Financial life in a big town

U.S. lawmakers are appalled at a foreign takeover bid for an American beer icon. The truth is Anheuser-Busch (BUD.N: Quote, Profile, Research, Stock Buzz) was a sitting duck — a lesson in poor strategy that wise managers would do well to learn.

The St Louis-based brewer of Budweiser, now a takeover target of European brewer InBev (INTB.BR: Quote, Profile, Research, Stock Buzz), failed to expand abroad in a meaningful way, so its share price went nowhere over the last five years as it missed growth opportunities.

Missouri senator Claire McCaskill vowed on Tuesday to do everything possible to “stop the sale” of Anheuser which is based in her state.

InBev Chief Executive Carlos Brito promised this week to keep the home of Budweiser, America’s “King of Beers” in St Louis. What he did not say was that Anheuser’s lack of ambition abroad had made it vulnerable.

Anheuser missed chances to expand in South America with AmBev in 2004 and then Bavaria in 2005, and also into the fast-growing Russian beer market faxless payday loans. It only announced plans to build its first brewery outside the U.S. from scratch last year.

“There has been no effective international strategy at all and its expansion abroad has not made a material difference to Anheuser and left it open to a bid,” said one banker who did not want to be named.

Belgian-based InBev, brewer of Stella Artois and Beck’s, launched a $65 a share bid for Anheuser last week, valuing the biggest U.S. brewer at $46.3 billion. The Budweiser and Bud Light brewer has only said it will evaluate the InBev proposal carefully.

SALES STAGNANT, COMPETITORS GEAR UP 

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CALGARY–Fertilizer producer Agrium Inc. says it is looking forward to record profits as "unprecedented demand for crop inputs."

The Calgary-based company said it expects second-quarter earnings of US$2.80 to $3 per share, up from previous guidance of $1.92 to $2.22, "due to very strong results from both our retail and wholesale operations."

Agrium's results are "particularly impressive given that the North American spring application season has been hampered by excessively cold and wet weather this year," president and CEO Mike Wilson said in a release.

"Continued strong global crop prices have created unprecedented demand for crop inputs and we foresee an extended demand-driven cycle."

The company said its forecast assumes there is no unfavourable financial impact from its Egyptian nitrogen facility EAgrium, at which construction was halted in April“due to permitting and other delays created by the Egyptian government."

A syndicate of banks providing financing for the project has requested the suspension of future draws on a credit facility and says the loan is in default no qualifying payday advance.

Agrium said it expects government approval but has "concerns these issues may not be resolved in the near term, in which event EAgrium's shareholders would be exposed to the loss of their total equity commitment."

Agrium has $165 million invested in the project with a total equity commitment of $280 million.

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Boeing Co (BA.N: Quote, Profile, Research) reported a greater-than-expected 38 percent jump in first-quarter profit on Wednesday as increased deliveries of its commercial planes offset a dip in military sales, and manufacturing operations became more efficient.

The Chicago-based company, which vies with EADS (EAD.PA: Quote, Profile, Research) unit Airbus in the lucrative jetliner market, kept its full-year profit target unchanged and forecast next year’s earnings in line with Wall Street estimates, despite problems getting its new 787 Dreamliner in the air.

Boeing, which is also the Pentagon’s No. 2 supplier, reported quarterly profit of $1.2 billion, or $1.62 per share, compared with $877 million, or $1.13 per share, a year earlier.

The results easily beat Wall Street’s average earnings forecast of $1.36 per share, according to Reuters Estimates.

Boeing shares rose 2.7 percent to $80.71 in early New York Stock Exchange trading payday loans. At Tuesday’s close, they had fallen 27 percent since last July, dogged by 787 delays.

“It’s pretty amazing they beat consensus by 20 percent,” said Paul Nisbet at aerospace specialists JSA Research. “The high rate of operating margin was a big jump — the volume is beginning to pay off. With the high demand for aircraft, they are getting good prices.”

Operating margin at the commercial plane unit jumped nearly 3 percentage points to 12 percent, as Boeing’s massive manufacturing operations became more efficient as the company works through a record order book. Its defense unit operating margin rose slightly to 11.4 percent.

Boeing now has an unprecedented $271 billion worth of commercial planes on its order book, pumped up by a three-year boom in aircraft sales. It also has $75 billion worth of defense orders. 

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You sign a long-term gas and electricity contract, hoping to save money, but promised savings have not materialized.

