Attack of the dragon buyers in Vancouver

By Angelina Chapin - Monday, February 6, 2012 at 10:05 AM - 0 Comments

There’s a pearl of wisdom Vancouver realtors hold about 2012: the year of the dragon should heat up an already super hot housing market. Last February, the tendency of Chinese Canadians to spend around the new year—considered a time of good luck—boosted the market. Realtors hope that since the dragon is considered the most auspicious sign, even bigger purchases will come through this year.

Re/Max agent Sarah Daniels, who sells homes in the west-end suburb of south Surrey, is already booking more viewing appointments than usual for more expensive homes, a niche that Chinese buyers have dominated for the past few years. She says the $1.8-million-plus market in her area is 70 per cent driven by Asian buyers.

The potential boost, however, has some observers worried. Vancouver was just ranked the second-most expensive housing market among large English-speaking cities (behind Hong Kong) with a median home price of $678,000, according to a recent Bloomberg study. Many middle-class residents have already been priced well out of the market for houses. Last year Daniels made a sale to one overseas Chinese buyer for around $250,000 more than the property was worth just six months before.

Can YouTube replace TV?

By Jaime Weinman - Wednesday, February 1, 2012 at 8:15 AM - 0 Comments

Sandra Mu/Getty Images

The Internet is going to replace TV by producing content without network gatekeepers. That’s what YouTube believes as it invests $100 million to help develop its own professionally created channels. It’s also what dot-com companies were saying in 1999 when they made Internet shows like Hard Drinkin’ Lincoln. But now it’s YouTube’s turn to bring us cheaply produced content from moonlighting celebrities, like Amy Poehler’s advice channel Smart Girls at the Party.

YouTube has the advantage of a big built-in audience: it now streams four billion videos a day. To turn that into advertising money, it wants to target viewers who aren’t being served by TV; skateboarders, for example, can turn to Tony Hawk’s Ride channel. Most cable channels have given up on “narrowcasting,” unable to make money on niche audiences. YouTube has the chance to fill the void—or to find out why cable was losing its shirt on this kind of programming.

All the news free to print

By Richard Warnica - Tuesday, January 31, 2012 at 11:05 AM - 0 Comments

How much is a newspaper worth in the age of the Internet? If you live in New Brunswick, the answer might be nothing at all. Or perhaps even less.

The Irving family, owners of Brunswick News, which controls most of that province’s newspapers, recently erected a strict paywall for their online products. If you want to read so much as a headline of the Telegraph-Journal, the Daily Gleaner, or any other Brunswick News paper online, you now need a subscription, which at the moment costs $19.95 per month. But under a deal now available on Brunswick News websites, customers can get full online access for $16.95 per month. The only catch? They have to accept physical delivery of a daily paper as well, at no additional cost.

The Irvings are essentially paying online customers $3 a month to take their printed paper six days a week. The company declined to comment on its motives, but the move appears designed to shore up the print advertising business that still provides most newspaper revenues. At the same time, it may hope to entice some online-only customers to become print readers, too. The risk is that, faced with a paywall, customers used to free news online may become readers of no news at all.

L.L. Bean celebrates 100 years with a Bootmobile

By Kate Lunau - Monday, January 30, 2012 at 10:00 AM - 0 Comments

Newscom

American clothing company L.L. Bean—best known for selling outdoor apparel, like fleece jackets and its iconic “duck” boots—recently joined an exclusive club. This year, it turns 100, a rare achievement in the corporate world that puts the Freeport, Maine-based company on a list next to giants like IBM, General Electric and Chevron. The first product ever sold by L.L. Bean was the Maine Hunting Shoe, designed by outdoorsman Leon Leonwood Bean, who crafted a model with a rubber sole and shell and sold it by mail. Part of L.L. Bean’s success stems from the fact that it hasn’t strayed too far from its roots (this year it expects to sell half a million pairs of duck boots). A little marketing savvy helps too. To celebrate its anniversary, the company created a “Bootmobile,” a 20-foot-long truck that looks like a boot, which will drive around the country drumming up goodwill (and more sales).

