Canadian Personal Finance Blog

BCE Sale On The Rails Again?

On Friday the news broke that the purchasers in the BCE deal have finalized things and the sale should be going through, causing the stock to jump $4 per share. As a share holder I was very glad to see that, however, it seems the Dividends that I am owed for the past while, are not going to materialize, as this money is being used as part of the deal, which does not make me as happy.

I bought BCE initially, because I had no idea what to buy and figured, BCE was a good “Blue Chip” stock to buy. I later realized that the Dividends that it pays makes it an attractive stock as well (proof that the Sun shines on even an Ugly Dog’s butt every once in a while).

My guess is the BCE sale should go through, however, I don’t think that this is quite done yet either, in terms of twists and turns in the story either.

More Women in Pensions

Another interesting study from our friends at Stats Canada about Pension Plans in Canada points out that as of January 1, 2007, more of us are in Registered Pension Plans. The interesting point is that the Percentage of employees that were in a Pension plan actually dropped from 2005 to 2006 even though the total number of folks in Pension Plans actually increased.

More interestingly this increase in the raw number was seen mostly from Women joining pension plans. The percentage of women are:

Of the 5.8 million total membership, women accounted for 2.8 million, or 48.5%, while men accounted for 3.0 million, or 51.5%. In 2000, women accounted for 45.1%, and men, 54.9%

Increases for women were shared between the public and private sectors.

The number of Defined Benefit Pensions that are still under-funded is mentioned as well, and it is still a worrisome area for folks who have them (or who have been recently chucked out of them like me), however the number of Pension plans that are underfunded did decrease in 2006 from 2005 from 57% in 2005 to 45% in 2006. This is still not a good thing since 45% of the funds are unable to meet their obligations at this moment.

TD Hurt by “Rogue” Trader

Thanks to former TD employee Simon Richard Brignall, TD stocks are going to take a hit, because the company has to write off $96M in losses thanks to more “creative accounting” being done by some insiders.

During this period, Mr Brignall mismarked positions on his trading book and entered fictitious trades. This conduct, when considered by reference to the FSA’s prescribed regulatory standards for individuals, is such that it appears to the FSA that he is not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorised or exempt person or exempt professional firm.

Sounds like he made a few mistakes, seems the FSA (Financial Services Authority) doesn’t think he should be doing this job, as a TD stock holder, I think I agree. Who hired this guy? Not sure they should be allowed to do that job either (In My Most Humblest of Opinions). Who was supposed to watch and make sure this guy wasn’t doing this? Not sure they should be keeping their job either.

Mr. Brignall does not appear to be the only cause of this loss, but allegedly has a great deal to do with it.

The Supreme Court ruled (without formal explanation) that the BCE sale can march ahead, but it is by no means a done deal, as there are still a few obstacles before the sale is finalized. It’s very interesting that there is no formal statement from the court yet about why they are allowing it to go ahead, so it will be interesting to read the reasons, once they are finally available for commentary.

Am I happy about this, for now, yes I am, however, as I said, I think the sale price of $42 may not be achieved due to market pressures, but again, we shall see.

Best Buy Warranties

Thanks to an accident and a pressing need for a new digital camera (the previous one was damaged) we went off to buy a camera at Best Buy. Why Best Buy? Don’t have to pay for 3 months, and I thought their advertising implied don’t pay for 12 months, but we’ll talk about that one in a little while.

For a while no one really bothered us and we decided to pick up another Canon camera (not advertising, just stating a preference). A sales agent finally came over and did some intelligent gabbing about how she owned this camera and it was fabulous (oh really? not sure I bought that part, but what the heck). I asked all the questions that were important to me:

• Does it use “AA” batteries or Lithium Ion (I use “AA” rechargeables), the answer was yes “AA” was normal.
• Does it do video? Yes, it does Full Motion JPEG (a little wonky format, but there are enough translators out there, that it was fine).
• How much for a big memory card, $40 for 4 GB, so that was fine (high speed SD card? I seem to remember this means it may not be easily readable in older systems, but what the heck).

Then we came to the payment. Best Buy standard is don’t pay for anything over $100 for three months for free (but if you don’t pay it off they scalp you with a 28.8% interest rate that is retroactive to the day you are born the day you purchased the item). The advertising in the weekly circular implied that 12 months pay back was “complimentary”, but no, they were simply saying, that if you want to pay $90 you could not pay for 12 months (which added up to about 20% interest paid anyhow).

