Where’s the bailout, Canada?

What is the rationality by the Canadian government against bailing out the tech sector, while bailouts for the banking and auto sector gets an easy green light? Are tech workers any less Canadian who’s jobs do not matter?
BlackBerry (TSE: BB) recently had one of the worst quarters with almost a $1 billion loss in write-downs. BlackBerry, which was ahead of the curve in the invention of smartphones, are now at the brink of bankruptcy with $2-$3 billion in cash – and that’s running out fast! BlackBerry announced last week that they will be cutting 4,500 jobs (source), about a third of the workforce.
The Canadian government has bailed out the banking sector with $114 billion (source), auto industry with $4 billion (source) during the economic crisis five years ago, but why no such bailouts for the tech sector?
BlackBerry is not the first tech company that is in this situation. In the past, Canada had the opportunity to save jobs with a bailout of Nortel Networks, but it was decided that the company is not worth saving (source). BlackBerry may as well face the same verdict in the coming months. Both Nortel and BlackBerry were leaders in their heyday, and being the giants that they once were, have spawned off a number of other startups across the country. So, why the hatred and ignorance towards the tech sector by the Canadian government? Are the tech workers any less Canadian than bankers and auto-sector workers?
I am not advocating that every company that fails should be bailed out with taxpayer money, but what is the rationality behind saving some industries and letting others fail? This is not made clear by the politicians.
What are your thoughts on this topic? 

Quotes from T Boone Pickens

I have been reading up on ideas for investment in energy – both conventional sources such as oil and gas, and alternative sources such as solar and wind. I came across some very inspiring and sane business advice from the billionaire investor T Boone Pickens. For those who are unfamiliar with Pickens, he made his money in the oil sector and is the chair of hedge fund BP Capital Management. He unveiled The Pickens Plan in 2008, a major energy policy proposal that plans on weaning America off foreign oil dependency. The plan relies heavily on wind energy as a source of alternative energy.
T. Boone Pickens
I found the following quotes from T Boone Pickens very inspiring and wanted to share them on this blog.

  1. “A plan without action is not a plan. It’s a speech.”
  2. “Chief executives who themselves own few shares of their companies have no more feeling for the shareholders than they do for baboons in Africa.”
  3. “In a deal between friends, there’s no place for a wolverine.”
  4. “When you blow away the foam, you get down to the real stuff.”
  5. “When you are young, fitness is a sport. As you grow older, it’s a necessity.”
  6. “If you are going to run with the big dogs, you have to get out from under the porch.”
  7. “If he tells ya a goose can pull the wagon, I’d say load the wagon.”
  8. “Be willing to make decisions. That’s the most important quality in a good leader. Don’t fall victim to what I call the ‘ready-aim-aim-aim-aim’ syndrome. You must be willing to fire.”
  9. “Far too many executives have become more concerned with the ‘four Ps’ – pay, perks, power and prestige – rather than making profits for shareholders.”
  10. “Keep things informal. Talking is the natural way to do business. Writing is great for keeping records and putting down details, but talk generates ideas. Great things come from our luncheon meetings, which consist of a sandwich, a cup of soup, and a good idea or two. No martinis.”
  11. “I have always believed that it’s important to show a new look periodically. Predictability can lead to failure.”
  12. “Work eight hours and sleep eight hours, and make sure that they are not the same eight hours.”
  13. “It may smell like manure to you, but it smells like money to me.”
  14. “If you’re on the right side of the issue, just keep driving until you hear glass breaking. Don’t quit.”
  15. “The thing where you throw the ball and catch the ball – that’s a pretty neat trick. I’ve done it a few times, but it’s not something you can do consistently.”
  16. “A fool with a plan can outsmart a genius with no plan.”
  17. “Work hard. Come early, stay late. That’s the way leadership has to approach it.”
  18. “Fight your way out of corners. I play pretty good off the wall.”
  19. “Everything here happens fast. There isn’t any standing around or looking at your watch.”
  20. “I learned early on that you play by the rules. It’s no fun if you cheat to win.”
  21. “When you are hunting elephants, don’t get distracted chasing rabbits.”
  22. “We’re flexible, quick on our feet and able to get the job done.”
  23. “You win with a team, and I’m a good team builder.”
  24. “I don’t want to get old and feel bad.”
  25. “Show me a good loser and I’ll show you a loser.”
You can follow T Boone Pickens on Twitter @boonepickens

Chatter Around the World – 13

Chatter Around the World is a weekly link update of economics, investing, dividends and personal finance articles that have caught my eye. In these weekly updates, I also capture my blog updates and news related to my holdings.

New blog posts

Let dive into the links that caught my attention this week.