In the last two years, anyone who signed or renewed energy contracts has paid more than if they had stayed with their local utility.

But if they try to get out early, they’re hit with big penalties.

On Your Side has helped many people get out of contracts without fees because they were older, living on low income or obviously confused about what they signed.

Agata Falkowski-Ham: Her grandparents, both in their eighties with limited English, were paying 40 cents a cubic metre for gas – about one-third higher than the Enbridge Gas price (29 cents).

They were clients of Ontario Energy Savings Corp., which wanted $800 to cancel the contract.

I helped her grandparents get out penalty-free. Then, I went to work for her mother.

A 60-year-old widow, she had signed electricity contracts with two companies – Direct Energy and Universal Energy Corp. – at the same time.

Direct Energy released her, but Universal did not. Spokesperson Jonathan Drummond said the mother had consulted her daughter before reaffirming the contract.

Falkowski-Ham insisted she was out of town and had not discussed the deal with her mother.

Universal agreed to cancel without penalty after getting proof the widow’s only income was $639 a month from a survivor’s allowance.

Juan Molina: He had a contract for gas and electricity with Ontario Energy Savings Corp., but signed new contracts at the door with Superior Energy Management.

OESC asked him to come back and he agreed. That led Superior to impose cancellation charges for the two new contracts.

"I agreed to allow Juan out of his contract (reluctantly)," said Greg McCamus, president of Superior, after I appealed on his behalf paydayloans. "He seems like he has a lot of financial issues and made a mistake by signing another contract when he had an existing contract in place."

Wendi Maroon: Her mother, 73, had a gas contract with Universal Energy. Later, she signed with OESC when offered lower rates.

Universal Energy charged cancellation fees, but relented.

"If the family provides documentation that Mrs. Maroon was over 70 at the time of signing the contract, UEC will cancel without fee," Drummond said.

The daughter had been told there was no policy of releasing seniors from contracts. She was relieved to hear her mother would no longer get letters from a collection agency.

Whitney Slattery: A first-year college student living in her own apartment, she signed a five-year electricity deal last fall with Superior Energy.

"When I got my hydro bill, it was double its normal cost of about $50," she said. "I called Superior Energy and was told that it would cost me $753 to cancel."

McCamus said the contract and reaffirmation call were done properly, but he would not hold her to the deal.

"She is so agitated and obviously confused and frustrated that I don’t know if she is capable of understanding our offer," he said after listening to her calls.

Remember you have a choice. You can say no to energy sellers at the door. If you can live with floating prices, you may pay less with your utility – and you won’t get penalized if you want to end the relationship.

Write to onyourside@thestar.ca or visit www.ellenroseman.com

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So, you want to open a discount brokerage account and manage your own investments.

Which discount broker do you choose? How do you compare them all?

Luckily, you can find a wealth of Canadian information online.

You can start your virtual tour with Surviscor, a consulting firm that regularly reviews and ranks the discount brokerages.

Its winter 2008 survey, posted at www.surviscor.com, compares 16 online brokers operating in Canada.

As well as overall rankings, there are separate rankings for investors and traders. This recognizes they have different needs.

Credential Direct, owned by Canada’s credit unions, gets the top score for catering to investors (7.59 out of 10).

It’s followed by BMO InvestorLine (6.85), Qtrade (6.56), National Bank Direct Brokerage (6.42) and TD Waterhouse (6.37).

Your next stop is the Stingy Investor website. (Go to www.ndir.com and search for Canadian discount brokers). It’s run by Norm Rothery, chief investment strategist at Dan Hallett & Associates Inc.

Here you can find up-to-date comparisons of the fees and commissions charged by 15 Canadian online brokerages (as well as phone numbers and email addresses).

What you pay usually depends on how many trades you make per quarter or year, how many shares you buy at a time and how many dollars you have in assets at the firm.

In the past year, most discount brokers have introduced lower fees for active traders. That’s the good news.

But many brokers also charge penalties – called maintenance fees – for inactive traders, especially those with smaller accounts. So, watch out and ask questions.

The Stingy Investor doesn’t rank discount brokers. But when you read its listings, one firm stands out for simplicity and low fees.

Questrade charges one cent a share, $4.95 minimum to $9.95 maximum, and calls this "democratic pricing."

Maybe you want to hear about other investors’ online trading experiences paydayloan.

You want to eavesdrop on their conversations.

