Maytag Recalls Refridgerators, Maytag Man Not So Lonely Anymore

Full press release as follows:

Yahoo!: Maytag voluntarily recalls 1.6 million refrigerators in Canada and the U.S.

By The Canadian Press
TORONTO - Maytag Corp. is voluntarily recalling about 1.6 million refrigerators in Canada and the United States due to an electrical problem that could create a fire hazard.
Maytag says two incidents, neither involving injuries, have been reported in Canada.
Outside of Canada, Maytag has received reports of 41 incidents, including 16 that ranged from smoke damage to major kitchen damage.
The Newton, Iowa,-based company says the recall involves some Jenn-Air, Amana, Admiral, Magic Chef, Maytag, Performa by Maytag and Crosley side-by-side and top freezer refrigerators.
Consumers are advised to contact Maytag to find out if their refrigerator is included in the recall and to set up a free in-home repair. The toll-free number is 1-866-533-9817.
Maytag says approximately 193,500 of the units were sold at department and appliance stores and by homebuilders in Canada
from January 2001 through January 2004. Benton Harbor, Mich.-based Whirlpool purchased Maytag in March 2006 in a $1.8 billion dollar deal.

I only bring this up because I've known a surprising number of people who despise Maytag appliances with every fiber of their being. It's noteworthy simply because unlike cars, trucks, and such like, kitchen appliances are seldom the subject of deep-seating feelings.

Apparently, these sentiments aren't baseless. Where there's smoke, there's fire, so to speak.

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Canadian Government Promises Nortel Aid. Wait, What?

This just in, from the Department of "Are You Fucking Kidding Me?"

Yahoo!: Canadian government to aid Nortel after bankruptcy filing

Canadian government Wednesday offered aid to Nortel Networks after the telecom giant filed for bankruptcy protection in the Canada and the US.
"The government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada (EDC)," Industry Minister Tony Clement said in a statement.
The EDC agreed to provide up to 30 million Canadian dollars (24 million US) in short-term financing and is open to discussing with Nortel financing with other financial institutions, he said.

Somebody, anybody, please tell me where the sense is in this announcement. Even as an empty promise intended to curry favor with the electorate, it just doesn't work.

This bailout nonsense has long since jumped the shark. Rest assured, we here at the global headquarters of Lee Distad's Professional Opinion fully intend to belly up to the public trough make our case to the legislators that the blogging industry, and ourselves in particular, need a multi-billion dollar federal bailout.

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Nortel Networks Screwed, Again

When people talk about the biggest corporate disasters of all time, the same names come up: WorldComm, Enron, and Nortel Networks.

Unlike the former companies, Nortel has been hanging in for years, like some sort of slow-motion train wreck, bouncing from major crisis to minor, and never regaining it's lost status as the darling of Canadian hi-tech companies.

Yahoo!: Telecom giant Nortel files for bankruptcy protection, victim of credit crunch

Telecom equipment giant Nortel Networks Corp. (TSX:NT) and several of its units have filed for bankruptcy protection from creditors, a victim of the global credit crunch that has devastated the Canadian company's markets.
Once the kingpin of Canadian technology and one of this country's most widely held stocks, Nortel and several of its units filed for Chapter 11 bankruptcy protection in the United States and were set to do the same thing in Canada under the federal bankruptcy protection law.
The high-tech company has faced a variety of troubles since the telecom bubble burst eight years ago, including accounting problems that devastated its stock and led to criminal charges against former executives and most recently the sharp slump in the economy.

This seems like a good time to dredge up an old joke that's been trotted out via email every time Nortel has been on the ropes (figures are unaudited):

If you had bought $1000.00 worth of Nortel stock one year ago, it would now be worth $49.00.
With Enron, you would have $16.50 of the original $1,000.00.
With WorldCom, you would have less than $5.00 left.
If you had bought $1,000.00 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, then turned in the cans for the 10 cent deposit, you would have $214.00.
Based on the above, our current investment advice is to drink heavily and recycle.

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BCE Takeover All Over But For The Suing

Well, that didn't go too well.

Yahoo!: BCE takeover dead, court fight looms over $1.2B termination fee

The BCE Inc. takeover is dead, and the two sides appear headed for a $1.2-billion court fight over the carcass of the deal.
...
BCE, the parent company of Bell Canada, stated about eight hours later that the purchasers' notice was invalid because it was delivered before the Thursday-midnight termination deadline, but "given the purchaser's position, the BCE privatization transaction will not proceed." The Teachers group said that "under these circumstances neither party owes a termination fee to the other."
BCE disagrees, stating that it "will be demanding payment of the $1.2-billion break-up fee from the purchaser."