The fall of the BlackBerry titans

By Chris Sorensen, Charlie Gillis, Cathy Gulli, and Richard Warnica - Friday, January 27, 2012 at 7:20 AM - 0 Comments

Nathan Denette/CP

When Jim Balsillie and Mike Lazaridis, the former co-CEOs of BlackBerry-maker Research in Motion Ltd., cut their salaries to $1 last December, and asked investors for patience and confidence, most took that to mean the long-time partners were simply stepping up their efforts to halt RIM’s painful slide, and intended to stick around for some time. “We’re more committed than ever,” Balsillie said.

In reality, RIM was already a company in the midst of the biggest shakeup in its relatively brief but spectacular history. While they tried to reassure investors, the board of directors—including co-chairs Balsillie and Lazaridis—were already coming to some painful conclusions about what had been going wrong and were already considering a change of leadership at the very top.

“Mike and Jim” may have helped pioneer a global industry that’s expected to be worth US$150 billion by 2014, but in an age of iPhones and increasingly ubiquitous devices running Google’s Android software, investors had run out of patience, and pressure was mounting on the board.

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Stick shifts make a comeback

By Chris Sorensen - Wednesday, January 25, 2012 at 11:30 AM - 0 Comments

Photograph by Andrew Tolson

In a recent ad for the Cadillac CTS-V coupe, a well-groomed man wearing a suit speeds down a lonely road through the forest. As his hand reaches for the leather shift knob, a narrator asks: “Why did we build a 556-horsepower luxury car with a manual transmission? Because there are those who still believe in the power of a firm handshake.” Another recent ad, for the 2012 Chevrolet Sonic, also shows clips of the car being driven with a five-speed stick shift, amid images of young people listening to music and taking pictures of each other with their iPhones.

Meanwhile, Mazda and Mini are also talking about manuals in their ads, suggesting a resurgence in an aging automotive technology that, based on sales figures at least, appeared to be all but dead in North America. It’s estimated that only about 10 per cent of all vehicles on the road are equipped with manual transmissions, and that they account for as few as five per cent of new car purchases (although they remain popular in Europe). But dig a little further and it becomes apparent that the recent love affair with the stick shift may have more to do with marketing than changing motoring habits.

Michelle Krebs, a senior analyst at Edmunds.com, says there has long been an association in people’s minds between manual transmissions and performance. So while many CTS-V and Sonic drivers will end up buying cars with automatic transmissions for practical reasons—they are easier to drive in stop-and-go traffic while balancing a cellphone and Starbucks coffee—marketers know that they probably still like to think of themselves as Dale Earnhardt Jr. “Performance is about image,” she says.

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Bick’s moves its pickles to the U.S.

By Anna-Liza Kozma - Wednesday, January 25, 2012 at 10:50 AM - 0 Comments

Photograph by Reena Newman

When you trawl the pickle aisle of a Canadian grocery store you’re almost certain to see shelves of Bick’s products and that iconic red-and-green logo. It’s the country’s dominant producer of pickles. At least it used to be. After more than 60 years of processing cucumbers, onions, peppers and beets in Canada, Bick’s has closed its plants in Dunnville and Delhi, Ont., and moved its operations to Wisconsin.

The move has left the Canadian pickle industry adrift, with farmers fretting—worried not just about falling cucumber prices and disappearing markets, but the very fate of the Canadian-made pickle. Marshall Schuyler once grew 600 tonnes of cucumbers for Bick’s per year but has gradually been cutting back in favour of more profitable crops like soybeans and corn. This year, for the first time in 20 years, he won’t be planting any. “The future success of Canadian cucumbers—and many of our processed vegetables—depends on the consumers’ willingness to pay for food safety,” he says, referring to the rise of cheaper foreign imports that picklers like Bick’s are turning to.

While fresh produce has benefited from the buy-local movement, the same can’t be said for canned or jarred goods. “Canadians just want to buy the cheapest product they can,” says John Lutigheid, a former cucumber grower for Bick’s in Chatham, Ont. “They don’t care where their pickles are made. The buy-local movement has been all about buying fresh, which only applies for a few months of the year.”

