The Obama administration says its stimulus program has created or preserved 12,228 jobs in Arizona this year.
But one leading Arizona economist says that number is not worth the program’s price tag.
Arizona has been allocated $2.8 billion under the American Recovery & Reinvestment Act, according to the administration. The money covers transportation and water infrastructure contracts, weatherization of low income homes, Medicaid, public school funding and university biomedical research among other projects.
Economist Elliott Pollack said Wednesday dividing the federal allocation and the number of jobs equals about $230,000 per job in Arizona.
“They might as well give people the money,” Pollack said Wednesday at an economic forecast sponsored by Arizona State University and JPMorgan Chase & Co.
The Federal Trade Commission is going after bloggers, celebrities and tall tales in the first revision of its rules for endorsements and product reviews in nearly 30 years.
The new guidelines, which go into effect Dec. 1, are designed to adapt to a new world in which blogs and social media Web sites such as Facebook and Twitter have quickly become go-to destinations for consumers to get an opinion about a product. The last FTC rules revision was in 1980.
An existing FTC rule that states product reviewers must reveal any connection they have with advertisers was extended to bloggers. Companies will often distribute free products to bloggers for their review, and sometimes advertisers offer payment for endorsements. The FTC said that endorsements on blogs appear to be "word of mouth," but that is not always the case – sometimes companies create their own blogs that can give the aura of objectivity.
The new rules also clarify that celebrity endorsers of products must reveal their relationships with advertisers when making endorsements if they are pushing a product on a blog, social network or television talk show.
"The test here is, if the relationship were known between the blogger and the advertiser, would that affect the credibility of the endorsement?" FTC assistant director of advertising practices Richard Cleland told CNN. "That question has to be determined on a case by case basis. What we have produced is a general guidance that says in certain cases receiving a free product is not any different than being paid directly for an endorsement."
The FTC also targeted testimonials in ads that convey atypical results for a product online pay day loans. For instance, many weight loss supplement ads will show people who have used the product and have lost large amounts of weight, with a disclaimer at the bottom that reads "results not typical." Under the new rules, the company must disclose the results that consumers should usually expect.
The existing rules carry a fine as high as $11,000 if product endorsers and reviewers don’t comply.
"This is great for consumers," said Zeus Kerravala, an analyst with Yankee Group. "There’s some doubt about blogs now, because you don’t really know whether they’re unbiased or not."
Kerravala said this could be the beginning of a larger attempt for the government to regulate the Internet. Though he doesn’t believe it will be as tightly regulated as the off-line world, some tougher rules may be coming down the pike.
"We’ve gotten to a point where blog rumors could move stocks," said Kerravala. "There have to be some stricter regulations of the Internet. It’s long overdue."
But enforcement could prove difficult. Cleland said the FTC won’t be hiring new personnel to monitor blogs, creating a "game of whack-a-mole" for regulators, given the numbers involved. As a result, the FTC said it is more likely to go after advertisers rather than bloggers to ensure ad companies are giving product reviewers proper instructions about disclosure compliance.
– CNN’s Eric Kuhn contributed to this report
Rhode Island will be open for business Friday.
State workers were scheduled to take their first of 12 furlough days ordered by Gov. Donald Carcieri. But a state Supreme Court justice temporary blocked the shutdown Thursday after several employee unions sued, arguing the move violated their contracts.
More states are furloughing workers these days than at any time since the Eisenhower administration, but unions are increasingly fighting back. Rhode Island workers’ victory Thursday is the latest in a string of legal actions aimed at stopping the shutdowns.
Last month, a federal judge sided with government workers in Prince George’s County, Maryland, who argued that a 10-day furlough violated their contract. After winning a similar ruling in July, Hawaii unions continue to battle Gov. Linda Lingle over her ongoing efforts to institute furloughs.
A growing number of states are turning to furloughs in hopes of balancing their budgets. The recession — and accompanying decline in tax revenues — has wreaked havoc on state spending plans.
