Money world

My OfficeMax Inc. shares have done better lately. What does the future hold?

The No. 3 U.S. office products firm is continuing its cost-cutting efforts in an attempt to improve its profitability and sales in a highly competitive business hampered by the weak economy.

It isn’t, for example, opening any new stores this year. It is increasing the number of private-label products bearing its name to lure shoppers with lower prices while expanding profit margins. About one-fourth of its sales are currently private-label.

It expects sales to decline in the second half due to cutbacks in corporate America, the economy and what is projected to be a lackluster back-to-school season.
Shares are up 31 percent this year following drops of 61 percent last year and 57 percent in 2007. While the company lost $17.7 million in the second quarter, the fact that Wall Street had expected far worse provided a boost to its stock.

OfficeMax sells through a direct sales force, the Internet and catalogs. It has improved its profitability but still lacks the economies of scale of its larger rivals and must compete with numerous retailers that have begun to sell office products.

No. 1 Staples, whose profits were down 33 percent in the past quarter, has more than 1,500 stores and is taking market share away from OfficeMax’s main Chicago sales area. It bought the Dutch office-supply firm Corporate Express NV last year. In comparison, No. 2 Office Depot has more than 1,200 stores and OfficeMax fewer than 1,000.

The consensus recommendation on OfficeMax shares is "hold," according to Thomson Reuters, which consists of one "strong buy," three "buys" and seven "holds."

Yet OfficeMax remains aggressive. It recently signed a multiyear deal that will allow it to use some FedEx Corp. services in about 900 U.S. retail locations. It is offering domestic FedEx Express and ground shipping, while it will accept drop-off packages from FedEx customers at its in-store print and document services center car loan interest rates.

The company has also forged an alliance with Lyreco, a global distributor of office products in 36 countries, and has a partnership to distribute co-branded office products through 1,600 Safeway grocery stores.

Earnings are expected to decline 75 percent this year compared with a 6 percent gain projected for the office supplies industry. The forecast is for a 50 percent gain next year versus a 13 percent rise industrywide.

Is there any advantage to having my various individual retirement accounts with the same investment firm, or does it make no difference?

It can make things easier having your investments with one firm because you can check them online in the same place and will have fewer statements to contend with.

Too often investors with funds at several firms also own similar funds, just in different places.

You can find an array of choices in most any investment style at larger fund firms. In addition, for mutual funds sold with "loads," or sales charges, there can also be discounts for those who invest certain amounts of money with them.

"You’re picking the investments, so you’re not giving up that control to the investment firm," said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.

"Within your account, however, you want to make sure that you have diversified investments."

Still, there’s nothing that should tie you to keeping investments with one firm if you feel that you can find some better funds at an additional firm and keeping everything together won’t meet your goals.

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A top Ford executive expects industrywide U.S. auto sales to rise for the first time in more than two years this month, thanks largely to the government’s "Cash for Clunkers" program.

Sales may have risen as high as 13 million units on an annualized basis during August, Mark Fields, Ford’s president of the Americas, told reporters on Friday.

Retail sales at Ford Motor Co. in August have already surpassed last year’s levels with a weekend still to go, he said. Ford’s sales in July rose 2.4 percent.

Automakers are scheduled to report monthly sales on Tuesday. Many analysts are forecasting a year-over-year increase for an industry that has taken a beating during the recession, although year-ago levels were already depressed.

Ford was one of the top gainers from the clunkers program. The Ford Focus compact car and Escape crossover were among the top sellers, though Japanese automakers sold more vehicles than U.S. companies.

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LOS ANGELES–Software giant Microsoft Corp. has apologized for altering a photo on its website to change the race of one of the people shown in the picture.

A photo on the Seattle-based company’s U.S. site shows two men, one Asian and one black, and a white woman seated at a conference room table. But on the website of Microsoft’s Polish business unit, the black man’s head has been replaced with that of a white man. The colour of his hand remains unchanged.

"We apologize and are in the process of pulling down the image," Microsoft spokesperson Lou Gellos said in a statement. Microsoft replaced the altered version of the photo with the original, unedited image on its Polish website.

Bloggers argue Microsoft was attempting to please all markets by having a man with both a white face and a black hand.

Others say the ethnic make-up of the Polish population, which is predominantly white, may have played a part in the decision to change the photo.

Associated Press

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More Canadians received Employment Insurance benefits in June compared with the month before, but the number of new claims fell sharply – a sign that the worst of the recession may have passed.

