News Column

Stocks take lumps

July 10, 2014



Media companies in focus







Canada's main stock index fell on Thursday as worries about the financial woes of a major Portuguese bank spurred a selloff in global equity markets and weighed on every major sector.

The S&P/TSX composite index fell 100.71 points to close at 15,114.48

The Canadian dollar nicked up 0.02 cents to 93.90 cents U.S.

Company earnings are expected to be the biggest driver in markets over the coming weeks as investors look for signs that the strengthening in both the Canadian and U.S. economies has translated into higher sales and profits. Many Canadian companies will be reporting quarterly earnings this month and into August.

Corus Entertainment reported a third-quarter net loss of $30.3 million or 36 cents per share compared with a net profit of $89.9 million or $1.07 per share in the same quarter last year.

Revenues were up 14% to $214 million compared with $187.1 million year-over-year. Adjusted net income was $41.6 million or 49 cents per share, missing analysts' estimates of $43.17 million or 51 cents and its stock fell 3%, or 77 cents, to $24.58.

Postmedia Network Canada Corp. said it managed to cut its losses for the third quarter, but still faced a steep drop in advertising revenue. The owner of several newspapers and websites, including the National Post, Vancouver Sun and the Ottawa Citizen, says it lost $20.6 million or 51 cents per diluted share for the three months ended May 31.

That compared with a loss of $103.3 million or $2.56 per diluted share a year earlier when it booked an impairment charge of $93.9 million.

Postmedia is in the middle of a three-year turnaround plan, which has included closing various printing plants, laying off staff and setting up digital paywalls for its websites. Its shares were unchanged at $2.20.

In other media news, Bell Media, which is owned by BCE Inc., announced it was cutting 91 employees as it makes big changes to programming at music channels Much, MTV and M3. Shares in BCE were up 11 cents at $48.39.

Also, Star Media Group said three of its free Metro daily newspapers -- in London, Ont., and Regina and Saskatoon -- will print for the last time on Friday.

The decision will result in layoffs for 25 staff, and will allow the company to focus on larger markets, said Star Media, a division of Torstar Corp. Torstar shares were down 11 cents at $8.12.

Investors were fearful of a contagion effect after shares in Banco Espirito Santo (BES), Portugal's largest listed bank by assets, plunged more than 15% on growing concerns that financial troubles at holding companies of the bank's founding family will have an impact on BES.

On the domestic economic beat, Statistics Canada reported this morning that housing prices rose 0.1% in May, following five months of gains ranging from 0.1% to 0.3%. The increase was largely the result of higher new home prices in the Prairie region.

ON BAYSTREET

The TSX Venture Exchange slumped 9.68 points to 1,022.95.

All but one of the 14 Toronto subgroups were lower, weighed mostly by gold, down 1.8%, materials, down 1.6%, and energy, off 1.3%.

The lone gainer was real-estate, up 0.4%.

ON WALLSTREET

Stocks slumped Thursday after poor economic news from Europe. But it could have been a lot worse.

The Dow Jones Industrials fell 70.54 points—off its lows of the day -- to finish at 16,915.07

The S&P 500 faltered 8.15 points to 1,964.68, and the NASDAQ composite pulled back 22.83 points to 4,396.20.

After Alcoa kicked off earnings season earlier this week with a home run, a number of retailers reported mixed results on Thursday.

Family Dollar escaped early losses and closed just slightly lower despite reporting a decline in same-store sales and profits. Maybe investors approve of the struggling retailer's new plan to lure in shoppers: booze. The company said it will follow Wal-Mart by selling beer and wine in the coming years.

Shares of Tractor Supply Co. slumped 2% after the company posted disappointing earnings on Wednesday.

Investors took a big axe to shares of Lumber Liquidators. The flooring retailer plummeted almost 22% after disclosing a traffic tumble and projecting profits that would badly miss expectations.

The somber news sparked selling in home improvement stocks like Ethan Allen Interiors, Lowe's and Home Depot

Potbelly, which went public in October, plunged 25% after the sandwich chain cut its outlook for the year and said it will try new marketing moves.

The ugly day actually began in Europe, where a little-known Portuguese bank brought back concerns about the health of the continent's financial system.

Trading of Espirito Santo Financial Group -- the leading shareholder in Portugal's biggest bank -- was suspended. Shares of Banco Espirito

Santo plummeted 17% before they were also halted.

The euro banking woes trickled down to U.S. financial firms, with shares of Bank of America, Morgan Stanley and JPMorgan Chase all down about 1%.

Americans received another glimmer of hope about the jobs market on Thursday. The U.S. Labor Department said initial claims for jobless benefits fell by 11,000 last week to 304,000. That was slightly better than many on Wall Street expected.

The weekly claims report comes on the heels of the June jobs report, which revealed the U.S. added an impressive 288,000 jobs.

Prices for 10-year U.S. Treasuries gained, lowering yields to 2.53% from Wednesday's 2.55%. Treasury prices and yields move in opposite directions.

Oil prices grew 55 cents to $102.84 U.S. a barrel.

Gold prices vaulted $12.50 to $1,336.80 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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