Some 750,000 workers in 21 states are being affected by furloughs, said Sujit CanagaRetna, senior fiscal analyst at the Council of State Governments.
"It’s the most number of furloughs we’ve seen in 50 years," he said. "It’s a further indication of the gravity of the financial situation."
Most governors work out agreements with employee unions in order to avoid legal action, experts said. They argue furloughs are more palatable than layoffs.
"Usually budget deals are negotiated," said Nick Johnson, director of the Center on Budget and Policy Priorities’ state fiscal project. "It’s unusual to wind up in court quick payday loan."
But it may become more common. In Rhode Island, the two sides are returning to court next Friday for the full Supreme Court to review the unions’ request.
Carcieri, however, said Thursday that he has no choice but to reduce the state payroll. He has asked his department chiefs to identify the last 1,000 people hired and begin notifying them of impending job reductions.
"Preventing the state from moving forward with the shutdown days cripples our ability to address growing budget gaps," Carcieri said in a statement.
Carcieri announced late last month that he would shut down the government for 12 days during fiscal 2010, which ends July 1. This equates to a 4.6% pay cut for public employees, but would save the state $21.6 million. The furlough was in part to slash $67.8 million from the budget.
Union officials, however, argue there are other ways to address the state’s fiscal shortfall, such as raising taxes.
"You cannot balance the state budget on the backs of state workers," said J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County and Municipal Employees.
Have you suffered a setback because of the economy? What are you doing to overcome it and get back on track? If you’ve been confronted with some challenge during this recession but are fighting back, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.
Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.
Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.
The bad part: It ends on Dec. 1.
Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.
"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."
Sense of urgency
What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)
In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn’t a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.
"That’s why there’s such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they’re taking three to six months to do that."
That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.
Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.
The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn’t have been able to buy without it paydayloans.
"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn’t want to move in because of the [less than perfect] conditions the homes are in."
That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.
"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."
Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He’s spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He’s stretching the cash by doing much of the work himself.
Cash for Clunkers effect
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.
In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program.
"It’s just like Cash for Clunkers," said Robert Dye, a senior economist for PNC Financial Services Group. "It runs the risk of a let-down as the program runs its course."
Johnny Isakson, R-Ga., who is a former real estate broker, is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions.
The effort has drawn strong industry support.
"We need to stimulate the move-up buyer," said Century 21’s Kunz, "so it works its way up the pricing food chain. That’s what we need to get inventory moving again."
Nine months ago, a historic meeting was breaking up in the ballroom of a Secaucus, N.J., hotel. Anheuser-Busch shareholders had just agreed to sell America’s biggest brewer to an aggressive Belgian brewer called InBev.
August A. Busch IV, whose stint as chief executive of Anheuser-Busch would end with the sale, stepped down from the podium. "A bittersweet day," he said.
And then, Busch — the fifth generation of his family to lead Anheuser-Busch — slipped out of the hotel’s lobby.
But he wasn’t supposed to slip out of the public’s eye.
The new regime had given him a seat on the board of the combined company and a lucrative consulting deal — indications that he would be a sort of public ambassador for the new Anheuser-Busch InBev. Many expected him to ease Anheuser-Busch’s transition to new ownership, and act as a liaison between the new owners and A-B’s many constituencies.
It hasn’t worked out that way.
Since the buyout, Busch has not been spotted at industry events. No quotes in media reports, no pictures at meet-and-greets. From trade meetings to sales conferences with distributors, Busch has been a no-show.
"He has not been visible in the beer industry," said Harry Schuhmacher, editor of Beer Business Daily. "I just haven’t heard of him being around."
The disappearance seems odd given how much InBev paid for Busch’s services. As part of the buyout, InBev made him a highly paid consultant for Carlos Brito, CEO of the combined company.
Busch, 45, received $10.35 million as a lump sum and started collecting additional fees of about $120,000 a month. He also got a personal security detail and free access to events sponsored by A-B.
