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B.C.’s Sierra Wireless agrees to $1.2-billion takeover by Semtech at US$31 a share
California chip maker Semtech Corp. has agreed to buy Vancouver-area communications technology vendor Sierra Wireless, Inc. for US$31 a share, the two companies said late Tuesday.
The publicly traded firms had earlier that day confirmed a Monday morning Bloomberg report that a deal was in the works and at an advanced stage. After the close of markets, the two companies announced they had reached a definitive agreement in a deal valuing Sierra at US$1.2-billion. Semtech’s market capitalization is US$3.6-billion.
Sierra stock closed down 5.2 per cent at US$28.15 on Tuesday after jumping 19.4 per cent on Monday on the Nasdaq after the news report. In Canada, where markets were closed on Monday, the stock was up 13.6 per cent on the Toronto Stock Exchange on Tuesday.
Sierra, founded in 1993 and based in Richmond, B.C., makes cellular hardware and software used to connect sensors on vehicles, computers and other devices to internet-of-things, or IoT, wireless networks. It booked US$448.6-million in revenue and lost US$49.3-million in its most recent fiscal year. But the company’s results have been steadily improving. It generated US$173-million of revenue in the first quarter, significantly higher than analysts’ expectations, which prompted several to increase their share price targets. Sierra said at the time it expected to generate between US$160-million and US$175-million in the second quarter.
But in a separate release late Tuesday, Sierra said it now expected revenue in the second quarter to exceed US$185-million and that it would have adjusted operating earnings of between US$21-million and US$23-million, up from US$15.8-million in the first quarter
Analysts expect Sierra to have its first profitable fiscal year since 2017 under the leadership of chief executive officer Phil Brace, a veteran technology executive who joined the company in July, 2021, after predecessor Kent Thexton retired. Mr. Brace, a Canadian based in California, previously held senior positions with Seagate Technology Holdings PLC and Veritas Technology LLC.
“Over the last year, Sierra Wireless has taken decisive steps to profitably grow the business, and I am proud that the progress we have made has culminated in this exciting transaction,” Mr. Brace said in a release. “Together with Semtech, we will be able to extend the reach of IoT solutions by scaling, optimizing and ultimately delivering an even stronger product portfolio and service model to customers.”
Semtech, based in Camarillo, Calif. – between Los Angeles and Santa Barbara – was founded in 1960 and generated US$740.9-million in net sales and a net profit of US$59.9-million in its most recent fiscal year. It is a leading global supplier of high-performance analog and mixed-signal chips and advanced algorithms for infrastructure, high-end consumer and industrial equipment.
A key focus of the transaction is the cloud services capabilities of the combined company, which would add US$100-million in high-margin recurring revenue to the buyer. Semtech also said it expects to generate US$40-million in cost synergies within 12 months after the deal closes.
“We believe the next era of technology growth is the full digitization of our industrial world – the internet of everything. Our vision is to build a simple, horizontal platform with the goal of accelerating this transformation and to bring about a smarter and more sustainable planet,” Semtech CEO Mohan Maheswaran said in a release. “This exciting strategic acquisition of Sierra Wireless is a critical part of bringing this vision to life.”
Oil falls 3%, pressured by surprise U.S. crude, gasoline build
Oil prices slid 3% on Wednesday, with losses accelerating after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week after OPEC+ said it would raise its oil output target by just 100,000 barrels per day (bpd).
Brent crude futures were down $2.90, or 2.9%, at $97.61 a barrel by 12:17 p.m. ET (1617 GMT). West Texas Intermediate (WTI) crude futures fell $2.93, or 3.1%, to $91.49. Both contracts had seesawed previously.
The premium for front-month Brent futures over barrels loading in six months’ time <LCOc1-LCOc7> is at a three-month low, indicating waning concern about tight supply. The same premium for WTI futures <CLc1-CLc7> neared a four-month low.
U.S. crude oil inventories rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration nL1N2ZF1LG said.
Crude stocks rose 4.5 million barrels last week, compared with an analyst forecast for a draw of 600,000 barrels. Gasoline stocks gained 200,000 barrels, versus expectations for a 1.6 million-barrel drop.
“The crude oil number is well above expectations. Gasoline is a disappointment. You should never see a build in gasoline during summer. It’s a very bearish report,” said Bob Yawger, director of energy futures at Mizuho.
Ministers for the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to the small increase to the group’s output target, equal to about 0.1% of global oil demand.
Algerian oil production in September will rise to 1.57 million bpd, Energy Minister Mohamed Arkab told state television.
While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up output at the expense of Russia, hit by sanctions over the Ukraine conflict.
Ahead of the meeting, OPEC+ trimmed its forecast for the oil market surplus this year by 200,000 bpd to 800,000 bpd, three delegates told Reuters.
Also weighing on prices, top Iranian and U.S. officials said they were travelling to Vienna to resume indirect talks about Iran’s nuclear programme, reviving the all but vanished hopes of a removal of sanctions hampering Iranian oil exports.
Prices were also hurt when San Francisco Fed President Mary Daly warned of a 75 basis point interest rate hike if inflation continued. Richmond Fed President Thomas Barkin also said that the Federal Reserve was committed to getting inflation under control and returning it to the U.S. central bank’s 2% target.
The U.S. dollar index, which tracks the greenback against six major peers, also rose, pressuring demand by making oil more expensive for holders of other currencies.
Brookfield Infrastructure Partners Posts Strong Second Quarter Results
The Canadian Press – Canadian Press – Wed Aug 3, 9:16AM CDT
TORONTO — Brookfield Infrastructure Partners LP reported strong second quarter results as funds from operations (FFO) jumped 30 per cent compared with the same quarter last year.
