By James Langton
(October 31 – 13:00 ET) – Good news from French telecom giant Alcatel has the Toronto Stock Exchange booming again this morning. Alcatel said yesterday that third quarter profits had tripled, and the firm is projecting strong growth. The news lit a fire under the entire networking sector, including Nortel Networks.
The tech rally has the TSE 300 up 226 points to 9,479. Volume is robust at 72.6 million shares, about 11 to nine in favour of buyers. The split between winners and losers is virtually even.
The narrowness of the rally indicates that it is all about Nortel. Techs are up about 9%, driving the industrials group up 7%. There’s some strength in software and biotechs, too, but that’s more or less it for the rally. Paper stocks are up slightly, but there’s weakness in financials, gold real estate, and utilities.
Nortel is up about 10% at midday in heavy trading, about 6.2 million shares moving so far. Joining the rally are JDS Uniphase, Alcatel’s exchangeable shares, and Exfo Electro.
A bullish call on Research in Motion from Credit Suisse First Boston has that stock up 8% this morning. Ballard Power is up strongly on its latest earnings news. QLT has gained about 10% on the heels of encouraging clinical trial data.
With Nortel rallying, BCE is sliding, slipping 3% on 1.5 million shares. The shares are falling despite the news that shareholders of Teleglobe Inc. have approved its takeover by BCE. Teleglobe shareholders will get 0.91 of a BCE share, less a nominal cash consideration per share, for each Teleglobe common share held. Court approval for the deal will be sought tomorrow.
The other recent safe havens are also sliding. Golds are down, led by Barrick. Financials are weak, with the insurers leading the way. Manulife is down almost 3%, and the banks are soft.
Abitibi is trading heavily today, up 2% on 2.4 million shares, leading the paper stocks higher. Bowater is down, though.
Oils are soft, with Gulf Canada down 3% in active trading. Northstar Energy is weak, too.
In M&A news, Legacy Hotels Real Estate Investment Trust is buying two luxury hotels from Canadian Pacific for $305 million. The deal is expected to close in December, with Legacy acquiring the Chateau Frontenac for $185 million, and the Empress Hotel in Victoria for $120 million. Legacy will issue exchangeable shares to CP for $120 million of the price.
In earnings news, TransCanada PipeLines Ltd. reported earnings from continuing operations of 32¢ a share in its latest quarter, up from 30¢ a share last year.
Fishery giant, FPI Ltd. reports net income of 27¢ a share in the hird quarter, compared to 17¢ a share last year.
Molson Inc. said net income from continuing operations was 56¢ a share last quarter, up from 46¢ a share in the prior year period.
MDC Corp. Inc. reports earnings of 21¢ a share in the third quarter, down from 27¢ a share from a year ago.
The rescheduled conference call for 360networks Inc. will reportedly describe details of a strategic alliance with Alcatel.
In New York, the Alcatel news has set in motion an impressive tech rally, while the rest of the market trades quietly. The Dow Jones industrial average is up just 26 points to 10,862. The Nasdaq composite, though, has gained 133 points to 3,325. The S&P 500 is up 18 to 1,416. Yesterday’s loser Cisco Systems is leading the rally, with strong gains in Nortel and JDS Uniphase also contributing. IBM is strong, as is GM and Home Depot.
The CDNX is barely joining the rally, up three points to 3,244 on volume of 16 million shares. Techs are up, as are oils. Mines are down though. Brazilian International Goldfields is the top trader, up 56% to 14¢ on 1.2 million shares.