Then we came to the Warranty, which the young lady pushed on me with great ferocity. Did you want to pay $70 for a 2 year warranty above and beyond Canon’s warranty? No. Long diatribe about all the serious things that can go wrong with my camera (no mention of daughters dropping it and breaking it), I listen politely, no again. There is also a 3 year warranty at $90? No thank you, still more talk of the perils of the lenses and how long it will take to get the camera back from Canon, who most likely won’t fix it, still, “No Thank you”. The young lady finally relented and I left.

I remember reading that while Best Buy employees do not get paid commission on sales (not sure I completely believe that), they do get a BIG percentage on all “extended warranties” that they do sell, and I saw that when I got this camera. I was in a rush, but managed to stay polite but firm in the situation, but I could tell the young lady trying to make the sale had a large stake to be made if I did buy the “warranty”.

Any folks out there with similar stories to tell?

Related Articles

• Extended Warranties a Sucker’s Bet by the Canadian Capitalist
• Class Action Suit Against Canada Post by Michael James on Money
• Pride and the Extended Warranty by me

BCE Decision Today at 4:30 PM

Care to wager a few shillings on the results? I am sure that is what a few traders will be doing, in either direction, with the Supreme Court ready to bring down a decision on an appeal of the Quebec Supreme Court’s ruling stopping the BCE sale. This ruling will either kill the sale or put it back on track for now. As a share holder, I would hope the sale would continue, but who knows what the highest court in the land might decide.

The Nortel Three and their Day in Court

Frank Dunn, Douglas Beatty and Michael Gollogly had their arraignment in court yesterday under Fraud charges brought by the RCMP. This is interesting to me, since I lived through those days, and am curious now to hear about what exactly may have transpired during that time at Nortel.

What happened to cause all employees to get their “Return to profitability” bonus? I will be reading the coverage of this case very closely.

Important to note that Nortel the company is not part of these proceedings as a defendant, and they have stated they are co-operating fully with the RCMP investigation.

The Globe and Mail Report:

The RCMP alleged Mr. Dunn, Mr. Beatty and Mr. Gollogly fraudulently misstated Nortel’s results. Among the accusations are that the three “made false entries and omitted materials particular in the books and documents in regards to the financial results of Nortel.”

It will be very interesting to see how this is proven in court, or refuted, because I suspect this is going to get into some very technical aspects of Corporate Accounting Practices in Canada. I have had some of this explained to me, and I can say as a non-accountant, it is very confusing.

Rates Staying the Same

So what did the new Governor of the Bank of Canada know that we didn’t last week when he refused to lower rates, when the majority of experts were sure the rates were going to drop? Maybe he figured out that Inflation might be coming back, like we found out yesterday?  Does Mark Carney have a good crystal ball, or good information collecting skills? Either way, looks like he hit the nail on the head with that call last week.

Given Scotiabank, TD and BMO are raising their long term Mortgage Rates, makes me wonder what they might know as well?

One of the interesting trends I have noticed in my household is that during the summer months spending tends to drop, due to:

• No school fees needed for trips and such
• School lunches are now part of the regular groceries
• Organized sports are mostly complete so very little spending there
• Less running around, so a little less gas money spent.

This gives us a chance to try to catch up before the September onslaught of spending. September to December is the worst spending time for my family, due to start of school, sports and Christmas all piling in together and causing a glut of spending.

Did I mention it’s 6 months and 8 days until Christmas? Have you started planning yet?

Lazy Good For Nothing Canadian Workers

I mean that in a facetious fashion of course, but productivity dropped for another quarter again, according to Stats Canada.

In the first quarter of 2008, the labour productivity of Canadian businesses declined for a second consecutive quarter, in a context of inclement weather, reduced working hours, and a widespread drop in manufacturing output, especially in the motor vehicle industry.

Productivity of Canadian businesses edged down 0.3% in the first quarter of 2008, slowing from the upward revised 0.7% decline in the fourth quarter of 2007. The back-to-back declines followed four quarters of growth.

I think higher gas prices is going to be hitting us and a much stronger Canadian Dollar is going to really hurt manufacturing for a good long while.

BCE Takeover to the Supreme Court

BCE takeover bid takes another step towards wherever it may end up with a Supreme Court hearing being set. This expedited hearing means that BCE’s battle with it’s bondholders might be over soon and the final fate of BCE may be known before my kids go back to school? Maybe a little premature on that, but who knows?

More importantly the BCE board has defferred on whether to declare a second quarter dividend until the end of June, and speculation has it that that money might be used as part of a deal with the bondholders.

The Canadian Press reported Friday that one scenario would see the $294 million that otherwise would be paid as the second-quarter dividend instead used to compensate bondholders.

Hey, that’s my money! I am a shareholder and I hold BCE as a dividend paying asset, and you guys are keeping my money? Hey!