The official merger document seemed to outline a clear role for him at Anheuser-Busch InBev. At Brito’s request, Busch would advise InBev on new products; review marketing programs; meet with retailers, wholesalers, advertisers and the media; scrutinize the quality of Anheuser-Busch’s beers; and give advice about A-B’s relationship with charitable organizations and local communities.
"He was supposed to represent continuity from one era to the next, but I don’t know if he’s played much of a role" in the combined company, said Benj Steinman, editor of Beer Marketer’s Insights.
The lucrative consulting deal also tied Busch and InBev to a mutual "non-disparagement" covenant, limiting what Busch could say about InBev and what InBev could say about him. The company declined to make Busch available for an interview. Reached directly by the Post-Dispatch, Busch declined to comment, citing the consulting deal.
If anyone has emerged as the public face of A-B since Busch stepped aside, it’s Dave Peacock, who was Busch’s right-hand man and is now president of Anheuser-Busch. Since InBev acquired A-B, Peacock has led the company’s efforts to maintain alliances with distributors and employees.
Peacock has represented the company for signature events such as the Super Bowl, while speaking on behalf of the company when controversies have arisen, such as the company’s decision to cut more than 1,000 area jobs in December.
A-B InBev acknowledges that Busch’s work for the company has been limited to behind-the-scenes activity. A spokeswoman told the Post-Dispatch that his contributions "have proven very valuable," especially relating to the U.S. market. She did not enumerate those contributions. The company also declined to say how many board meetings Busch attended, or when.
Did InBev ever intend to lean heavily on Busch after the takeover? Veteran consultant Tom Pirko said it was not surprising that Busch was not prominent in the new company’s dealings bad credit car loans.
InBev wanted to change Anheuser-Busch’s culture and get rid of the Busch family’s hierarchy, Pirko said. The lucrative consulting arrangement was a way of hitting "the eject button" on the Busch family that had run the brewer since the Civil War.
"They wanted a clean break, without the baggage of the past," Pirko said. "When you do that, you have to remove the faces. To be a new company, you have to have new people."
The apparent withdrawal from public life isn’t just at the brewer. In January, Busch resigned as a director of FedEx Corp., a position he had held since 2003. That same month, he was granted a divorce from his wife of 2 1/2 years.
The next month, Anheuser-Busch held a large meeting of beer wholesalers in Houston. The event, aimed at introducing distributors to the new owners, would have been a perfect place to roll out August Busch IV. It would have been an opportunity to show continuity among all the changes. But he didn’t appear, according to industry observers.
Lately, Busch is splitting time between a new home near the Lake of the Ozarks and his other residence in Huntleigh. Busch, an experienced pilot, has been devoting some time to flying.
Not long ago, Busch was leading one of the world’s biggest brewers, trying to boost it out of a period of slow growth.
After being tapped in 2006 as the new chief executive, Busch became known for a management style more easygoing and low-key than that of his hard-charging father, August A. Busch III. In public appearances, the younger Busch was personable and energetic, Anheuser-Busch’s cheerleader in chief. He popped up at numerous state meetings, industry conferences and legislative summit meetings.
In April 2008, Busch IV rallied employees at a party outside A-B’s packaging plant on Pestalozzi Street to celebrate the 75th anniversary of Prohibition’s end.
"I love you guys, you ladies!" he said to rousing applause. "What an honor. An emotional day." Busch held up a bottle of Budweiser. "Here’s to our future … and another 75 fantastic years. Let’s go get ‘em!"
A few weeks later, at the company’s annual meeting at SeaWorld, Busch showed shareholders some of the company’s Super Bowl commercials, chatted about A-B’s NASCAR sponsorship and urged the hundreds of assembled investors to try some new Bud Light Lime.
Soon after A-B’s board approved InBev’s takeover bid on July 13, Busch started slipping into the shadows.
Perhaps, this shouldn’t have been a surprise, as an early scene of the A-B InBev era suggests.