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The end of the job

By Chris Sorensen - Friday, January 20, 2012 at 8:20 AM - 0 Comments

Beau Lark/Corbis

It’s just a few cents more than a large specialty coffee from Starbucks, but it turns out that $5 is still enough money to make otherwise sane-looking people do some rather odd things. The website Fiverr.com, launched in 2010 on the heels of the recession that cost nearly seven million North Americans their jobs, is built around the concept of allowing people to buy and sell services for just $5. The advertised offerings range from useful (“I will professionally review your website or blog for $5”) to the frivolous (“I will sing Happy Birthday or congratulate someone in my bubble bath for $5).

Meanwhile, on the contract-job posting site Guru.com, there is a more serious offer for someone to create ESL lesson plans. On Freelancer.com, a new bridal services company is looking for someone to design its logo, while a dental clinic is seeking someone to produce a flyer to attract new customers—just two of more than 1.3 million current postings on the site.

The sites are all part of what may be one of the most dramatic shifts in the labour market of our time: the transition to a freelance economy where work is farmed out on a piecemeal, as-needed basis (often for relatively little money). The shift started out slowly in the 1990s as Silicon Valley companies discovered how to use the Internet to outsource dull computer-coding jobs, but has been picking up speed in recent years, particularly in the wake of the Great Recession, which left companies of all stripes battered and reluctant to hire new full-time employees. Microsoft, for example, used online testers in 2009 to find bugs in its software, while a year earlier Pfizer started allowing its employees to outsource bits and pieces of their jobs—making spreadsheets and PowerPoint presentations—to freelance firms.

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What do financial markets have in store for 2012?

By Erica Alini - Thursday, January 19, 2012 at 9:10 AM - 0 Comments

Richard Drew/AP

When one of the world’s most experienced money managers talks of “paranormal” activity in today’s markets, you know these are treacherous times for average investors. “It’s as if the Earth now has two moons instead of one,” mused Bill Gross in his first investment letter of 2012. Gross, the head of a $244-billion bond fund at Pimco, one of the world’s biggest fund managers, lost $5 billion in redemptions last year, as clients pulled money out of his fund after a string of bad (but at the time seemingly rational) bets against U.S. Treasuries.

If not paranormal, 2011 was the year when volatility went viral. Bad luck played a part, with large swaths of the Japanese economy swept away by the tsunami. Mostly, though, the uncertainty that rattled investors was man-made, as bickering policy-makers in Brussels and Washington seemed to gamble with the fate of the global economic recovery. Stocks on the Standard and Poor’s 500 Index swung twice as much as they did, on average, in the last 50 years, only to close roughly where they had opened 12 months earlier, according to Bloomberg. The Dow Jones Industrial Average closed up by just six per cent, and the NASDAQ went down two per cent. Even more disappointing was the TSX, which closed the year down by 11 per cent.

Gross wasn’t the only pro who faltered in a year when, in addition to wild volatility, market activity slowed. U.S. broker-dealer MF Global Holdings Ltd. went belly up in November after betting $6.3 billion on European sovereign bonds. Last October, Goldman Sachs posted its first quarterly loss since 2008. Eager to protect profits and reputations, some financial firms are resorting to desperate measures—Dutch Bank ABN AMRO even introduced a tool called the Rationalizer, which measures emotional arousal levels through skin sensors and advises traders to take a break or wind down their transactions if they get too elated or frustrated. All this raises a troubling question: what chance does the average investor stand? Even those who played it safe by turning to things like guaranteed investment certificates and principal-guaranteeing investment vehicles were left languishing. With interest rates at near-zero levels, baby boomers are approaching retirement with unexpectedly undersized nest eggs. Mounting resentment against financial advisers, meanwhile, had Canadians choosing to try to go it alone. The number of accounts registered with online brokerages has increased by 36 per cent since 2008, according to Investor Economics, a Canadian financial services research company.

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The Netflix thriller

By Chris Sorensen - Tuesday, January 17, 2012 at 11:20 AM - 0 Comments

Mike Cassese/Reuters

After a steep plunge, its stock is suddenly hot again. Can it keep luring the subscribers it needs to survive?

