Friday, September 22, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): In a day that saw the loonie rise, Cognos' sterling earnings
buoying the tech sector, and gold once again flirting with the US$600 mark,
Bay Street was unable to maintain a rally because of the factor that has
dogged it all week: the price of crude. A general sense of foreboding that
dragged down the U.S. markets in the afternoon spread across the border as
well, as analysts pondered the meaning of the apparent slowdown in the
American economy for the nation that sends 85% of its exports to the
States. Alcan also sank on the admission that its plant upgrades in
Australia might be 25% higher than they had budgeted, while lumber
exporters learned what sort of bite the new softwood deal would take out of
their trade.
* The S&P/TSX Stock Exchange Composite Index declined 46.13 points, or 0.40%.
* Alcan, the aluminum giant, warned that the cost of refitting its
refinery in Gove, Australia, will be 20-25% higher than the originally
projected US$1.5 billion. However, the company mentioned that the recent
rise in aluminum prices would offset the increased cost. Alcan declined in
today's trading.
* Murray Edwards, the vice-chairman of Canadian Natural Resources,
opined that he believed some of the ambitious projects being considered for
the oil sands regions of Canada by such companies as Exxon-Mobil, Total SA,
and Petro-Canada might be derailed by high costs in the future. "These
projects, long term, need prices higher than $50 a barrel."
* The border tax charged to softwood lumber exporters has turned out to
be higher than the U.S. tariffs that triggered the agreement, Ottawa
revealed today. The 10.8% in duties may be gone, but an average of 15%
Canadian export tax will begin to be levied starting October 1st. The tax
will be funneled back to the forestry-heavy provinces, and the actual
percentage will vary according to the cargo, route, and province where the
wood is traveling.
* Software developer Cognos buoyed the tech sector with an 8.4% rise in
revenue for the second quarter. Net income was C$23.8 million, or C$0.26
per share, down from C$24.9 million, or C$0.27 per share, last year;
however, total revenue of C$229.4 million was up from last year's C$212
million, and beat predictions of C$228 million. Cognos plans to buy back up
to US$200 million of its shares from the open market, about 10% of the
total float.
* In U.S. earnings news, Palm, Inc., lost 9% in the first quarter but
still beat expectations. Net income was US$16.5 million, or US$0.16 per
share, down from US$18 million, or US$0.18 per share last year. With a
revenue of US$355.8 million, Palm beat forecasts of US$0.18 per share on
revenue of US$354.4 million. Nike, Inc., also beat forecasts but slid down
13% in profit in its first quarter. The drop to US$377.2 million, or
US$1.47 per share, was down from last year's US$432 million, or US$1.61 per
share, but exceeded forecasts of US$1.42 per share. GM also dropped as
chatter declined about its finding a merger partner.
* Oil briefly broke the US$62 mark this morning, but as Iranian Prime
Minister Ahmedinejad said that he might back off nuclear refining given the
right enticements, the price began to fall again. One analyst remarked that
the markets were testing the resolve of OPEC to hold production levels as
crude hit a ten-month low, closing down US$1.04 at US$60.55, down 5% for
the week.
* The recovery of the yellow metal gained speed, as gold closed up
US$7.10 to end at US$595.40.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Canadian Commentary, which
is updated twice daily. The information herein is believed to be true and
accurate, we take no responsibility for inaccurate information and reserve
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SOURCE Thomson Financial Corporate Group
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