It was the Monday morning after InBev’s acquisition of A-B was consummated. Busch joined the victorious Brito on a conference call with analysts and reporters. Busch spoke briefly of his faith that the Brazilian executive would "honor his public commitments and continue the traditions that have made Anheuser-Busch a success."
Then, for more than an hour, Brito talked about the future, outlining his plans for the new company. When Brito was through, he asked the St. Louis executives if they had anything to add.
Peacock offered a quick closing comment.
Busch remained silent.
The first time the Dow Jones industrial average entered five-figure territory, corporate bigwigs tossed hats that said "Dow 10,000" to cheering traders on the floor of the New York Stock Exchange.
That was a decade ago. Traders could soon see 10,000 again soon, but any celebrating would be more relief than an expression of brimming confidence.
The Dow stands about 500 points shy of the 10,000 mark, putting the milepost on investors’ radar for the second time in a year. Here are some questions and answers about what it would mean for the Dow to hit 10,000.
When did the Dow first close above that level?
March 29, 1999, in the midst of a powerful market rally that would end with the dot-com collapse at the start of this decade.
What would it mean this time?
Some analysts say it holds little significance given how far the market remains from its peak almost two years ago. But many contend that seeing Wall Street’s best-known thermometer roll back to five digits could inject traders with confidence.
"It’s like a century rather than 99 years. There’s not that big of a difference but there’s a big difference psychologically," said Dan Cook, senior market analyst at IG Markets in Chicago.
Should a climb past 10,000 make investors more confident?
Analysts are divided. But it would certainly feel better than when the Dow skidded 370 points on Oct. 6, 2008, to close below 10,000 for the first time in four years.
But some say reaching 10,000 would make them nervous that the market was overheated.
What would be needed to push the Dow above 10,000?
Investors will need to see more signs of an improving economy, because the market tends to bounce back as the economy is getting ready to recover from a recession. Investors need reassurance that they’ve been right to buy into the market.
Recent economic readings have signaled that the recession could be ending.
"It’s good news that the market has reached 9,500, but it’s particularly good news that it’s confirmed by most of the important economic numbers we’re looking at," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, N.Y.
Should average investors prepare in some way for the Dow at 10,000? Should they even care?
Long-term investors shouldn’t react to day-to-day moves in the market, but it could be a good time to prune portfolios. Most financial advisers say it’s wise to pull money from the strongest performers and funnel some of it to other investments. That helps guard against letting one part of a portfolio carry too much weight.
What if it doesn’t happen?
Brokerage TD Ameritrade agreed Monday to pay $456 million to settle a lawsuit involving the marketing of a debt class that ended up crippling investors.
But New York State Attorney General Andrew Cuomo, who brought the suit, said another firm, Charles Schwab, has refused to settle claims involving the sale of auction-rate securities (ARS) to individuals, charities, non-profits, small businesses and institutions.
Cuomo’s office said TD Ameritrade joined 11 underwriting securities firms and rival broker Fidelity Investments in settling his allegation that they "misrepresented auction-rate securities as liquid, short-term investments," according to a statement.
The office said the settlements by 20 firms with his office and other regulators have resulted in more than $61 billion in buybacks of the securities.
As part of the settlement, Omaha, Neb.-based TD Ameritrade (AMTD) said it will repurchase all auction-rate securities it sold before Feb. 13, 2008. TD Ameritrade will buy the securities from retail investors with accounts of $250,000 or less within the next 75 days.
The firm said it will repurchase the remaining securities by March 2010, and will reimburse investors who sold at a loss after the market failed.
The auction-rate securities market involved buying and selling long-term bonds that resembled corporate debt. Hospitals, cities and corporations sold the securities at weekly or monthly auctions, where interest rates were reset each time.
Many investors had treated ARS like cash investments, but the $330 billion market collapsed in early 2008 as the credit crisis took a turn for the worse fast cash loans.
Cuomo’s office said it is pushing auction-rate securities brokers and underwriters to repurchase them from investors who were left with steep losses.