Of course, $1.2 billion is peanuts next to what BCE shareholders missed out on. But not only is it, as they say, the principle of the thing, BCE could probably really use the money.

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Blowback Over Shaw Cable And HBO Canada

So Shaw Cable just announced that they'll be offering HBO Canada, but not everybody is happy with the offer of $14-$18/month when bundled with MovieCentral.

Here's the response to Shaw that a regular Lee Distad's Professional Opinion reader from BC cc'ed me on.

Dear Shaw Cable,

Your *^(&^*&^ joking right?

Look let me explain this to you once. In order for you to be competitive you are going to have to stop whacking us (18.95?) for individual channels. I bought the premium package TO GET THE EXTRA CHANNELS.
Either I get ALL the HD channels included in the present package or forget it. Clearly you need direct competition to put this in perspective. This is unbelievably arrogant and outrageous behavior to stick your hand out like this
And is because you believe you are operating from a position of strength. You are not.

PS – Make sure Jim Shaw gets this.

It doesn't help Shaw's case that, as my reader pointed out in a separate email, Cogeco Cable in Eastern Canada is offering it already bundled in with Movie Network for one price.

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BCE Totally Screwed

Bad news for shareholders looking forward to the buyout that was supposed to take telco BCE private.

Yahoo!: BCE says buyout in jeopardy, shares sag

Reuters) - BCE Inc said on Wednesday it was unlikely its C$34.8 billion ($28.2 billion) leveraged buyout would close next month after its accountants ruled that the company that emerges from the deal would not meet a solvency test because of its huge debt load.
Shares of BCE, Canada's biggest telecom company, plunged almost 40 percent as investors reacted to the latest twist in the saga of the world's largest leveraged buyout, which is being led by the Ontario Teachers' Pension Plan.
The deal has already faced regulatory scrutiny as well as a Supreme Court of Canada challenge by angry debt investors as it inched its way forward to the scheduled December 11 closing date.
And on Wednesday, BCE -- the parent of Bell Canada -- said its accountants, KPMG, have found the company would not meet the buyout agreement's solvency test because of current market conditions and the amount of debt involved in the financing.

Bad news for shareholders, good news for the underwriting banks that weren't happy with the terms they had written.

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Tim Hortons Ratchets Up The Green

This just in from the It's Not Easy Being Green Department:

Yahoo!: Toronto Tim Hortons going green with brown cups

TORONTO (Reuters) - Tim Hortons Inc plans to step up its environmental efforts by setting up recycling bins for the millions of paper coffee cups and other waste the restaurant chain produces every day.
The decision to crank up the coffee and doughnut chain's green program comes as the city of Toronto moves to crack down on food packaging that ends up in its landfill sites.

Hey, fantastic. But what about the fact that about 99% of Tim's business is rush hour orders through the drive through window?

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Financial Post really wants Canadian banks to go shopping

Just got this story sent to me in my email:

National Post: Fed trolls Canada to rescue U.S. banks

In a desperate bid to help U.S. banks recapitalize, Washington is reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
...
The communications have included phone calls from Fed officials pitching potential sales of assets of U.S. financial companies and at least one intensive discussion of a major rescue operation, according to people familiar with the contacts.
"I don't think Canadian banks want to take a lot of balance sheet risk but I don't think they are going to have to," the [UNNAMED] source said, adding that while the target banks have manysubprime mortgages, the Federal Reserve will backstop these high-risk liabilities. "We could end up in a funny situation two years from now saying this was a once in a generational opportunity for Canadian banks."

While it's been widely reported that the Fed is exhorting foreign banks to check under the sofa cushions for anything they can spare, reading this I see a little conjecture, and a whole lot of effort to drum up a Canadian angle to the story. Call it the financial version of "you provide the pictures and I'll provide the war."

Given the generally provincial and introspective attitude of Canadian banks, I would be deeply surprised if any of them went all-in on distressed US finance assets. A Calgary-born friend who works on Wall Steet is fond of pointing out that Canadian bankers with big balls, bigger ambition and a huge appetite for risk end up in New York, London or Honk Kong. The ones who stay home, well, you could call them cautious, although he uses a different word that starts with "P."

This may indeed be a once-in-a-bubble fire sale. Certainly some big global players are taking advantage. Do Canadian banks have the sack to play too? I have my doubts.