Silicon Valley is famous for spawning overnight success stories—Twitter, Google and Facebook—and infamous for making losers out of former winners just as quickly, as anyone involved with MySpace will attest. But Netflix’s recent roller coaster ride has been a particularly wild one.

The popular Internet video streaming company, based in Los Gatos, Calif., enjoyed a nearly nine per cent jump in its stock to just over US$80 this week after it reported that its 20 million subscribers watched nearly two billion hours worth of movies and TV shows on its service during the most recent quarter. That’s roughly 33 hours of video watching per subscriber each month—more than four times the amount watched by users of Google’s online video behemoth YouTube, according to the website paidContent.org.

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Yoga pants and a new pad

By Gabriela Perdomo - Tuesday, January 17, 2012 at 11:10 AM - 0 Comments

Goldman Sachs added Lululemon Athletica Inc. to its list of top picks for investors two weeks ago, pushing up the price of the Vancouver-based retailer’s stock by five per cent. In two years of market turmoil, Lululemon’s stock has been a rare standout. Worth just $15 in January 2010, it is now trading at over $53. “They are such a unique company,” says David Ian Gray, a retail strategist at DIG360 Consulting. “And they know their audience.” Gray believes Lululemon, much like Nike, has found a loyal group of consumers willing to pay for quality and social status. Gray thinks it is also benefiting from a global shift toward “athletic lifestyle higher-end branding,” and thinks the company will continue to thrive because it takes seriously its values of health, wellness, and personal empowerment.

Lululemon’s success has been a boon for investors, not least for founder Dennis “Chip” Wilson, who still owns 31.5 per cent of the company. The Goldman endorsement comes as Wilson was identified by the Vancouver Sun as the owner of the city’s most expensive home. According to BC Assessment rolls, Wilson’s mansion—overlooking the ocean and mountains of West Vancouver—is worth $37.2 million. All thanks to pricey yoga pants.

Driveway cash flow

By Kate Lunau - Tuesday, January 17, 2012 at 11:05 AM - 0 Comments

On his way to see the San Francisco Giants play, Anthony Eskinazi was looking for somewhere to park close to the stadium, when he noticed an empty spot in front of a house nearby. Most people would have just kept circling the block, but he sensed a business opportunity. Eskinazi is the founder of ParkatmyHouse.com, an online service that helps drivers rent spaces from people who don’t need them. Available in the U.K. since 2006, it’s expanding into North America.

ParkatmyHouse.com, which calls itself the “world’s largest online parking marketplace,” helps home and business owners looking for some extra cash to rent out unused parking spaces to drivers who need the convenience; the site handles the booking process. With an investment from German carmaker BMW (through BMW i Ventures, its investment arm), the company is moving into major U.S. cities, like New York and Washington. No Canadian cities are available yet, but as any urban driver can attest, we could use the extra spots.

Reliable, fuel-efficient cars are passé

By Chris Sorensen - Tuesday, January 17, 2012 at 10:00 AM - 0 Comments

Brent Foster

Sirens wailed and guitar strings screeched as the 2013 Dodge Dart rolled onto a stage at this year’s Detroit auto show. Hundreds were there to see the first new vehicle spawned by the marriage of Chrysler Group LLC and Fiat Group Automobiles S.p.A. in 2009. They weren’t disappointed. The sporty small car, built using Fiat’s Alpha Romeo Giulietta platform, represents yet another attempt by Chrysler to reach into its rich past for an all-new vehicle—in this case, for the name of a popular sedan from the 1960s and 1970s—while shedding its reputation for building only powerful muscle cars and hulking pickup trucks.

The Dart is meant to compete head-to-head with the brisk-selling Chevrolet Cruze, sleek Ford Focus and popular Honda Civic by adding some attitude to the segment. Prospective buyers will have their choice from a long list of optional features, including LED accent lighting, an 8.4-inch touch screen and no less than seven different steering wheel choices. “The traditional ‘why buys?’ in the segment are price, fuel economy and reliability,” says Dodge president Reid Bigland, who chatted with onlookers following the unveiling. “But today those are no longer differentiators. They’re just simply the minimum barriers to entry. We wanted to do more.”