Schwab objects: Cuomo’s office also announced "imminent legal action" against Charles Schwab (SCHW, Fortune 500) for alleged deceptive selling of auction-rate securities as safe.
"It is disturbing that Charles Schwab, who had been holding itself out as an industry expert, has stonewalled its customers," Cuomo said. "Today’s notice should send a signal that if Charles Schwab will not stand by its customers, this office will."
In a statement, Schwab said it did not plan to settle, and that Cuomo presumed the company "somehow knew of a risk that the entire ARS market could seize up at any time, and failed to disclose that risk to its clients, which is preposterous."
Regulators like the Securities and Exchange Commission — and Cuomo’s office itself — did not know the auction-rate market was going to fail, Schwab said, adding it "could not be expected to foresee and disclose market risks that even regulators and market experts did not foresee."
U.S. travel over the Independence Day holiday weekend will drop 1.9% this year compared to 2008, a casualty of higher fuel prices and economic worries, travel and auto group AAA projected Wednesday.
Approximately 37.1 million Americans will travel 50 miles or more away from home during the Fourth of July holiday weekend, typically the busiest time for auto travel in the U.S., down from 37.8 million last year.
"Many Americans remain cautious about the outlook for their personal finances and these attitudes are reflected in the slight decline in travel we are forecasting for the upcoming holiday weekend," said AAA Chief Executive Robert L. Darbelnet.
Ongoing fears about the state of the economy coupled with increasing joblessness and falling incomes are major factors in reducing Fourth of July travel, AAA said.
Auto travel will drop 2.6% from last year’s levels due to higher fuel prices. But air travel, which will account for just 5% of Fourth of July travel, will increase 4.9% due to lower fares and pent-up demand.
Gasoline prices are more than 30% lower than they were a year ago, but recent increases at the pump will steer Americans away from road trips, AAA said faxless payday loan.
On Tuesday, average U.S. retail gasoline prices were $2.68 a gallon, about 11% higher than a month ago, according to AAA.
Attractive airfares are also likely to contribute to less auto travel, AAA said.
AAA’s forecast for the July 4 weekend is the opposite of the forecast for the Memorial Day holiday weekend in May, when AAA predicted a 1.5% increase in travel from 2008 levels, with automobile trips increasing 2.7% and air travel dipping 1%.
Despite the gloomy news keeping more Americans at home this summer, those who do venture out on vacation will find some good bargains.
The lowest average published airfares over the holiday weekend are expected to decrease 16% from last year and hotel rates are also expected to be cheaper than last year.
"Those who do vacation this summer will find a plethora of attractive discounts," Darbelnet said. "If you can afford to go, this summer is a smart time to travel."
There’s a different feel to Mr. Rogers’ neighbourhood these days.
On the tenth floor of Rogers Communications Inc.’s Bloor St. campus, the corner office that belonged to Ted Rogers before he died last year is being converted into a conference room. Though repurposed, the space will pay homage to the wily, red-haired cable baron who built a single FM radio station into the country’s biggest communications giant.
Further down the hall, the new CEO, Nadir Mohamed, is preparing to move into a new office after spending nine years at the firm, most recently as chief operating officer of its communications division.
Mohamed, 53, is the first to admit he isn’t Ted Part 2. For one thing, he doesn’t share his predecessor’s workaholic bent, a trait common among entrepreneurs that no doubt served Rogers well in his drawn-out battles with entrenched rivals such as Bell Canada.
But Mohamed promises that he shares Rogers’ enthusiasm and drive to run the business.
"The psyche in Ted was that every day you wake up and you gotta improve, you gotta make it better for the customer – because if we don’t, Nadir, they’re going to kill us," Mohamed said during an interview yesterday.
He banged his fist on a glass table to highlight each point in a somewhat unconvincing effort at mimicking a legendary Ted outburst.
"If there’s anything that will be the DNA of this company and that drives this business and we can never afford to lose, it’s that idea that every single day we have to get better."
