defections from iOS and Android, but it doesn't have to be a success for RIM. You've got to start somewhere."

Mr. Misek, whose price target on RIM shares is $19.50 (U.S.) and whose rating is "buy," had expected the March launch in the U.S., despite what others believed, and "we would be buyers especially on this weakness ahead of much higher [May and August quarters] estimates."

Analyst Kris Thompson of National Bank Financial was particularly downbeat, holding to his $10 stock price target and "underperform" rating.

"The launch failed to generate much buzz other than the appointment of songwriter and performer Alicia Keys as BlackBerry's new Global Creative Director," he said.

"The product launch included no material secrets. Skype and WhatsApp have committed to provide BB10 apps, but no timeline was announced. BB10 OS is expected to be available on the PlayBook, but no timeline was announced. The virtual Z10 will not be available in the United States until March. The qwerty Q10 will not be available anywhere until April, which is very, very disappointing. Estimates might come down on the launch delays. We would avoid the stock until $10 and until we've had time to assess the product."

GDP expands
Canada's economy picked up in November, ending a months-long cold streak.

Gross domestic product grew by 0.3 per cent in November, Statistics Canada said today, a better showing than October's 0.1 per cent. In fact, it was the best showing since April, The Globe and Mail's Tavia Grant reports.

That growth was driven by the manufacturing, mining and energy sectors.

Canada's factories, in particular, turned in a good showing as manufacturing output climbed 0.7 per cent, compared to October's 0.9-per-cent slump.

"Overall, an upbeat report suggesting that economic activity picked up from its fall doldrums, although still lagging potential output growth," said economist Emanuella Enenajor of CIBC World Markets.

Both wholesale and retail trade picked up. In retailing, which notched a 0.6-per-cent gain, cars and car parts were the main drivers, but iPhone 5 frenzy after September's launch may have played a role, as well.

The arts, entertainment and recreation sector slipped, no doubt affected at least somewhat by the NHL lockout.

"Note that the arts, entertainment and recreation sector fell 0.3 per cent after three straight monthly declines totalling 5.4 per cent through October - this is at least partly due to the NHL lockout, which has since been resolved, and should lead to a bounce back in this sector," said Robert Kavcic of BMO Nesbitt Burns.

Even with November's rebound, the fourth quarter is still believed to have expanded at an annual pace of about 1 per cent to 1.5 per cent.

Best Buy shutters stores
Best Buy Canada is closing 15 of its almost 230 big-box stores and cutting about 800 employees as it prepares to expand into smaller outlets under its Future Shop and Best Buy Mobile banners, The Globe and Mail's Marina Strauss reports.

The cuts come as electronics retailers generally feel the squeeze of the burgeoning business at online retailers such as and Wal-Mart Stores Inc. and their cut-rate prices.

Spokesman Christopher Bennett said the cutbacks are not the result of heated e-commerce competition but rather consumers' growing preference for smaller stores. The new, smaller Future Shop stores will be roughly one-quarter the size of its big-box outlets.

This Bud's for you
The U.S. Justice Department moved today on an issue dear to the heart of any Canadian: Holding down beer prices.
Authorities filed a civil suit against the proposed $20-billion (U.S.) takeover of Mexico's Group Modelo by Anheuser-Busch InBev, warning the deal would see "consumers paying more for beer and having fewer new products from which to choose."

Citing the fact that U.S. consumers spent at least $80-billion on beer in 2012, the Justice Department said the deal would reduce competition across the nation and in 26 cities specifically.

Anheuser is the biggest in the United States, and Modelo the third-largest, together accounting for about 46 per cent of annual sales, according to the statement from the Justice Department.

Anheuser's Bud Light is America's top seller, and Model's Corona Export the top import.

"Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers," the department said.

Anheuser already owns part of Modelo.

"We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court," the brewer said.

"Given today's development, we no longer expect the deal to close during the first quarter of 2013. We will comment further once we have reviewed the DOJ filing."

Potash profit sinks
It's a good thing that Potash Corp. of Saskatchewan announced a 33-per-cent dividend hike yesterday, because today's fourth-quarter earnings aren't much to write home about.

As The Globe and Mail's Pav Jordan reports, the potash giant's quarterly profit fell shy of analysts' estimates as demand slipped in Asia and the company was hurt by a $41-million (U.S.) provision related to a legal settlement in the United States.

Potash earned $421-million, or 48 cents a share, in the quarter, below projections of 57 cents and well down from the $683-million or 78 cents earned a year earlier.

"Our fourth-quarter results were adversely affected by weaker performance in all three nutrients as global fertilizer markets paused in the absence of significant immediate needs and amid lack of direction, particularly in phosphate and potash," chief executive officer Bill Doyle said in a.

Air travel up
Economic uncertainty didn't keep customers from flying in 2012, The Globe and Mail's Bertrand Marotte writes today.

Air passenger traffic last year increased by 5.3 per cent, driven by growing demand in emerging markets, according to the International Air Transport Association.

"Passenger demand grew strongly in 2012 despite the economic bad news that dominated much of the last 12 months," said Tony Tyler, IATA's director general.

"This demonstrates just how integral global air travel is for today's connected world."

Streetwise (for subscribers)

ROB Insight (for subscribers)

Business ticker

Report an error Licensing Options
About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