Brookfield posted net income of US$176 million, or 13 cents per unit, for the three-month period ended June 30, compared to US$352 million, or 41 cents per unit, the prior year.
It says FFO for the second quarter was the highest in its partnership’s history totalling US$513 million.
Recent acquisitions, organic growth and gains on its foreign currency hedging program helped support the latest results, Brookfield says.
Brookfield says the transport segment continues to experience elevated demand as global supply chains remain constrained.
Meanwhile, its midstream segment generated US$170 million of FFO, nearly triple the prior year results.
This report by The Canadian Press was first published Aug.3, 2022.
China ratchets up military and economic pressure on Taiwan as Pelosi begins her visit
American employers posted fewer job openings in June as the economy contends with raging inflation and rising interest rates.
Job openings fell to a still-high 10.7 million in June from 11.3 million in May, the Labor Department said Tuesday.
In its monthly Job Openings and Labor Turnover Survey, the Labor Department said that the number of Americans quitting their jobs fell slightly in June while layoffs fell.
The job market has been resilient so far this year: Employers have added an average of 457,000 a jobs a month in 2022; and unemployment is near a 50-year low. That is one reason many economists believe the economy is not yet in an recession even though gross domestic product, the broadest measure of economic output, has contracted for two quarters in a row — one rule of thumb for the onset of a downturn.
The Labor Department’s jobs report for July, out Friday, is expected to show that employers tacked on another 250,000 jobs last month, which would be a healthy number in normal times but would be the lowest since December 2020. Economists also expect that unemployment stayed at 3.6% for the fifth straight month, according to a survey by the data firm FactSet.
S&P/TSX Composite Down In Late-Morning Trading After Long Weekend
Canada’s main stock index was down in late-morning trading following the August long weekend, with the energy and base metals sectors driving it lower, while U.S. stock markets were mixed.
The S&P/TSX composite index was down 141.08 points at 19,551.84.
In New York, the Dow Jones industrial average was down 206.96 points at 32,591.44. The S&P 500 index was down 6.76 points at 4,111.87, while the Nasdaq composite was up 12.88 points at 12,381.86.
The Canadian dollar traded for 77.71 cents US compared with 77.98 cents US on Friday.
The September crude contract was up 30 cents at US$94.19 per barrel and the September natural gas contract was down 53 cents at US$7.76.
The October gold contract was up US$8.70 at US$1,777.70 an ounce and the September copper contract was down three cents at US$3.52 a pound.
This report by The Canadian Press was first published Aug. 2, 2022.
Molson Coors Q2 Profit Falls Amid Fifth Straight Quarter Of Net Sales Growth
Molson Coors Beverage Co. saw profit fall in the second quarter as it generated net sales growth for the fifth consecutive quarter for the first time in over a decade on a constant currency basis.
The Colorado and Montreal-based company, which reports in U.S. dollars, says it earned US$47.3 million, or US$0.22 per diluted share, compared with US$388.6 or US$1.79 per share a year earlier.
Underlying net income was US$260.1 million or US$1.19 cents per share, compared with US$343.8 million or US$1.58 per share in the second quarter of fiscal 2021.
Revenues for the three months ended June 30 were US$2.92 billion, a slight decrease from US$2.94 billion a year earlier.
Net sales in the Americas was down 2.3 per cent, as brand volumes declined 2.2 per cent as a result of softer industry performance and the impacts the Québec labour strike.
Molson Coors CEO Gavin Hattersley says the company has the right mix of brands to “compete and win across all segments” and navigate challenging economic times.
This report by The Canadian Press was first published Aug. 2, 2022.
Air Canada Reports Q2 Loss, Posts A Nearly Five-Fold Jump In Revenue
The Canadian Press – Canadian Press – Tue Aug 2, 6:06AM CDT
MONTREAL — Air Canada reported a second-quarter loss of $386 million compared with a loss of $1.17 billion a year earlier, and says it saw a nearly five-fold increase in revenue.
The airline says its loss for the three months ended June 30 totalled $1.60 per diluted share, compared with a loss of $3.31 per diluted share in the second quarter of 2021.
Revenue totalled $3.98 billion, compared with $837 million during the same time last year.
Air Canada says its second-quarter cost per available seat mile decreased to 20.8 cents from 49.3 cents a year earlier, while its adjusted cost per available seat mile was 13.1 cents, compared with 41.5 cents in the second quarter of 2022.
Air Canada CEO Michael Rousseau says while the global airline industry is facing “unprecedented conditions as it emerges from pandemic-related restrictions,” the situation is “particularly challenging in Canada.”
He also says that despite “meticulous planning and projecting,” there remains a significant amount of pressure in restarting, but says he is “encouraged by recent improvements.”
This report by The Canadian Press was first published Aug. 2, 2022.
OPEC+ sees slightly smaller oil market surplus this year, sources say
OPEC+ sees this year’s oil market as slightly less supplied than previously thought, a day ahead of a meeting at which the producer group is set to decide on its production policy for next month.
New data showed that the OPEC+ Joint Technical Committee (JTC), meeting on Tuesday, trimmed its forecast for a surplus in the oil market this year by 200,000 barrels per day (bpd) to 800,000 bpd, three OPEC+ delegates told Reuters.
The JTC is meeting ahead of a ministerial meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, on Wednesday.
One of the sources said that the JTC, which advises the group on market fundamentals, did not discuss any output policy at its meeting.
OPEC+ sources told Reuters last week that the group will likely keep output unchanged in September, or raise it slightly.
Fox News reported on Monday that Saudi Arabia will push OPEC+ to increase oil production a on Wednesday, a Fox Business news reporter said on Monday.