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HBC Changes Hands From One Private Equity Company To Another

Who said that the global credit crunch has dried up all the opportunities for dubious, ill-thought out Private Equity plays? The purchase of beleaguered Canadian retailer HBC by NRDC Equity Partners doesn't count as being taken private, since HBC was bought by the late Jerry Zucker's PE enterprise in 2006. TV personality Stephen Colbert might call it being taken private-er.

Yahoo! News: Hudson's Bay Co. bought by U.S. private equity owner of Lord & Taylor

TORONTO - The Hudson's Bay Co. has been bought by the private equity firm which owns American department store chain Lord & Taylor.
The purchase by New York-based NRDC Equity Partners, for an undisclosed amount of money, combines two of the oldest department store retailers in North America. It puts together HBC's Bay, Zellers, Home Outfitters and Fields operations with NRDC's Lord & Taylor group and Fortunoff jewellery and home-decor chain.

Since it's a PE to PE deal, it's going to take some digging to find out what NRDC paid for HBC. A cynic might suspect that it was at a liquidation rather than a premium price given how, you know, nobody actually shops at the HBC family of stores. On the other hand, HBC still has a pretty cherry collection of real estate, as well as lease locations, so the potential is there for a reasonable profit, given that Zucker originally took HBC private at a fire sale price.

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Bell Hops Onto The Digital Delivery Train!

It's a big week for news about Digital Delivery.

Globe and Mail: Bell launches video download store

Long restricted in the range of TV shows or movies they can buy or rent online, Canadians now have a much broader selection with the opening of the Bell Video Store.
With more than 1,500 movies and TV titles available, the Bell Video Store is the country's first online service to offer download-to-own movies the same day they become available in retail stores. People in less of a hurry can download them to rent shortly after, when they are released for rent.
The site is a collaboration between Bell and its partners, which includes digital delivery services developed by ExtendMedia as well as content from Paramount Pictures, Corus Entertainment, Maple Pictures, Eros Entertainment and Image Entertainment.

1500 titles isn't much, but it's a start. Also 1500 major release titles is better than 10,000 straight-to-video clunkers, so I hope that their mix of titles reflects that.

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Forzani to buy Athlete's World

Reuters: Forzani Group says to acquire Athletes World

TORONTO, Nov 21 (Reuters) - Forzani Group Ltd (FGL.TO: Quote, Profile ,Research), Canada's largest sporting good retailer, said on Wednesday it would buy privately held athletic apparel chain Athletes World for an undisclosed price.
Forzani said the purchase would be financed through existing credit facilities.
Athletes World, which generated revenue of C$186 million ($188 million) and a loss of $7.4 million in its most recent fiscal year, obtained creditor protection on Oct. 30, facing tight competition and the impact of a rising Canadian dollar.
Athletes World will seek court go-ahead for the transaction this week, and if approved, the deal should close at the end of November, Forzani said.

I've got a few questions.

Forzani operates the following retail banners:


Coast Mountain Sports
Sport Chek
Sport Mart
National Sports
Atmosphere
Intersport
RnR
Sports Experts

One could argue that the reason that Athlete's World was struggling was that it was being clobbered by Forzani's brands. What strategic value does adding Athlete's World to their masthead deliver? What mall locations do Athlete's World stores sit on where Forzani Group stores don't already have a better spot? It's not even as if there are any brilliant senior managers to poach. In short, what is the benefit to FGL, aside from a brief spike in the share price?

Is this an acquisition for acquisition's sake? When the last retail sporting goods banner is bought up by Forzani Group, and CEO Bob Sartor stands atop the Rocky Mountains surveying his empire, will he weep, for there is nothing left to conquer?

Lastly, when are we going to see a big international player step up and make an acquisition play for Forzani, such as I have been calling for in the past year?

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Forzani Group in limbo due to weak US$, tightening credit market

Earlier this year I was certain that Forzani Group was a takeover target too tempting to resist, and that they would be aquired by a big fat Private Equity firm. And it looked as if it was going to happen, but nothing ever came of it.

Now Forzani is heading into what analysts are expecting to be a soft Christmas, and despite overall positive sales results, there seems to be no happy ending in sight.

Globe and Mail: Forzani struggles to get back in the game

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Half a million Canadians have Sirius

There are all sorts of interesting factoids about Canadian satellite radio sales in this press release.