Chrysler wasn’t the only automaker flaunting a little extra flash at the annual industry gathering. Toyota Motor Corp. unveiled a Scion-badged rear-wheel-drive car called the FR-S, built in partnership with Subaru, marking the first time in years it will have a sports car in its lineup. General Motors Co., meanwhile, displayed a sportier version of its subcompact Chevrolet Sonic and two Chevy concept cars that attempted to combine the look of raw power with a frugal budget (with mixed results). For those who can afford the real thing, a long-nosed Lexus sports coupe concept was also on display, as was a low-slung Acura NSX “super car” concept.

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Does Kodak have a future?

By Gustavo Vieira - Monday, January 16, 2012 at 10:00 AM - 0 Comments

SSPL/Getty Images

After 131 years in business, the future looks terribly bleak for Kodak, with reports it will be filing for bankruptcy within the next few weeks. Once king of all things photographic, Kodak slowly shifted from film to printers in the last decade, as digital cameras all but killed its main market. Meanwhile, the company has been trying to sell off its patents just to stay afloat (a technique employed by Nortel during its last gasp).

An ugly picture, yes, but not all agree this is the last Kodak moment. Above all else, Kodak still has its iconic name: the brand’s value was estimated at $10 billion only a decade ago (though absent from Interbrand’s list of 100 best global brands since 2008). In the age of Instagram, Flickr and DSLR cameras, it could still prove invaluable for the right investor, even if it takes doing something radical like the newly resurrected Polaroid, which recently hired Lady Gaga as creative director.

Pipelines and battle lines

By Alex Ballingall - Friday, January 13, 2012 at 7:15 AM - 0 Comments

After the U.S. delayed its decision on whether to approve the controversial Keystone XL pipeline that would carry oil sands bitumen from Alberta to the Gulf of Mexico, Prime Minister Stephen Harper was quick to stress his government’s renewed enthusiasm for exporting more oil to Asia. He called it “an important priority” for Ottawa.

With those words, the heated pipeline fight shifted from Keystone to the Northern Gateway project in British Columbia, where Calgary-based Enbridge Inc., hopes to lay a 1,172-km oil sands pipeline to the port town of Kitimat. For environmentalists, the economic benefits—estimated by Enbridge to add $270 billion to Canada’s GDP over 30 years—don’t outweigh the risk of an oil spill, something Enbridge experienced with much publicity in July 2010, when one of its pipes burst into Michigan’s Kalamazoo River. Nathan Lemphers, a Pembina Institute analyst, says Northern Gateway’s route leaves it vulnerable to landslides and avalanches, increasing odds of a rupture. He also points to the B.C. coastline, where an oil tanker spill could devastate salmon stocks and wipe out the region’s orcas, according to a 2010 report by the Raincoast Conservation Society. Alongside such disquiet are concerns over Aboriginal land rights. Continue…

BB cream fans lay it on thick

By Joanne Latimer - Wednesday, January 11, 2012 at 12:30 PM - 0 Comments

Photograph by Jenna Marie Wakani

Not so long ago, a tan was considered the hallmark of beauty. Baby oil was slathered on to encourage that golden glow. When the sun fell out of favour, the inexorable rise of bronzers and self-tanners began. But half a world away, where celebrities prize porcelain skin, a secret weapon in cosmetic bags called BB cream was doing the opposite—making skin whiter. Legions of fans bought in.

A combination of tinted moisturizer, sunscreen, blemish healer and skin whitener, the name “BB cream” is short for blemish balm or beauty balm, depending on the marketing spin. BB cream was first brought to Asian markets in 1985, almost 20 years after German dermatologist Christine Schrammek introduced the first blemish balm, but it didn’t became a runaway bestseller until the early 2000s. A craze was born. “Imagine if you were in a country where they didn’t have a staple like, say, mascara. That’s how Asian women feel in Canada when they can’t get their BB cream. It’s crazy how devoted they are to it,” says Andrea Claire, a Canadian makeup artist and beauty blogger based in Singapore.