In June, 816,630 people collected EI, benefits, up 5.1 per cent from May and up 73.1 per cent year over year, Statistics Canada said yesterday. The biggest increases came in Alberta, British Columbia and Newfoundland and Labrador.

Initial and renewal claims received in June fell by 7.9 per cent, the largest drop since the job market and the economy turned sour last October. Claims fell in all provinces and territories, with the exception of Ontario, which saw a slight increase of 0.9 per cent.

“We are still in `the worst of times.’ Every month, tens of thousands more Canadians are laid off than can find new jobs,” United Steelworkers economist Erin Weir wrote in a report yesterday.

“The better news is that new benefit claims declined sharply, albeit from an all-time record high. While hardly `the best of times,’ this revelation provides hope that Canada’s labour market is getting worse more slowly.”

In another potentially positive sign, the number of EI beneficiaries rose more slowly in the second quarter of this year compared with the first three months, 18.8 per cent versus 25.2 per cent.

Between June 2008 and June 2009, the number receiving regular EI benefits increased in all 28 census metropolitan areas. Alberta and Ontario were particularly hard hit.

In Calgary, the number of people receiving EI benefits rose nearly fivefold in June to 19,020 from 3,960 in June, 2008. In Edmonton, the number of recipients increased more than four times to 16,250 from 3,950 the year before.

“Of course, these staggering percentages reflect not only the huge loss of jobs in Alberta, but also the province’s previously low unemployment rate,” Weir said.

In Ontario, the number of EI claimants rose by 3 per cent in June, much slower than the 14.3 per cent increase during the previous month, StatsCan said.

The biggest increase in the province was in Windsor, where the number of EI recipients more than tripled in June to 14,240 from 4,480 a year ago. Claims more than doubled in Toronto, up to 95,820 from 45,080.

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In a year when summer jobs have been as scarce as sunny days, some local students have decided to create their own work. With a few weeks to go before it’s time to crack open the textbooks again, they have learned their new businesses have potential beyond just a source for tuition funds.

Johnny Paterson has taken a professional approach to the old summer stand-by for cash-strapped students – mowing lawns. He has business cards and company shirts embroidered with a logo of his own design for his enterprise, College Lawn Cutters and Window Cleaners. Of course, it’s not surprising considering he’s a third-year business administration student at the Richard Ivey School of Business at the University of Western Ontario.

Katherine Ramkhelawan (she uses the name Katherine Sunita for her art) is painting interiors for residential and commercial clients as the operator of Sky Murals. She’s heading to the Toronto School of Art for courses in digital illustration in the fall.

As two of the 26 participants in this year’s Summer Company program run by Enterprise Toronto, Paterson, 19, and Sunita, 29, both got $1,500 in seed money at the beginning of the summer to invest in equipment. They also had coaching on critical business elements such as marketing, cash flow and budgeting.

Sunita’s core business – face painting for children’s birthdays – has expanded to include other interior painting projects for the same clients. "Generally, it’s for people who want to make their children’s rooms exceptional," said Sunita.

She offers a palette of other art services such as seasonal windows for retailers, a mural for an after-school centre and trompe l’oeil (trick the eye) murals in private residences. "It really transforms the space and in a country where it’s winter for three-quarters of the year, it’s nice to have colour in your house," she said.

Running a business wasn’t the first choice for Paterson, who lives in Pickering. For the past three summers he was an inventory person in the trucking industry and mowed lawns as a sideline. But when Paterson started looking for a summer job back in January, he got the same answer everywhere: "No one was hiring a student team this year."

He turned his casual lawn mowing into a full-time business that allowed him to apply his textbook learning in the real world. His unique approach was to eliminate contracts in favour of week-by-week orders. "They love that because if it’s not ready to cut it saves them money. Most landscapers want money up front for the year – up to $1,000."

Adding extra services has boosted his revenue goals. "Once I get a landscape customer, I mention I do windows, too," he said. "That’s just gravy." At first, he had to research how to properly clean windows. "Now that I have some experience, I’m pretty good at it."

Success for the two students isn’t always about revenue, and both say they want to continue after another year of studies. Paterson plans to send an email during spring break in advance of next season. Paterson’s initial goal was to make about $6,000, a figure he’s already surpassed. His new projection is total revenue of close to $10,000, and he estimates 25 per cent more next year.

In July, Sunita made less than half of her original optimistic projection of $2,900 per month, but her August is already overbooked. However, she wants to continue because of the job’s flexibility. "I can mould it into what I need," she said.