Mohamed is often described as one of the industry’s brightest stars and one of the few executives capable of working closely with Rogers without getting burnt out. Mohamed says the two immediately hit it off when they first met in 2000 at Rogers’ Forest Hill home.
On the surface, though, the two men could not appear more different. Rogers was known for his larger-than-life personality and wearing suits cut from unnaturally coloured fabrics. Mohamed, by contrast, seems to prefer wearing black and projects an owlish appearance, thanks to a thin, pointed nose and dark-framed eyeglasses.
Rogers was often described as a gutsy risk-taker who didn’t take no for an answer, while Mohamed is the calm, cool, consensus-builder with a knack for running wireless companies. He is credited with helping to transform Rogers Wireless from a growth-at-any-cost formula into the conglomerate’s most valuable business unit, now accounting for more than half of Rogers’ annual revenue.
"He’s an incredibly measured person," said Alek Krstajic, CEO of wireless upstart Public Mobile and a former Rogers executive. "He spends time on things. There’s no knee-jerk reactions with Nadir Mohamed."
Even Mohamed’s office is a cold and sterile place. The desk is glass, not wood, with relatively few personal items on the shelves behind it. A giant framed photograph of a derelict Shanghai building hangs on the other side of the room, a 50th birthday present from his wife Shabin, a fan of contemporary art.
But dig a bit beyond the bookish exterior and there’s more to Mohamed than meets the eye. For starters, take a look inside the black filing cabinet in his office. Slightly embarrassed, Mohamed gingerly opens the door and reveals it is packed full of Goldfish crackers.
An Ismaili Muslim, Mohamed was born in Tanzania and lived in its largest city, Dar es Salaam, until he was a teenager payday loan online. His grandparents had immigrated to East Africa from India in the early 1900s. He says his father’s efforts to build a hardware business from the ground up instilled a work ethic in him from an early age, while his mother taught him to be caring and inclusive.
At age 12 or 13, Mohamed’s parents shipped him off to London to get a Western education. They wanted him to be a doctor or a lawyer. Instead, he received an education in life. He remembers being picked up by a 20-year-old cousin who took him out for a night on the town. "It probably wasn’t a great idea in hindsight, but I remember getting to bed at five in the morning that first night because he was out partying. And then the next morning he woke up and drove me to school, a couple of hours away."
Essentially, he lived on his own in England but Mohamed says he never felt lonely because he was surrounded by his favourite sports – soccer, cricket and tennis. The latter-mentioned he still plays.
A few years later he followed his family to Vancouver, studied commerce at the University of British Columbia, then worked at an accounting firm and earned his CA. He fell into telecommunications by happenstance. A friend of his had a job interview at BC Tel but had accepted another offer. Mohamed went in his place. The rest is history.
Mohamed is CEO at a time when Rogers is undergoing a profound transformation. Once a scrappy debt-ridden cable company, it has emerged as a stable cash-producing communications firm with interests in wireless, cable and media properties. Profits are rolling in and dividends finally are being paid out. In fact, Rogers’ board recently approved a share buyback for $1.5 billion at a time when its rivals disappointed investors with weaker-than-expected first quarter results.
Currently, it’s top dog in wireless after years of heady growth but the market is more saturated as more Canadians sign up for cellphones and an onslaught of new rivals prepares to enter the fray. Rogers is poised to lose its exclusive grip on GSM wireless technology in Canada to Bell, Telus and new entrants.
"There’s a realization that the company is going to be slower growth," said Genuity Capital Markets analyst Dvai Ghose.
So Mohamed’s primary job will be figuring out ways to make Ted’s empire run more smoothly and profitably. That raises questions about less profitable areas of the business, such as the Toronto Blue Jays, but Mohamed says he, like his predecessor, believes in the brand-building, cross-promotional opportunities of owning a Major League Baseball team.
It’s not yet clear how Edward Rogers will fit into the mix.