Updates from My Portfolio Holdings

Recent Buy – Medtronic Inc (MDT)

I initiated a new position in Medtronic, Inc. (MDT). Medtronic is a S&P 500 component, which manufactures and sells device-based medical therapies worldwide.
The company operates in two segments, Cardiac and Vascular Group, and Restorative Therapies Group. The Cardiac and Vascular Group’s products include pacemakers; implantable defibrillators; leads and delivery systems; ablation products; electrophysiology catheters; products for the treatment of atrial fibrillation; information systems for the management of patients with cardiac rhythm disease management (CRDM) devices; coronary and peripheral stents and related delivery systems; therapies for uncontrolled hypertension; endovascular stent graft systems; heart valve replacement technologies; cardiac tissue ablation systems; and open heart and coronary bypass grafting surgical products. The Restorative Therapies Group offers products for various areas of the spine; bone graft substitutes; biologic products; trauma, implantable neurostimulation therapies, and drug delivery devices for the treatment of chronic pain, movement disorders, obsessive-compulsive disorder (OCD), overactive bladder, urinary retention, and fecal incontinence and gastroparesis; external insulin pumps; subcutaneous CGM systems; products to treat conditions of the ear, nose, and throat; and devices that incorporate advanced energy technology. It also manufactures and sells image-guided surgery and intra-operative imaging systems; and provides Web-based therapy management software solutions. The company serves hospitals, physicians, clinicians, and patients in approximately 140 countries. Medtronic, Inc. was founded in 1949 and is headquartered in Minneapolis, Minnesota.

Recent Buy Decision

My healthcare mutual fund is the only exposure that I have to the healthcare sector and I have been meaning to expand my exposure in the healthcare sector with individual stocks in my steps towards liquefying my mutual fund position. As part of the process, I intend to get exposure to medical devices equipment manufacturers, healthcare REITs (last month, I bought Omega Healthcare), pharmaceutical companies, biotech stocks etc. Medtronic fills the void for the medical devices equipment manufacturer.
Medtronic Inc is a dividend champion that has been increasing dividends for 36 years with a 5-yr dividend growth rate (DGR) of 16.50% and 10-yr DGR of 15.50%. The stock currently yields approximately 2.1% and a payout ratio of 32% with plenty of upside potential.
The stock The stock has a 5-yr average yield of 3.30% and currently yields 3.37% with a payout ratio of 29.8% and plenty of room to increase dividends.
A summary of the stock:
  • Symbol: NYSE: MDT
  • Quote: $52.81
  • 52-week Range: $40.28-$55.98
  • P/E: 15.19
  • P/B: 2.91
  • Yield: 2.12%
  • 5-yr DGR: 16.50%
  • 10-yr DGR: 15.50%
  • Payout Ratio: 32.18%
  • Debt to Equity Ratio: 0.60
  • Book Value per Share: 18.34
  • Graham Number: 37.89
 
Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.
 

Canadian Wireless Market

The Big-3 Canadian wireless market players have been cash cows for a lot of investors over the years. The national market is carved up between three large players – BCE Inc (TSE: BCE), Rogers Communications Inc (TSE: RCI.B) and Telus (TSE: T) controlling approximately 91% of the wireless market, with various other regional players filling in the rest.


As a consumer, Canada is ranked among the ten most expensive countries for wireless services (Source: OECD Communications Outlook, 2013). The Canadian conservative government has been bipolar in trying to balance encouragement of competition and having a protectionist viewpoint roadblocking foreign ownership of local companies or downright blocking some from entering the market. Wind Mobile, a relatively new small player, has had a troubled past with foreign ownership (source) and national security concerns regarding deals with Huawei (source). Earlier this year, Verizon Communications Inc (NYSE: VZ) and AT&T (NYSE: T) decided not to enter the Canadian market after mulling on it for months (Verizon source, AT&T source).

In the upcoming 2014 wireless spectrum auction, all the roadblocks created have resulted in no new foreign telecom carriers planning on entering the market (source), which is bad news for the consumers – as the status quo results in continuation of the eye-gouging rates. However, the Big-3 are the big winners from the news.

The stats for the Big-3 are:

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR Debt/Equity
BCE Inc BCE  $44.51  14.22  5.23% 74.40% 16.74% 1.21
Rogers Comm Inc  RCI.B $45.36 12.49  3.84% 45.50% 14.40% 2.90
Telus Corp T $35.44 18.02  3.84% 66.30% 7.96% 0.95

Of the Big-3, BCE Inc is the most diversified. Click here to read about BCE’s profile when I initiated my position in July.

Disclosure: I am long BCE.

Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.