Word-of-mouth was the best way to market their services, both discovered. Paterson started with 12 customers – neighbours, friends, family. "I never really did cold calls. It was referrals from then on in," he said. "I would be working and someone would come up and say, do you have a business card?"

Sunita tried flyer distribution and advertising without success ."Most of my work has come from people who have seen things I’ve done," she said.

Running a business means lots of extra unpaid planning and paperwork, the students agreed. Said Sunita: "It’s not like a nine-to-five job where you go in and do what you have to do and leave. I think about it all the time." Paterson found that business studies in school are different from real business challenges. Forget the mergers and acquisitions and high finance. The formula for success is pretty basic, he said. "There are three things to it: initiative, communication and hard work."

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WINDSOR, Ont.–Chrysler Canada launched Friday a new program that will see the company kicking in $500 to $1,500 to supplement the current federal program to encourage drivers to scrap old cars for new, fuel-efficient cars and trucks.

The company said qualifying customers must be owners of a 1995 or older model year vehicle that is in running condition and has been registered and insured in Canada for the previous consecutive six or twelve months, depending on the province free credit report online.

Chrysler Canada's cash for clunkers is in addition to its current sales incentives.

The program promotion follows a move by South Korean automaker Hyundai earlier this week to top up incentives available under Ottawa's Retire Your Ride scrappage system.

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WASHINGTON – Swiss banking giant UBS AG agreed Wednesday to turn over to the IRS the details of 4,450 accounts suspected of holding undeclared assets by American customers, ending an intense trans-Atlantic legal fight.

IRS Commissioner Doug Shulman said the accounts held $18 billion (dollar figures U.S.) in assets at one time. Many have since been closed, he said.

The deal will give the Internal Revenue Service thousands of long-sought account names, and is expected to provide even more UBS clients who voluntarily disclose their financial details to the agency, Shulman said.

UBS has an estimated 52,000 accounts of U.S. customers. The IRS chief said the 4,450 accounts being relinquished to the agency were the ones most suspected of containing undeclared assets.

"I believe this agreement gives us what we wanted – access to information about those UBS accountholders most likely to have been involved in offshore tax evasion," Shulman said.

He said that other account holders appear to be in compliance with U.S. tax laws.

The two sides told a federal judge last week they had reached a tentative agreement, but the details were not released until Wednesday.

Account holders will be notified before their names are released to the IRS. They will then have the ability to repeal their release before Switzerland’s Federal Administrative Court.

The process is expected to take several months, IRS officials said.

Shulman said the Swiss government has assured U.S. authorities that the release of the names conforms with both Swiss banking laws and the tax treaty signed by both countries car insurance quotes. Shulman said the IRS reserves the right to resume its legal fight if any of the names are withheld.

"This issue is not going away, and people hiding assets and income offshore will find themselves increasingly at risk due to our efforts in this area," Shulman said.

The Swiss Bankers Association issued a statement in support of the agreement.

"The out-of-court agreement avoids a prolonged legal battle that would have had an uncertain outcome and UBS can now continue with its consolidation process in an atmosphere free of this legal uncertainty," the association said.

Swiss Justice Minister Eveline Widmer-Schlumpf told a news conference in the capital of Bern that the deal lifts the threat of criminal prosecution against UBS, which could have endangered the bank’s very existence and dealt a severe blow to the Alpine nation’s economy.

"There was no alternative to this solution," she said.

Asked if other Swiss banks could be targeted for future prosecution in the United States, she said: "We don’t expect this to be the case."

UBS Chairman Kaspar Villiger said, "I am confident that the agreement will allow the bank to continue moving forward to rebuild its reputation through solid performance and client service."

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Sony Ericsson on Monday entrusted the head of Ericsson’s U.S. technology division with the task of leading the struggling cell phone maker back to profit and reversing a sharp decline in market share.

The 50-50 venture said it had named Bert Nordberg as chief executive to replace Dick Komiyama, who retires at the end of the year.

Sony Ericsson has reported steep losses in past quarters and seen its market share slip to below 5 percent, sparking market speculation of a possible breakup.

“I would go for increased market share and restoring profitability,” Nordberg told Reuters when asked where he hoped to see the company in one to two years. He said he would pursue ongoing restructuring and step up efforts to develop “smash-hit” products.

Nordberg, 53, currently Executive Vice President at Ericsson and head of the firm’s Silicon Valley business, said he was extremely confident in the support from both parent companies and that turning to profit “can’t be too far away.”