Shida Atri became a fan after she got hooked on Korean TV dramas and found out that the actresses attribute their flawless skin to BB cream. Atri, who was born in Iran, went door to door in Toronto’s Koreatown looking for a BB cream for her olive complexion.

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Tough questions for job hunters

By Kristy Hutter - Wednesday, January 11, 2012 at 12:15 PM - 0 Comments

How would you cure world hunger? If you want to work at Amazon, you’d better come up with a creative answer. This curveball was just one of the 25 strangest interview questions asked by big employers in 2011, according to Glassdoor.com. The career website compiles a list at the end of each year, in an attempt to expose companies that ask oddball questions and prepare candidates for what they may be up against.

Some other examples include Deloitte’s “Would Mahatma Gandhi have made a good software engineer?” and from Hewlett-Packard: “If Germans were the tallest people in the world, how would you prove it?” Google is one of the most frequent offenders, appearing on the list since the site launched in 2008.

Glassdoor spokesman Scott Dobroski says employers want to analyze how a potential employee thinks critically. Take, for example, Best Buy’s “How many planes are flying over Kansas right now?” “You have to sound out the process by saying, ‘Well, it would depend on the time. I know that Chicago is a hub airport in the United States and that’s not too far. Dallas isn’t too far off, either. What time of year is it?’ ” says Dobroski. You might not get the right answer, but you could still land the job.

Target Apparel’s multiple targets

By Chris Sorensen - Wednesday, January 11, 2012 at 12:05 PM - 0 Comments

Photograph by Andrew Tolson

Target Apparel is taking on Target, and taking cues from Canada Goose and American Apparel, too

Imitation may be the sincerest form of flattery, but it’s also lucrative if you know what you’re doing. Take Canadian mall mogul Isaac Benitah. The “cheap chic” retailer, who presides over Fairweather and International Clothiers, is embroiled in a high-stakes legal war with Minneapolis-based Target Corp. over the use of the “Target” name in Canada. And he is doing so while borrowing from other well-established brands at the same time.

Recent newspaper ads for Target Apparel, owned by Benitah’s Fairweather Ltd., advertise a line of Canada Weathergear “Super Triple Goose” parkas for as little as $79.99 that closely resemble popular Canada Goose jackets, which cost more than $500. That’s not all. Target Apparel’s logo appears at the bottom of the ads, complete with a font that closely resembles the one used by American Apparel, albeit with a maple leaf plastered on the end.

It’s a veritable triple play. While some shoppers might be inclined to shake their heads, experts say the strategy can translate into big money in a country where copyright laws are weak when it comes to fashion, and trademark infringement is difficult—and expensive—to prove. “You’ve got two target groups,” says Alan Middleton, a marketing professor at York University’s Schulich School of Business. “People who might be fooled by the real thing and those who know it’s not the real thing, but don’t want to pay for the real thing.”

Meanwhile, in the case of Target, Benitah may also be set for a big payday. He won an early victory after a federal court turned down an attempt by Target, set to open stores in Canada in 2013, to make him stop using the name. Now Benitah, who could not be reached for comment and claims to have owned rights to the Target name in Canada for a decade, is seeking his own injunction against Target’s bid to sell clothing in Canada, with a trial set for the end of 2012. Jim Danahy, the head of retail consultancy CustomerLAB, calls it a clever tactic by a Canadian entrepreneur “with the ultimate aim of forcing the U.S. firm to pay up for Canadian marketing rights.”

Who’s spying on the web?

By Kristy Hutter - Wednesday, January 11, 2012 at 11:10 AM - 0 Comments

Oli Scarff/Getty Images

The whistle-blowing WikiLeaks has a track record of revealing explosive secrets, so when three Canadian tech firms popped up on the website, it immediately raised the question: what are they hiding? WikiLeaks latest campaign, called “The Spy Files,” is aimed at exposing the use of online surveillance technologies by telecommunications companies, police forces, governments and intelligence agencies collecting private data. The site has named Canada’s Vineyard Networks, Sandvine and AdvancedIO Systems as “Western intelligence contractors,” but so far specific files have not been published online. While the companies say they have nothing to hide, the website is already causing trouble for some British and U.S. firms.