SkyREPORT.com: Sirius Canada Tops 500K

Sirius Canada unveiled last week that it has signed up more than 500,000 paying subscribers nationwide, adding more than 200,000 since February alone.
...
Sirius Canada said its automotive partners make up nearly 60 percent of vehicle sales in Canada, and since the beginning of 2007 have built more than 100,000 vehicles with factory installed Sirius radios. (Sirius Canada’s automotive partners include Ford, Chrysler, Audi, BMW, Jaguar, Land Rover, Lexus, Mazda, MINI, Subaru, Toyota, Volkswagen and Volvo.)

I haven't taken the plunge yet, but everybody I know who has Sirius loves it, especially if their job involves a lot of driving.

Anyway, nothing earth shaking about this per se, and I have no nasty comments to make about it, but I thought that I should bring it to your attention.

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It's been a rough week for ex-NFL star Michael Vick

Basically, everything after his criminal proceedings and his dismissal from the NFL is just dogpiling now.*

The Star: Royal Bank sues Michael Vick over loan

The legal woes of former NFL superstar quarterback Michael Vick took an unexpected Canadian twist today as the country's biggest financial institution, the Royal Bank of Canada revealed in court documents it's suing the suspended Atlanta Falcons quarterback for more than US$2.3 million.
The Toronto-based bank, which also does business in the U.S. South under its RBC Centura banner, is arguing that Vick's guilty plea on federal dogfighting charges and the resulting impact on his career have prevented him from repaying money he borrowed.
Vick borrowed $2.5 million from the Royal's private banking arm in January, with plans to use the money for real estate investments, the Toronto-based bank said in the lawsuit filed in U.S. District Court in Newport News, Va.

CP: Michael Vick tests positive for marijuana; judge imposes tighter restrictions

The disgraced Atlanta Falcons quarterback tested positive for marijuana earlier this month, a violation of the conditions of his release as he awaits sentencing in federal court on a dogfighting charge that already jeopardizes his freedom and career.
Now, he's incurred the ire of the judge who could sentence him to up to five years in prison in the dogfighting case. On the day of Vick's guilty plea, U.S. District Judge Henry Hudson warned that he wouldn't be amused by any additional trouble.

20 years from now, his senate confirmation hearings probably won't go very smoothly.

*I couldn't help myself, and no, I'm not sorry.

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Major shakeup in HBC's senior executives: too little too late?

All I can say is that it was a long time coming.

Globe and Mail: More alterations in the cards at HBC

A shakeup in the senior ranks of Hudson's Bay Co. is
expected in the coming weeks as Jerry Zucker, its new U.S. owner, tries to speed
up the turnaround of the department store retailer.
On Wednesday, Mr. Zucker
brought in Robert Johnston, a close business ally who orchestrated the takeover
of the company in early 2006, as his top HBC executive. Observers interpreted
the replacement of president Michael Rousseau as a signal that the U.S.
billionaire wants to exert more influence over the operations.

Industry analysts had been suggesting for some time that HBC required a full overhaul of the C-suite. After all, if the incumbent management knew what they were doing, they wouldn't be in a pickle in the first place.

I have to say, HBC finds itself dug deeper into its hole than it was when Mr. Zucker took ownership last year. The question remains, are they making meaningful changes, or just rearranging deck chairs on the Titanic?

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Nardelli a poor choice to head Chrysler, says Thomas Watson

Canadian Business Magazine's Thomas Watson comes right out and says what I was hinting at obliquely about a week ago: that Nardelli isn't the best qualified person for the job.

Canadian Business: The wrong driver at Chrysler

Simply put, the new CEO of Chrysler rubs the UAW, like
the multi-million-dollar retention packages handed out by auto parts maker
Delphi Corp.'s board to keep executives who ran the company into the ground.
Hiring Nardelli was a bad move. It was also unneeded. After all, to save
Chrysler, you need someone that auto workers can grow to trust as a long-term
partner, not someone with nothing to lose — and especially not someone from
outside the industry who is really more interested in fixing a broken
reputation. The right guy for the job exists. In fact, he was running Chrysler
before Nardelli came along.

Watson's point about LaSorda being a better choice to drive long-term change is significant, but I think that he skirted what I believe is the main issue, that Cerberus was looking for a hatchet man, and a Judas Goat upon whose neck they could hang failure if things don't go well.

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Bank of Canada says Loonie has ideas above its station

It's great to hear that the B of C's pet economists are in line with what every exporter, small business owner, and blogger with a liberal arts degree have been saying for months. Of course, the central bank's people use more charts and formulae to say it.

