The Star Online: Business
The Star Online: Business |
- Canada province probes complaint over China workers
- Best Buy warns on profit; U.S. unit head to leave
- Preview - Apple's Mac flies in under the radar
| Canada province probes complaint over China workers Posted: 24 Oct 2012 07:03 PM PDT NEW YORK: British Columbia authorities said on Wednesday they are investigating complaints by a labour group that local mining jobs are being advertised in China by recruiters in exchange for hefty recruitment fees. The investigation stems from accusations by the B.C. Federation of Labour that recruitment firms in China are charging as much as C$12,500 (7,860 pounds) in fees to find temporary jobs for Chinese labourers at a mining development in the province owned by HD Mining International Ltd. Last week, local online newspaper, theTyee.ca, reported that labourers are promised the "possibility of immigrating to Canada" and the ability to "sponsor your family to Canada, too." The news site reported that a journalist posing as a mine labourer on an online Chinese jobsite was connected with recruiters who claimed to be hiring for the mining project. HD Mining, which is jointly held by Huiyong Holdings Ltd and Canadian Dehua International Mines Group Inc, has denied any link to a recruiting scheme. The company has secured permits to import up to 201 foreign labourers under Canada's temporary foreign worker program, which it has said it needs to complete a bulk sample study at its Murray River coal project in remote north-eastern British Columbia. The province's Labour Minister Pat Bell confirmed on Wednesday that his office was investigating the "serious" allegations. "The investigation is specific to the fee allegation that has been made," he said. It is against Canadian labour law to charge a foreign temporary worker a fee for employment information and support, and workers cannot be forced to pay back recruitment costs to employers. Skilled temporary workers can apply to immigrate to Canada after four years of working in the country. The controversy comes at a time of heightened sensitivities over Chinese ownership of Canadian resource assets. A contentious C$15.1 billion bid by state-owned CNOOC Ltd to take over Canadian oil producer Nexen Inc is being reviewed by federal authorities. Canada's official opposition, the left-leaning New Democratic Party, called on Wednesday for the immediate cancellation of HD Mining's temporary foreign worker permits and a full investigation into the company's hiring practices. SKILLED LABOR Outrage has swelled in British Columbia in recent weeks as unions and labour groups spoke out over HD Mining's plans to use foreign workers at the Murray River project. The company has insisted that it would only bring over existing employees of parent-company Huiyong Holdings and that they would return to their existing jobs in China upon completion of the development project. HD Mining spokeswoman Jody Shimkus said the company had tried to hire locally but was unable to find people with the skills to operate the specialized mining equipment that will be used at the project. "We're using highly sophisticated, mechanized, underground long-wall mining equipment, which is currently not being used in Canada," she said. "One of the challenges we have is that equipment is not yet here, so it's difficult to train people." Local labour groups have said the jobs were not advertised at going wage rates and that no effort was been made to train local workers. The United Steelworkers Union has accused HD Mining of intentionally excluding most Canadian workers from jobs by including Mandarin as a required language in postings. Jobs now posted on the company's website do not require Mandarin language skills and start at $25 an hour for mechanics. The going rate for mine labourers in British Columbia is more than $30 an hour, the union said. HD Mining's first 13 foreign workers are due to arrive in rural British Columbia this month, with more expected as the project progresses. The company is currently doing bulk sampling work at the project, which is still years away from production. - Reuters |
| Best Buy warns on profit; U.S. unit head to leave Posted: 24 Oct 2012 07:01 PM PDT NEW YORK: Retailer Best Buy Co Inc warned that earnings and same-store sales would fall for its third quarter, and said the head of its U.S. business will leave as the world's largest consumer electronics chain starts to restructure under a new CEO. The news, which pushed its shares down 6.8 percent in after-hours trading, came less than a month before the unofficial start of the biggest selling season of the year. U.S. business president Mike Vitelli will exit at the end of the current fiscal year in early February with a lump-sum payment of $1.45 million, and the executive vice president of U.S. operations, Tim Sheehan, will leave the company at the end of this month. The move is the first big structural change under new CEO Hubert Joly, who