Thanks to a proliferation of Canadian personal finance blogs, you can have access to other people’s experiences and opinions. But you do need to exercise judgment.

Start with CanadianCapitalist.com, one of the longest-running and active personal finance blogs. Scroll down the right hand side to Categories, then find Investing and Discount Brokers.

You’ll find out why this blogger went to Questrade for rock-bottom trading commissions and then returned to TD Waterhouse to consolidate all his accounts with one broker.

Another blog worth an investment of your time is Million Dollar Journey, which has a chart comparing eight Canadian discount brokers (www.milliondollarjourney.com).

Besides fees and commissions, he looks at such factors as: What is the margin rate? Can you get real-time quotes free? What is the minimum required to open an account? Is there a maintenance cost? How much interest is paid on cash? Can you use a dividend reinvestment plan? What is the foreign exchange fee or spread charged?

This blog also publishes reviews of individual brokers and critical comments from readers.

"It took a total of 5.5 weeks for my RRSP to get transferred from Tradefreedom to Questrade," says one investor. "I saw that my RRSP positions were incorrect. I’m pretty frustrated with the overall experience."

In case you think it’s all one-sided, you can find responses from Lynn Suderman, communications manager for Questrade, to some of this negative feedback.

Next week, we’ll look at how to put together a portfolio of exchange-traded funds that needs little oversight or supervision.

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Anyone who has tried to break a bad habit knows how hard it can be. Every New Year’s Day millions resolve to lose weight, quit smoking or get better organized. And every Jan. 2, those making the resolutions are resolved to try it again another day.

In his latest book, "Strategy and the Fat Smoker," author David Maister equates business achievement with the struggle a smoker has when trying to quit the habit. Many try, but not all will succeed.

With business, as it is with smoking, Maister surmises some essential questions of strategy are not being asked and answered despite a plethora of practical wisdom that is well disseminated, publicized and understood.

Smokers who want to quit know that doing so will benefit their health and their wallets. Executives know a well-designed business approach will add to their bottom line.
There are a million good reasons for doing both. But turning reason into reality means thinking differently about strategy. Without answering some tough questions, the smoker lights up again or the business fails because of the pursuit of the same old failed strategy in hopes of a better result.

Those who lead organizations, according to Maister, must think differently about strategy. First, they must learn what drives and motivates people, then take that information to the next level by using it to figure out how to change and improve their businesses. Second, they must be ready to rebound from mistakes. The ability to recover from mistakes is a strategy move in its own right.

Maister’s book has opened my eyes to two important ways of looking at strategy.

First, it has helped me realize that creating a single resolve in a group to take action is more important than merely creating insights into what should be done. Getting everyone on board and, as Maister says, "sticking to the diet" can be a leader’s biggest challenge. If done well, however, it can also be the most rewarding.

Second, is the importance of taking an action-oriented approach to strategy cash advance loan. Problems should be addressed now, before something serious happens in the future, leaving what needs to be fixed beyond repair. Being successful means moving forward and implementing something management and your organization cannot ignore.

Maister also reveals his finding that success cannot be achieved if you rely on only doing things "well most of the time." For him, the pursuit of short-term goals is inherently anti-strategic and self-defeating. The time necessary to make noteworthy advancements cannot be undervalued.

He reminds us that anything worth putting an effort into, whether it is breaking a bad habit or building a better business strategy, will take time to bear fruit. You must forgo some of today to reach a better tomorrow.

Maister says strategies in business are applied more efficiently when presented as matters of principle and not just convenience. In establishing those strategies, business leaders must take into account that some people have an appetite for high-investment, future-oriented strategies they are willing to defer. Others, they will find, are reluctant to invest, even in their own future.

If you are willing to invest some of your time on a strategy book designed to make you a better manager, take a bite out of "Strategy and the Fat Smoker."

BENJAMIN OLA. AKANDE IS DEAN OF WEBSTER UNIVERSITY’S SCHOOL OF BUSINESS AND TECHNOLOGY. READERS ARE INVITED TO JOIN WEBSTER’S ONLINE BIZTALK BOOK CLUB. GO TO WWW.WEBSTER.EDU/SBT/BOOKCLUB TO JOIN AND PARTICIPATE IN THE BOOK CLUB CHAT FOR "STRATEGY AND THE FAT SMOKER" FROM NOON TO 1 P.M. TODAY. NEXT MONTH’S BIZTALK BOOK CLUB SELECTION IS "LIFE’S A CAMPAIGN: WHAT POLITICS HAS TAUGHT ME ABOUT FRIENDSHIP, RIVALRY, REPUTATION, AND SUCCESS," BY CHRIS MATTHEW.

