BCE Inc.
Toronto symbol BCE, provides local and long distance telephone services in Ontario and Quebec. It also operates a nationwide wireless service.
RBC CANADIAN EQUITY FUND $18.03 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) mainly invests in larger-capitalization stocks, but may also buy small- and mid-cap stocks. The $3.1-billion fund’s largest holdings are Royal Bank, Manulife, EnCana, TD Bank, Potash Corp., Bank of Nova Scotia, Canadian Natural Resources, Suncor Energy, Research in Motion and BCE. The fund is heavily weighted (47.2%) toward the resource sector; 27% of its investments are in finance. Over the last 10 years, RBC Canadian Equity posted a 4.9% annual rate of return. That’s just over the S&P/TSX’s 4.6% gain. The fund lost 38.3% over the last year, compared to a loss of 38.2% for the S&P/TSX. The fund’s MER is 1.96%....
CIBC CANADIAN EQUITY FUND $16.61 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Web site: www.cibc.com. No load — deal directly with the bank) looks at fundamentals like earnings, cash flow and debt level to identify companies that it sees as having above-average growth potential. The $317.2-million fund’s top holdings are: TransCanada Corp., EnCana, Research in Motion, Bank of Nova Scotia, CN Railway, Potash Corp., BCE Inc., Canadian Natural Resources and Royal Bank of Canada. CIBC Canadian Equity holds 39.4% of its portfolio in resource stocks and 27.1% in finance stocks....
TELUS CORP. $33.75 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $11.3 billion; SI Rating: Above Average) plans to spend $500 million this year to improve the speed and reach of its wireless networks in British Columbia. This investment is nearly a quarter of the $2.05 billion that Telus plans to spend on upgrades in 2009. Most of the balance will go to improving its high-speed Internet services and installing equipment related to two large telecommunication contracts with businesses in Ontario and Quebec. Telus’s 2008 cash flow was $2.8 billion, or $8.76 a share. A faster network will help Telus attract and retain more cellphone customers. Telus is Canada’s third-largest wireless service provider, after Rogers and BCE. Moreover, it has to compete with new entrants in the wireless market, which should begin operations later this year. These improvements will also let the company offer more Internet services at greater speeds. This includes faster downloading of videos and music from the Internet....
SCOTIA CANADIAN GROWTH FUND $41.09 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9269; Web site: www.scotiabank.com. No load — deal directly with the bank) attempts to use an investment’s fundamentals to determine whether it has the potential for above-average growth. The $315.8-million Scotia Canadian Growth Fund’s largest stock holdings include EnCana Corp., Royal Bank, TD Bank, BCE Inc., Potash Corp., Canadian Natural Resources, Suncor Energy, Bank of Nova Scotia and Barrick Gold. Scotia Canadian Growth holds 43.3% of its portfolio in the resource sector. Its next-largest segment is financial services, at 24.9%....
Brookfield Properties Corp., $7.14, symbol BPO on Toronto (Shares outstanding: 391.1 million; Market cap: $2.8 billion), owns, develops and manages office buildings in some of North America’s largest cities. Brookfield’s commercial portfolio consists of interests in 108 properties totalling 74 million square feet in the downtown cores of New York, Boston, Washington, D.C., Los Angeles, Houston, Toronto, Calgary and Ottawa. Brookfield Asset Management (symbol BAM.A on Toronto), holds a 50% interest in Brookfield Properties. The other 50% trades on the Toronto exchange. Office buildings account for about 78% of Brookfield’s revenue, and residential housing accounts for about 22%. Brookfield’s residential land-development and homebuilding operations are mainly based in Alberta (42% of total acres), Texas (26%), Colorado (18%), Ontario (13%) and Missouri (1%)....
GENNUM CORP., $3.65, Toronto symbol GND, has agreed to buy Ottawa-based Tundra Semiconductor Corp. (Toronto symbol TUN). Gennum makes equipment that lets TV broadcasters store, manipulate and transport video signals without losing picture quality. Like Tundra, it also makes chips and other components for computer-networking equipment, such as modems and routers. Gennum is paying $86 million in cash and shares for Tundra, 48% more than Tundra’s market cap just prior to the announcement. The cash portion of the purchase price is $55 million, while Gennum shares make up the other $31 million. To put this in context, Gennum earned $22 million U.S., or $0.62 U.S. a share, in its fiscal year ended November 30, 2008. (Although it trades on the Toronto exchange, Gennum reports its results in U.S. dollars.) These figures exclude writedowns of investments and other unusual items. Gennum also held cash of $49 million U.S., or $1.38 U.S. a share, as of November 30, 2008. It has just $1-million U.S. in long-term debt, so it has plenty of room to borrow the extra cash it needs to complete the takeover....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 227.6 million; Market cap: $5.7 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) has 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. As part of the deal that created the trust in 2006, Bell Aliant transferred most of its wireless business to BCE, which owns 44% of Bell Aliant. Strong demand for high-speed Internet service is helping Bell Aliant offset the loss of regular phone customers. In 2008, revenue grew 0.9%, to $3.28 billion from $3.25 billion in 2007. However, earnings rose 6.9%, to $331.9 million from $310.4 million. Per-unit earnings rose just 1.5%, to $2.07 from $2.04, on more units outstanding. These figures include restructuring and related charges....
BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada. BCE continues to lose traditional phone customers, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly. The wireless division’s 2008 revenue rose 7.6%, and its subscriber base grew by 4.5%. Wireless accounts for 25% of BCE’s revenue and 43% of its profit. BCE hopes to spur sales of its wireless and other services, like satellite TV, with a new deal to buy “The Source”, a 756-store home-electronics chain in Canada. BCE already operates about 750 retail stores....
Canada’s telephone companies face growing competition from cable companies and Internet-based phone services. New entrants in the wireless industry will also push the established wireless companies to cut their rates. We feel these four telecom companies will continue to dominate their markets. Steady cash flow from their traditional phone businesses will help them invest in new growth areas, like wireless, and maintain their high dividend yields. BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada....
BCE $24.79 (Toronto symbol BCE; Shares outstanding: 791.6 million; Market cap: $19.6 billion; SI Rating: Above Average) earned $1.8 billion in 2008, down 3.9% from $1.9 billion in 2007. Earnings per share fell 3.8%, to $2.25 from $2.34 on more shares outstanding. Revenue fell 0.3%, to $17.7 billion from $17.75 billion. These figures exclude restructuring charges, mainly job cuts, and other one-time items. BCE’s restructuring should cut its annual expenses by $400 million. BCE continues to lose traditional phone customers to cable companies and Internet-based phone services, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly; revenue rose 7.6% in 2008, and its subscriber base grew by 4.5%. The wireless division accounts for 25% of BCE’s revenue and 43% of its profit. Higher demand for BCE’s high-speed Internet and satellite-TV services helped offset lower revenue from its traditional phone services. Despite the lower earnings, BCE raised its quarterly dividend by 5.5%, to $0.385 a share from $0.365. The new annual rate of $1.54 yields 6.2%....