was brought in as the company grapples with the rising trend of shoppers who treat its stores like showrooms for cheaper online retailers. While a new chief executive will often overhaul management, especially at an underperforming company, the restructuring will leave Best Buy's retail and online businesses, as well as other groups, to report to Joly, who most recently headed hospitality and travel company Carlson. "The one thing that Joly does not have is retail experience. So you would think that he would really kind of lean on Vitelli," BB&T Capital Markets analyst Anthony Chukumba said. He added that Vitelli, a retail veteran was "very well respected on the Street." Joly, who also drove the turnaround of the French unit of EDS, now part of Hewlett Packard, and led the restructuring of Vivendi's videogame business, said the elimination of the top layer of U.S. operations management was meant to streamline the organization. "One thing I have learned in helping turn companies around is that a business needs to have a nimble organization," Joly said in a news release on Wednesday evening. Analysts were also troubled by Best Buy's forecast. Best Buy said it now expects earnings for the fiscal third quarter ending November 3 to fall "significantly below" those of a year earlier, excluding one-time items, due to falling margins and declines at sales at established stores. "You start to wonder, 'Are the wheels kind of coming off here?'," said Chukumba, who added that the retailer's outlook for the quarter was worse than what Wall Street was expecting. WAITING FOR SCHULZE As part of the executive shuffle, the company named Shawn Score as the head of its U.S. retail channel. Score was formerly the president of Best Buy's mobile business. The changes in the executive suite came two months after Best Buy suspended profit forecasts and share buybacks for the year to give its newly named chief executive time to construct his own turnaround plan. In early October, the company said CFO James Muehlbauer had decided to leave as well. The company is also waiting for its former CEO and largest shareholder, Richard Schulze, to decide whether he can put together a buyout bid. Schulze, who is trying to take the company private, is expected to make his next move in mid to late November. That move could be in the form of a formal bid along with other private equity partners or a request for more time to prepare a formal bid, a source close to the matter said on Wednesday. The source declined to be named as the information is not yet public. One analyst said the most troubling news of all was a decline in the company's gross margins, which suggests how aggressive it has become with promotions to lure customers. "If they try to compete on price they are doomed. Their cost structure doesn't allow that," said Wedbush Securities analyst Michael Pachter. "They have to figure out how to charge a higher price and make shopping in their stores a rewarding experience." Analysts polled by Thomson Reuters I/B/E/S on average had expected earnings per share of 36 cents in the quarter. In the fiscal third quarter a year earlier it earned 47 cents per share on an adjusted basis. "I think people were looking for more out of the third-quarter results given that we had some big product launches," said Morningstar analyst R.J. Hottovy. "Even though it was toward the end of the quarter, you had the iPhone 5 out there." Analysts were hoping the consumer electronics industry would get a boost from the recent or upcoming debuts of Windows 8, the iPhone 5, the Nintendo Wii U video game console, and stronger videogame title releases this year. On Wednesday, Best Buy also warned same-store sales would decline in the low-to-mid single digits for the third quarter. The retailer has already posted same-store sales declines in eight of the last nine quarters. Best Buy shares fell to $15.77 in after-hours trading from a $16.92 close on the New York Stock Exchange. The company also said Wednesday that it would hold an investor day on November 1 to discuss Joly's plans for the future. - Reuters |
| Preview - Apple's Mac flies in under the radar Posted: 24 Oct 2012 06:58 PM PDT SAN FRANCISCO: Amid the fanfare accompanying the noisy launch of the iPad mini this week, Apple Inc also took the wraps off new Mac computers. The facelift may help revitalize an important lineup that -- while seeing growth tail off in the early part of 2012 -- yields 14 percent of revenue and still racks up sales growth numbers that are the envy of a flagging PC world. On Tuesday, Apple took the lid off a slimmed-down iMac and a 13-inch laptop with a vastly improved screen, setting the stage for a potential revival in sales even as Hewlett-Packard and Dell Inc struggle just to stay level. Earlier this year, Apple had also launched an updated MacBook Air - a product analysts say spawned over 20 touch-enabled designs from rivals called "Ultrabooks," which run Microsoft Corp's upcoming Windows 8 