Yahoo!: Bank of Canada model points to overvalued C$

TORONTO (Reuters) - The Canadian dollar is overvalued given current commodity prices and interest rate levels, according to calculations based on a March 2006 Bank of Canada model for currency forecasting.

...

IDEAglobal said the model suggests the Canadian dollar's appropriate short-term value should be around C$1.09 to the U.S. dollar, or 91.74 U.S. cents, given oil prices of about $75 a barrel and a Canadian overnight interest rate of 4.50 percent.
The currency finished at C$1.0534 to the U.S. dollar, or 94.93 U.S. cents on Thursday, down from last week's 30-year high of C$1.0340 to the U.S. dollar, or 96.71 U.S. cents. U.S. crude futures were around $77 a barrel.
The push above 95 U.S. cents has brought a flurry of predictions that the currency could soon hit parity with the greenback.

The Bank of Canada doesn't think it's justified. The U.S. Federal Reserve doesn't think it's justified. Observers and those affected most by the exchange rate don't think it's justified.

And yet, here we are.

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Speaking of IPOs. Lululemon is off and running

The controversial IPO for yoga retailer Lululemon launched last week, to great hullabaloo.

Reuters: Lululemon stock jumps 50 pct in eagerly awaited IPO

Here's their chart

So far it's been a field day for the issue's originators, and the prime brokers who snarfed up the issue, and who then found an eager crop of retail investors to flip the units to. Let's see, the market cap is now, what, only 297 times their net profit? That's pretty dot-comical for a garment maker.

This is getting better and better.

Watch this space.

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Unfortunately, Loonie continues to surge

If I had a loonie for every headline in the past five months that delcared "Loonie hits 30 year record" I would have, um, thirty-five dollars, I think.

Canada.com: Loonie jumps on 'blowout'
News of a stunning surge in spending by Canadian consumers sent the loonie soaring more than one cent yesterday to a new three-decade high of more than 96.5 cents U.S. and set the stage for more interest rate increases.
The near three-per-cent jump in retail sales in May, reported by Statistics Canada, was almost six times the 0.5 per cent expected - and the steepest monthly gain in a decade.AC"While a good month was anticipated, this was a blowout," CIBC World Markets economist Avery Shenfeld said.

No, this is not good news:

But the good news on the economy was bad news for manufacturers, hammered by the high dollar.
It might spell bad news for borrowers, too, as the evidence of surprising economic strength added to expectations of more interest rate increases.
"This clearly puts additional Bank of Canada tightening in play, above and beyond a second quarter-point rate hike in September," BMO Capital Markets economist Douglas Porter said.

I've been saying this all along. A strong Canadian dollar has hugely negative repercussions for manufacturing industries in terms of percieved lower cost of goods to buyers abroad, not to mention all the companies that used to book nice easy profits on the USD/CAD conversion from foreign business branches.

I'm not saying that the sky is falling, but it's definetely a hassle in the short term.

Hat tip to Dealbreaker.com for beating me to this. I slept in today.

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Lululemon IPO goes live

And amazingly, not everybody is sunny and bright about it.

Canadian Business retail correspondent Zena Olijnyk raises some doubts about Lululemon's long-term value as an investment.

Yahoo!: Got a yen for zen?
But not so fast, I say. Look a little closer and you might want to be careful: this is one public offering that has the potential, for the retail investor, at least, to turn into something resembling a downward-facing dog
...
As a result, the valuations on this IPO should give pause for consideration. Using US$11 a share, the midpoint in the expected pricing range, the stock is valued at more than 30 times operating profit, once you back out one-time costs. For a firm with US$150 million in yearly sales, the US$800-million market cap this price implies is astronomical. (Following the IPO, there would be about 75 million shares outstanding.)

Ms. Olijnyk is, of course, not the first person to point out that this IPO doesn't exactly seem like mana from the gods. I was making rude noises about this back in May.

Lululemon Public Offering Drawing Interest And Ire

Judging by the results of Google Analytics, there are lots of people curious about Yoga Lifestyle retailer Lululemon's pending Initial Public Offering. Conversely, I recieved a fair number of rude comments from my correspondents about the IPO. The best one by far was:

Wow. Chip and co. have blatantly called the market top for hundred dollar yoga pants. Now that the cow is thoroughly milked, it's time to cash out and find a bigger fool to buy the brand. Apparel trends surf a wave, and this one is due to crest.

So there you go. I feel so validated.



Added bonus: Lululemon, the story so far

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