The firm also said Sony CEO Howard Stringer would become new board chairman on October 15, replacing Ericsson head Carl-Henric Svanberg, who will become chairman of BP Plc in January.

“The management changes seem to signal that Sony and Ericsson are prepared to continue working together online payday loan. That will be reassuring news for Sony Ericsson’s staff and customers,” said Neil Mawston from Strategy Analytics.

Of the top five cell phone vendors, Sony Ericsson saw the sharpest drop in sales from the first quarter.

The firm has missed such mobile phone trends as full keyboards, Internet browsing and navigation, and research firm Gartner said last week that Sony Ericsson’s market share fell to just 4.7 percent globally.

‘BIG DECISIONS TO MAKE’

“Nordberg has some big decisions to make from day one,” said Ben Wood, head of research at CCS Insight.

“Sony Ericsson needs to streamline its mobile software strategy and further reduce its dependence on mid-tier feature phones while working to restore profitability in the toughest economic climate the mobile phone industry has ever seen.”

Sony Ericsson is known for its phones focusing on music and imaging, but so far it has lacked a strong offering of smartphones.

Nordberg said he would look for a strategic revamp of the firm’s product portfolio.

“In this industry you need smash-hit products,” he said. 

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The Toronto stock market closed slightly higher today – but lost ground on the week – following a second glum dose of U.S. economic data that raised doubt about how much the American consumer can participate in the recovery.

The S&P/TSX composite index finished off the lows of the session as early losses in the financial sector disappeared and energy sector declines moderated despite a steep drop in crude prices.

The index came back from a 112-point deficit to close 22.45 points higher to 10,848.01 after the University of Michigan's consumer sentiment index for August came in at 63.2. That was much worse than the 69 reading that economists had expected and down from 66 posted in July.

The late-day recovery left the TSX down 37.32 points or 0.5 per cent on the week following four straight weeks of gains on optimism that an economic recovery will be in place by the end of the year.

The consumer report today came a day after other data showed that U.S. retail sales unexpectedly dropped last month.

"Consumers are sitting on their hands still – and the fact that jobs are still being lost means they'e going to be sitting there for awhile," said John Johnston, chief strategist at The Harbour Group, RBC Dominion Securities.

"Consumer confidence had shot up nicely but now it's drifting off again in both current conditions and future expectations components."

He said consumers are "basically not enthusiastic and not spending" and the August numbers suggest the weakness in consumer spending will be extended.

The economic news was better in Canada as manufacturing sales increased 1.9 per cent to $39.7 billion in June, a much better showing than the 0.3 per cent dip that economists had expected.

However, Statistics Canada said that strong sales in the aerospace industry and a rise in the price of petroleum and coal products largely explain the increase. Excluding both industries, Canada's manufacturing sales would have decreased 0.5 per cent.

The TSX energy sector was off 0.48 per cent today as the September crude contract on the New York Mercantile Exchange gave up early advances following the release of the consumer sentiment data to tumble $3.01 to US$67.51 a barrel. Suncor Inc. (TSX: SU) dropped 61 cents to $35.84 and EnCana Corp. (TSX: ECA) moved down 60 cents to $56.56.

The Canadian dollar gave up early momentum to move down 0.9 of a cent to 90.93 cents US.

The TSX Venture Exchange slipped 7.08 points to 1,193.42.

New York markets also finished well off the lows of the session as the Dow Jones industrial average moved down 76.79 points to 9,321.4, for a loss of 48.67 points or 0.5 per cent.

The Nasdaq composite index was down 23.83 points to 1,985.52 and the S&P 500 index dropped 8.64 points to 1,004.09.

Investors have sent markets higher this summer encouraged by improvements in housing, manufacturing and corporate profits. But without the support of the consumer, the U.S. economy's recovery is in question.

"I think you're going to need to see a material stabilization in labour markets before you get meaningful and stable consumer confidence," said Stephen Wood, chief marketing strategist at Russell Investments.

"And we're certainly not adding jobs and we're not even at a point where jobs are no longer being lost."

Investors had earlier taken in data showing that the U.S. consumer price index, a key measure of inflation, was flat in July, in line with economists' expectations payday loans. The core inflation rate, which excludes volatile energy and food prices, rose 0.1 per cent.

And the Federal Reserve said industrial production rose 0.5 per cent in July, better than the 0.3 per cent rise that economists expected.