The companies named by WikiLeaks design products—both hardware and software—that facilitate a practice called deep packet inspection, a way of filtering data as it passes an inspection point within a secured or unsecured network. These programs have completely legitimate purposes, whether used to manage congested Internet traffic, to diagnose potentially destructive glitches in a massive computer system, to crack dangerous organized crime rings, or to tap into an underground terror cell. But WikiLeaks is on a crusade to pinpoint the uses that a democratic government’s law-abiding citizens may not necessarily consider ethical.

In the United Kingdom, documents from several surveillance companies have been leaked onto the Spy Files website, sparking outrage. Hampshire-based Gamma Group was shown to have been providing spying programs to Hosni Mubarak’s regime in Egypt through a third party; aptly named Hidden Technologies Systems International was discovered selling its technology to Saudi Arabia’s police force; and Creativity Software has been supplying its cellular device tracking system to an Iranian mobile phone company.

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Diamonds aren’t forever: Oppenheimers leave De Beers

By Richard Warnica - Wednesday, January 11, 2012 at 11:00 AM - 0 Comments

AFP/Getty Images

Last fall, Nicholas “Nicky” Oppenheimer, the chairman of the De Beers Group and heir to one of the world’s most storied fortunes, gave a series of media interviews to explain why his family had agreed to exit the business that had made them rich.

The Oppenheimer clan had controlled De Beers, the world’s most important diamond mining and marketing firm, since the late 1920s. In many ways, they created the diamond as we know it today—as an idea and a symbol. Under the Oppenheimers, De Beers built the Central Selling Organization—the cartel that regulated global diamond prices and supply for more than half a century. They oversaw the “Diamonds Are Forever” marketing campaign. They were even crucial to the development of the Kimberley Process, a scheme to halt the sale of blood diamonds.

But now, Nicky Oppenheimer explained, it was time to get out. With so much of its fortune tied up in one commodity, the family was at constant risk of a market crash. It was an emotional decision, Oppenheimer told one radio interviewer. “But at the end of the day, we in the family decided it was the right thing to do, and it was unanimous.”

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Dwolla: The credit card killer?

By Alex Ballingall - Wednesday, January 11, 2012 at 10:20 AM - 0 Comments

Widespread reliance on credit cards may have seen its heyday, thanks to a 12-person tech startup in—of all places—Des Moines, Iowa. Called Dwolla, it was founded by a 28-year-old university dropout named Ben Milne after he grew frustrated paying thousands of dollars to process credit card payments at his speaker business. Dwolla is an online payment mediator that allows people to buy things by transferring money from cellphones, email addresses and Facebook accounts. And rather than taking a percentage cut off every transaction—like PayPal and others that rely on credit card transaction systems—Dwolla charges 25 cents for every transfer over $10. For everything else it’s free.

The company already handles between $30 million and $50 million per month and has raked in more than $1.3 million from investors. “We don’t believe in credit cards,” Milne told Business Insider. “The current model needs to be blown up.” With momentum like this, Dwolla might end up doing just that.

Donuts trump Berries as RIM trails Tim Hortons

By Gustavo Vieira - Friday, January 6, 2012 at 5:40 PM - 0 Comments

Mike Cassese/Reuters

It’s been a tough year for Research In Motion, once the biggest company in Canada by market capitalization. Lacklustre sales of its Playbook tablet, service outages, product delays and the growth of smartphone rivals all helped drive the company’s stock down from a high of nearly $70 a share in early 2011 to $14 last week. RIM’s value has shrunk so much that it now no longer ranks among the biggest 50 public companies in Canada. It’s now worth even less than retail chains like Tim Hortons and Shoppers Drug Mart. RIM’s market cap is just over $7.5 billion, a whopping $30-billion loss in one year. Tim Hortons and Shoppers are worth $7.8 and $8.8 billion, respectively. RIM insists its new operating system, due later this year, will change its fortunes, but for now, as technology analyst Paul Kedrosky quipped in a recent Twitter post, in the battle of Canadian brands it’s “donuts over doodads.”