software. Apple remains No. 3 in U.S. market share behind HP and Dell. But the Mac's premium pricing, at $1,000 and above, and its subsequent outsized margins mean a spike in revenue growth can give its bottom line a significant boost. "The pricing and feature set of the refreshed iMac present an attractive combination, and I would not be surprised to see the new iMac stimulate desktop sales in the December quarter and beyond," Barclays analyst Ben Reitzes said. The decades-old Macintosh line that helped set a stumbling computer company back on its feet -- today overshadowed in both revenue and media appeal by the popular iPhone and iPad -- saw growth drop to single-digit percentages in the first two quarters of 2012 for the first time since 2009. Yet sales outgrew the PC market, overall, by more than seven times over the 12 months to June, according to CEO Tim Cook, and has outpaced PC growth over the last six years. Apple reports fiscal fourth quarter results on Thursday. The company will likely have sold 5.1 million Macs in the October quarter, up just 5 percent, Piper Jaffray & Co analyst Gene Munster estimates. HALO EFFECT On Tuesday, Apple Marketing Chief Phil Schiller called the Mac "what began it all," and he claimed the Mac was America's No. 1 laptop and desktop among individual models. Research houses Gartner and IDC figures place Apple third in the United States with a market share of about 13 percent. Regardless where it places, at prices starting at $1,000 for its MacBook Air and going all the way close to $4,000 and growth -- while well off the 30-percent range of 2010 -- still defying the market, the Mac has proven a consistent money-spinner for the company even during troubled times for the traditional PC. Intel Corp , HP and other stalwarts of the PC industry are now fighting to sustain growth as tablet computers eat into their PC-related businesses. While the Mac line has not completely side-stepped PC market trends, it has held up better partly because it is targeted at a higher-spending clientele that values its consistency, vis-a-vis the often fragmented PC, where multiple vendors supply different components that don't always work seamlessly. But it also owes its success in large part to a so-called halo effect stemming from consumers' experiences with the iPhone and iPad, said Loren Loverde, analyst with research firm IDC. "They are on the positive end of halo effect both in terms of traffic and brand image," Loverde said, adding that Apple also has yet to fully realize the international growth opportunities for Mac, and expects the new products to see good demand during the holiday quarter. Late Apple co-founder Steve Jobs introduced the Macintosh in 1984, and it became the first successful computer to feature a mouse and a graphical user interface -- a model that has stayed intact through the succeeding decades. The desktop Mac itself stuck to that interface but has radically shifted in design over the years, to today's slim, all-in-one form. Analysts say the redesigned Macs may give Apple's December quarter an extra lift, but the quarter will hinge mostly on how many consumers bought iPads and iPhones, which combined accounts for 72 percent of the company's revenue. Cook and other executives are likely to be questioned on the smartphone's supply issues and the ramp-up of the new "iPad mini," available in stores on November 2. "The bigger question is likely the company's ability to ramp supply to meet the strong demand," Baird Equity Research analyst William Power said. Recent investor concerns regarding Apple have included "perceived slowing iPhone innovation, the lack of a strong developing market strategy for iPhone and current iPhone supply constraints." Apple's stock has reflected some of those concerns. While the stock is up 52 percent this year, it is down 12 percent from its record high of $705 on September 21. Despite the pullback, Apple is trading at 11.6 times next year's estimated earnings, same as the S&P 500 and far lower than some rivals like Amazon.com Inc , which trades at 100 times estimated 2013 earnings. Investors will focus initially on the headline shipment numbers during the fiscal third quarter on Thursday. It is estimated to have sold between 24 million and 26 million iPhones in the July-September period. And Apple said on Tuesday that it sold its 100 millionth iPad two weeks ago, which means that the company sold under 16 million last quarter. This is below the 17 million to 18 million some analysts had forecast. Longer term, Apple could also face margin pressure as smartphones pass the 50 penetration rate in major developed markets, said BGC analyst Colin Gillis. "The next stage of smart phone growth could be more focused on mid-to-lower priced offerings," Gillis said. "Apple may find it difficult to maintain margin while growing massive scale, particularly as the overall market for smartphones slows." - Reuters |
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