Another source of weakness for the Dow was Boeing Co. The aerospace company's shares declined $1.75 to US$44.87 after it said today an Italian supplier stopped production in June on two sections of its long-delayed 787 Dreamliner after structural flaws were found on fuselages. The carbon-composite 787 airliner has been delayed repeatedly. On June 23, Boeing announced another delay to the first test flight of the 787.

The TSX financial sector was up 0.48 per cent after the Irish Times reported today that a major Canadian bank has proposed to take a stake in Allied Irish Banks. It said that the investment would take place only after AIB's development loans move to NAMA, the National Asset Management Agency, which is being established by the Irish government to take over toxic development loans to developers.

Both CIBC (TSX: CM) and Royal Bank (TSX: RY) were mentioned as the interested buyer of a minority stake in the Irish bank, which confirmed it received interest from an unidentified third party.

But AIB said the discussions were "preliminary and are not expected to progress in the near term." Royal shares gained 65 cents to $51.36 and CIBC declined 31 cents to $67.75.

The base metals sector dropped 0.88 per cent as September copper fell back 7.8 cents to $US2.836 a pound. Teck Resources (TSX: TCK.B) was down 80 cents to $29 while Sherritt International (TSX: S) lost 11 cents to $7.33.

The December bullion contract was down $7.80 to $948.70 an ounce, taking the gold sector down 0.56 per cent. Goldcorp Inc. (TSX: G) faded 51 cents to $39.01.

A burst in the consumer discretionary sector was led by another strong showing in t-shirt maker Gildan Activewear (TSX: GIL). Its shares ran up $1.93 or 9.78 per cent to $21.66 after advancing almost 10 per cent Thursday as it said quarterly profits fell 24 per cent – but delivered an optimistic outlook.

A major decliner in Toronto was Chartwell Seniors Housing Real Estate Investment Trust(TSX: CSH.UN). Its units tumbled $1.07 or 16.2 per cent to $5.54 after the company cut its monthly cash distributions to unitholders on Thursday in a bid to preserve its cash. It said that "given the uncertain economic climate in North America management believes that recovery and growth in certain markets may take longer than previously anticipated."

On the earnings front, high priced teen retailer Abercrombie & Fitch said today that slumping sales led to a loss of $26.7 million, compared with a profit of $77.8 million a year earlier. However, its shares ran ahead $1.29 to US$34.25.

FNX Mining Co. Inc. (TSX: FNX) reported second-quarter profits of C$12.5 million, up from year-earlier net earnings of $11.3 million. Revenue was down 45 per cent to $61.9 million and its shares rose 51 cents to $9.88.

Linamar Corp. (TSX: LNR) saw a $48.4-million loss in the second quarter, but the auto parts company said it well positioned for a turnaround with hundreds of millions of dollars in new business set to begin production this year. Its shares fell 74 cents to $12.35.

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Magna and its Russian partner Sberbank have reached an agreement in principle with General Motors’ management over a contract to buy a stake in GM’s European unit Opel, Magna Co-Chief Executive Siegfried Wolf told Reuters on Thursday

The boards of directors of GM and Canadian automotive group Magna still need to approve a deal before trustees who control a 65 percent stake in Opel can give their final consent.

The agreement between Magna’s consortium and GM — which follows weeks of hard bargaining — does not necessarily mean that competing Opel bidder RHJ International is out of the race, however.

GM’s chief negotiator on the deal, John Smith, has said that the Belgian private equity firm had already reached an agreement with GM management on Opel. Now it is up to GM’s board and Opel trustees to pick one of the two rival offers.

But the overwhelming support for Magna in Germany from key players like Chancellor Angela Merkel suggests that the Opel Trust will likely sign off on a deal with the Canadian auto parts supplier and Russian lender Sberbank.

GM Europe said the company would review revised draft agreements on an Opel deal presented on Thursday by Magna and Sberbank, stopping short of saying the remaining issues between GM, Magna and Sberbank had been resolved over a sale fast cash.

GM also said it has asked the Opel task force created by the German government to outline a financing package that Germany and other European states hosting Opel plants would support.

Worried about 25,000 Opel jobs in Germany as September elections approach, Berlin put up 1.5 billion euros ($2.1 billion) in bridge finance for a ring-fenced Opel in May, just before the U.S. parent slid briefly into bankruptcy.

“This is the best solution for Opel and Opel workers,” top politicians in the German state of Rhineland-Palatinate, which hosts one of four Opel plants in Germany, said in a statement.

Magna is in the middle of negotiations over the financing for a deal, which includes an equity component of 500 million euros along with 4.5 billion euros in loans guaranteed by European governments.

(Editing by Michael Shields)

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