‘Strategy and the Fat Smoker’ by David Maister The Spangle Press, $29.99

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Stock index futures fell on Thursday as investors fretted about the outlook for corporate profits and news that Lehman Brothers (LEH.N: Quote, Profile, Research) put $1 billion of soured assets onto its balance sheet.

Retailers were also a focus as they released March sales reports. Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) posted same-store sales that fell short of Wall Street’s forecasts but raised its profit forecast. Shares of Wal-Mart, a Dow component, rose 2 percent to $55.24.

But a headwind for stocks was the price of oil, which traded above $111 a barrel and near a record high set on Wednesday.

Shares of Lehman Brothers were down more than 5 percent in Europe after the Wall Street bank said in a regulatory filing it liquidated three floundering investment funds and put $1 billion of assets onto its balance sheet.

Home goods retailer Bed Bath & Beyond Inc (BBBY.O: Quote, Profile, Research) joined United Parcel Service Inc (UPS.N: Quote, Profile, Research) and others when it gave a quarterly profit forecast well below Wall Street’s estimates quick payday loan. Its shares dropped 5 percent after the bell from a Nasdaq close of $29.47.

“We have entered a very cautious phase with investors very much on edge about earnings,” said Peter Cardillo, chief market economist at Avalon Partners.

“We also have oil prices making new highs and the dollar making new lows against the euro. While the averages are not falling apart, we’ve certainly embarked in a cautious, downward trading range.”

S&P 500 futures fell 6.4 points, but were above fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract. 

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Internet icon Yahoo, under pressure of a three-week deadline from Microsoft to accept its $41 billion buyout bid, said Monday that it doesn’t oppose a deal with the huge software maker but wants a better offer.

Microsoft made its offer for Yahoo in late January. The deal would create a stronger rival to Google Inc credit report. At the time, the cash-and-stock bid was valued at $44.6 billion, or 62 percent above Yahoo’s market value. As of Friday, the deal was worth just under $41 billion.

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WASHINGTON — The Labor Department reported Thursday that new applications filed for unemployment insurance jumped by a seasonally adjusted 38,000 to 407,000 for the week ending March 29.

The increase left claims at their highest point since Sept. 17, 2005, after the blows of the devastating Gulf Coast hurricanes.

The latest snapshot of labor activity was worse than economists had anticipated. They had predicted claims would be much lower, around 365,000.

In other economic news, the Institute for Supply Management said the nation’s service sector — including retailers, hotels, insurance companies and other firms — contracted in March but not as much as the month before faxless payday advance. The institute’s index registered 49.6 last month, compared to 49.3 in February. A reading below 50 indicates contraction, while a reading above 50 indicates growth.

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Monsanto Co., the world’s largest seed producer, said fiscal second-quarter profit more than doubled as U.S. farmers bought more Roundup weed killer and genetically modified corn seed.

The Creve Coeur-based company is taking market share from rivals such as DuPont Co. by spending more to develop new varieties of corn, soybean and cotton seeds. Higher prices will help double gross profit from Roundup this year, Chief Executive Hugh Grant said on a conference call.

Net income in the three months through February rose to $1.13 billion, or $2.02 a share, from $543 million, or 98 cents, a year earlier. That surpassed Thomson Financial’s prediction of $1.72 a share.

The second-quarter earnings include a 23-cent gain from the settlement of Monsanto’s claims related to Solutia Inc.’s emergence from bankruptcy.

Sales were boosted by global demand for Roundup and genetically modified corn seeds in the U.S bad credit payday loan. and Brazil, Monsanto said.

"Between now and 2012, I think we’re the only company in agriculture that can point to consistent growth irrespective of swings in commodity prices, fluctuations in planted acres or the usual ups and downs in the popularity of things like ethanol," Grant said.

Monsanto said it won an additional 3 to 5 percentage points of the U.S. corn-seed market this year, confirming earlier forecasts.

Monsanto last year surpassed DuPont’s Pioneer unit as the largest producer, with 32 percent of U.S. corn-seed sales. DuPont had 30 percent and has pledged to hold its share steady this year. Monsanto said its share this year will be 35 percent to 37 percent.

The Associated Press contributed to this report.

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