Heather’s fix

By Anne Kingston - Friday, January 6, 2012 at 1:00 PM - 0 Comments

Photograph by Cole Garside

On Nov. 8, 2011, Canada’s literati gathered in Toronto for their Oscars, the Scotiabank Giller Prize, an event designed to bolster book box office and buzz. Yet the hot topic as guests tucked into their tuna tartare was not literary but corporate—a new plot twist at Indigo Books & Music Inc. Hours earlier, the country’s dominant book retailer announced that Kobo Inc., the e-reader in which it held a 51 per cent stake, had been sold to Rakuten Inc., a Japanese company, for US$315 million. When regulatory hurdles are cleared, Indigo would net an estimated US$150 million.

That Indigo was jettisoning its much-publicized e-asset, one publishers had scrambled to accommodate, was puzzling—at least to those seeking a consistent narrative. Founded in 2009 to compete with Amazon’s Kindle, Kobo was Indigo’s fastest growing division, though only a small fraction of revenues. Minutes after announcing the divestiture, Indigo reported second quarter 2011 results, a loss of $40 million. Sales at Kobo were up 219 per cent over a year earlier, whereas those at indigo.ca rose 1.1 per cent and store sales were down—4.3 per cent at Indigo and Chapters superstores.

Months earlier, in June 2011, Indigo CEO Heather Reisman had talked up the digital/dead-tree book synergies to the Toronto Star: “Indigo is in the business of encouraging people to read,” she said. “We don’t care if people want to read digitally or physically.” A month before that, she predicted e-books would grow to 40 per cent of Indigo’s total book sales. Yet by November, the digital arm was history, shed in part because it would take an infusion of over $100 million to make it globally competitive, and the company was refocusing on a more high-risk area: non-book, or “lifestyle products.” In spring 2011, Reisman told the Globe and Mail that books would decline to 50 per cent of Indigo’s sales in a few years from 75 per cent. “Our stores are about the life of a book lover,” she stressed.

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Islamic finance: paying for piety?

By Erica Alini - Friday, January 6, 2012 at 6:00 AM - 0 Comments

For Canada’s 1.3 million Muslims, UM Financial arrived on the financial scene with a valuable service: mortgages that, in compliance with sharia principles, don’t charge interest. But its failure last year has sparked a fierce debate about whether Islamic banking should be banned, or whether it’s still a potentially lucrative industry in need of better regulation.

Mortgages with UM Financial were set up so that lender and borrower purchased the house together. The homebuyer pays rent to the mortgage issuer (rather than interest), while gradually buying off the outstanding share of the property. Ownership is transferred to the borrower only when the principal is paid in full. But when UM Financial failed, receivers were left with a legal can of worms. Who ultimately owns the houses—the bank or the borrower? And will 170 Muslim borrowers be forced to start paying interest in order to keep possession of their homes? Long-time critics of Islamic finance say these problems are inherent in the system and that it should be outlawed. Tarek Fatah, founder of the liberal-minded Muslim Canadian Congress, argues sharia-based banking amounts to calling interest by another name, and charging gullible, if devout, borrowers a premium for their piety.

Proponents of sharia-based finance maintain that the failure of UM Financial proves that Canada needs more, not less, Islamic finance. Had the country’s big banks opened up to the practice, borrowers would not have turned to a small, poorly regulated player such as UM Financial, says Walid Hejazi, a business professor at the University of Toronto’s Rotman School of Management. In retail banking, sharia-sanctioned models are examples of low-risk, back-to-basics finance, notes Hejazi. On the commercial side, a well-developed Canadian regulatory system for Islamic finance would make it easier for wealthy Gulf countries to invest in capital-intensive projects that need funding, such as the development of Alberta’s oil sands.

UM’s troubles were a rocky start for Islamic finance. But they likely won’t be the last word on a system that will remain in demand with a growing part of the population.

The best of 2011: Business

By macleans.ca - Friday, December 30, 2011 at 7:00 AM - 0 Comments

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