Microsoft Corp.’s legal woes mounted as a U.S. federal judge berated the software giant for accusing a judicial adviser of being biased against the company. The firm faces contempt charges that it effectively defied a court order to provide computer makers with a version of its Windows 95 operating system that does not include its Internet Explorer browser.
MICROSOFT ON THE ROPES
BRE-X BLAME GAME
Nesbitt Burns Inc. tried to shoot down a $3-billion lawsuit filed in Texas by former shareholders in Calgary-based Bre-X Minerals Ltd., saying neither the brokerage nor its gold mining analyst, Egizio Bianchini, were at fault for failing to uncover the massive fraud involving Bre-X’s Busang gold find in Indonesia.
EATON'S COUNTS THE COST
T. Eaton Co. Ltd. said it lost $104 million during the 40 weeks to Nov. 1, largely due to restructuring costs. Vicepresident Hap Stephen said the restructuring plan, which calls for the closure of 17 stores, should help the Toronto-based department store chain turn a profit in 1998.
A SUITOR FOR HYDRO
British Energy PLC said it wants to buy a stake in Ontario Hydro’s troubled nuclear generating stations within two years. An independent report concluded in August that Ontario’s 19 nuclear stations meet only minimum safety standards.
SCHNEIDER'S UNDER FIRE
A group of shareholders in Schneider Corp. hit the Kitchener, Ont.-based pork producer with a lawsuit for refusing to sell the firm to the highest bidder. The Schneider family, which controls the company, have rejected a $29-ashare offer from Maple Leaf Foods Inc. of Toronto in favor of a $25-a-share bid from U.S.-based Smithfield Foods Inc.
A PRINCE OF A PLAN
Saudi billionaire Prince al-Waleed bin Talal bin Abdulazi announced plans for a $500-million amusement park to be constructed on the grounds of Vancouver’s Pacific National Exhibition. Scheduled to open in 2000, the park will boast 25 rides and a 15,000-seat amphitheatre. The prince is best known for his business partnership with pop star Michael Jackson.
Betting against the banks
First, he shook Asia’s capital markets to the core. Now, the world’s most feared investor,
George Soros, is sending shivers down the spines of Canadian bankers. Reports that the Hungarianborn billionaire was speculating on Canadian bank stocks prompted a wave of selling last week, pushing share prices down by more than 10 per cent in some cases. The banks have also been buffeted by Asia’s financial turmoil, which is expected to cast a chill over stock markets this year. That, in turn, would hurt bank earnings because their huge profits in recent years have been generated in part by their brokerages. Canadian Imperial Bank of Commerce took the biggest tumble, dropping 11.5 per cent over five days. The Bank of Nova Scotia was also hit hard, dropping 10.4 per cent.
Canadian markets are familiar ground for Soros, 67, who has made and lost millions of dollars betting against the Canadian dollar. The naturalized American, who lives in New York City, is famous for selling stocks or currencies that he expects to drop, only to buy them back later at a lower price—a practice known as short selling.
Last year, Malaysian Prime Minister Mahathir Mohamad accused Soros of triggering Southeast Asia’s currency crisis. Soros replied that Mahathir and others were only trying to shift blame for their own economic mismanagement.
Smoke and mirrors
Documents traced to a major Canadian cigarette manufacturer offered the most disturbing evidence yet that tobacco companies have long tried to attract smokers as young as 13. Despite frequent assertions by the industry that it does not market to underage smokers, studies commissioned by RJR-Macdonald Inc. between 1979 and 1987 featured detailed information on young people and their tastes. The documents were released at the end of a lawsuit in California against R. J. Reynolds Tobacco, RJR-Macdonald’s parent company. Montreal lawyer Colin Irving, who represents RJR-Macdonald, denied that the documents contradict the company’s stated policy of not marketing to children. He said the consultants who prepared them may have ignored specific instructions not to include people under 18. RJR-Macdonald makes Export A Vantage, Macdonald Special and Macdonald Select cigarettes.
Economists are split on the impact of Asia’s financial crisis on Canada. The Canadian Imperial Bank of Commerce has trimmed its forecast for economic growth this year to 3.3 per cent from 3.5 per cent, compared with actual growth of 3.8 per cent in 1997. The Bank of Nova Scotia is more pessimistic, expecting 1998 growth of three per cent. However, Scotiabank’s brokerage arm, ScotiaMcLeod Inc., says the impact will be minimal and has left its prediction unchanged at four per cent.
For now, the economy continues to steam ahead. The value of building permits issued by municipalities rose 8.4 per cent in November to a seasonally adjusted $2.9 billion, the highest level since 1990. Lured by the cheap dollar, U.S. citizens made more same-day car trips to Canada in November than during any other month in the past 16 years.
Number of one-day car trips to Canada by Americans (in millions)
“There is little doubt that the markets insist on focusing on the Asian contagion and blowing its potential impacts on the North American economy out of any semblance of reality. " —Scoti a McLeod Inc.
“The worst of the Asian financial market debacle may well have passed, but volatility can be expected to persist. And the bulk of the economic pain is still to come. " —Nesbitt Burns
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