Edward Rogers is chair of a trust that controls the vast majority of Rogers voting shares, but still holds the same job – head of the cable division – as he did when his dad was CEO. It was no secret that the elder Rogers wanted his son to control the firm one day and encouraged him to put his name forward when the time came, which he did.
Mohamed is vague when asked if some power-sharing plan exists. Similarly, he ducks a question about whether he sees himself grooming Rogers to be CEO one day, saying, "I’d like him to be involved. I actually spend time with him … shaping the business. That’s not to say we’ve got it all right … we are just starting that relationship."
MEECH LAKE, Que.–The deep recession is wreaking havoc on the government treasury and will cause the deficit to balloon “substantially more" than projected in the budget this year, Finance Minister Jim Flaherty now says.
The finance minister said Monday the recession has hurt government revenues from personal and corporate taxes and raised spending requirements. That means the financial shortfall – originally forecast at $34 billion for 2009-2010 – will be much higher.
In its January budget, Ottawa estimated it would run deficits for five years and predicted a shortfall of $64 billion over the next two years, including $30 billion in 2010-2011.
"I expect we will have a larger deficit than anticipated in the federal budget . . . the deficit will be substantially more," Flaherty told a news conference after a meeting of federal-provincial finance ministers at Meech Lake.
The actual number will be released in a June update when the government reports to Parliament on how the fiscal stimulus is being spent.
Flaherty’s announcement amounts to a catch up for the government to projections already made public by parliamentary budget officer Kevin Page, who in March estimated the deficit would be at least at least $9 billion more over the first two years.
TD Bank chief economist Don Drummond, a former senior finance official, went even further, saying the shortfall would be about $18 billion more.
Flaherty would not elaborate, but said the new reality does not change the picture about when the government will come out of deficit, in the 2013-14 fiscal year.
The minister’s revision, after saying last month he was not changing his forecast, came after meeting with his provincial counterparts over the state of the economy, the issue of employment insurance and the adequacy of Canada’s pension system.
After receiving a briefing from Bank of Canada governor Mark Carney, Flaherty said the economy remains in a "serious recession" despite some encouraging signals.
But he balked at increasing the size of Ottawa’s $40-billion stimulus or expanding employment insurance benefits, as the opposition parties and Ontario have demanded.
Flaherty said once provincial stimulus spending is included, Canada has about $50 billion earmarked to boost the sagging economy saving account payday loan.
Ontario Finance Minister Dwight Duncan, however, said he was not giving up on the issue. He complained that an unemployed person in Ontario makes about $4,000 less from the system than the Canadian average, and that only about 32 per cent of the jobless in Ontario are collecting EI.
"The bottom line is that the rules in place now were designed at a very different time and we need more flexibility," he said.
As well, he called EI the most effective form of economic stimulus because those receiving benefits will spend it, and likely quickly.
The ministers were able to agree on a study group to look at the Canadian private pension plan system. Ted Menzies, parliamentary secretary to Flaherty, will head the group, which will include provincial representation.
Ontario, British Columbia, Alberta and Nova Scotia have been pressing for a national approach on pensions with a view to expanding coverage and benefits of private sector plans.
Corporate pension plans have been in trouble in part because of last year’s collapse of stock markets and other factors that have left many companies – including General Motors Canada and Air Canada – unable to deal with billions of dollars of obligations.
"This issue is going to take on greater and greater significance in the coming weeks and months and years," Duncan said.
"It does require more work to be done. Our preference is to take a pan-Canadian approach to this issue as we explore options that may be available."
Earlier, Flaherty agreed with Duncan that the issue needs a national approach.
Although only about 10 per cent of private pensions are under federal jurisdiction, "we’re all Canadians, we’re all in this together," he said.
Ottawa also announced technical changes to the Canada Pension Plan that would take effect in 2011. The changes would allow retirees under 65 more flexibility, permitting them to work more hours while receiving benefits. As well, the government proposes to exclude up to a year of low or no earnings without impacting benefits.
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