A survey of North American equities heading in both directions
On the rise
Lightspeed Commerce Inc. (LSPD-T) rose 5.5 per cent after announcing it is cutting 280 jobs, or 10 per cent of its staff, and buying back up to 10 per cent of its stock in an attempt by the Montreal commerce software company to revive its moribund shares.
The company announced the moves early Wednesday in a press release along with other unspecified cost-cutting initiatives in its facilities and operations. The initiatives come seven weeks after the board ousted CEO Jean Paul Chauvet and replaced him with his predecessor, founder Dax Dasilva. The shakeup came after negative investor response to the company’s third-quarter financial update in early February, and Mr. Dasilva promised at the time Lightspeed would be “a long-term profitable growth story with operational efficiencies throughout” and a frugal approach to spending.
“Lightspeed is now entering a new phase, one focused on profitable growth to capture the opportunity in front of us,” Mr. Dasilva said in a statement Wednesday. “This means making some hard decisions, like reducing spending in specific areas such as headcount, to allow for investments in others.”
Most of the costs related to Wednesday’s announcement will hit the company’s financial results in its fiscal first quarter that began April 1 and the company said the restructuring will be “substantially complete” by July 1. Lightspeed reaffirmed previous guidance that it generated revenue of between US$895-million and $905-million in its just-completed fiscal year while generating at least break-even adjusted operating earnings. The company provided no guidance for its new fiscal year, saying it would provide its outlook and strategic plan when it reports year-end results next month.
- Sean Silcoff
Indigo Books & Music Inc. (IDG-T) jumped 22.4 per cent after agreeing to be taken private after agreeing to a sweetened offer from a holding company connected to its largest shareholder.
The retailer says its agreement will see Trilogy Retail Holdings Inc. and Trilogy Investments L.P. pay $2.50 per share in cash for the stake in Indigo they do not already own.
The Trilogy companies, owned by Gerald Schwartz, the spouse of Indigo chief executive Heather Reisman, offered Indigo $2.25 per share in cash in February.
Indigo did not say what caused Trilogy to boost its offer but noted the new price reflects a 69-per-cent premium on the share price of $1.48 that Indigo had when Trilogy first made its bid.
Shares in the retailer, which announced the agreement after the close of trading, ended Tuesday down five cents at $2.01 on the Toronto Stock Exchange.
Indigo says an independent committee of its board of directors recently unanimously recommended the company accept Trilogy’s latest offer.
If shareholders agree to the deal during a May vote, Indigo expects the transaction to close in June and its shares to be delisted from the Toronto Stock Exchange sometime after.
“We believe that this transaction will provide minority shareholders with a substantial premium for their shares following some challenging years for the business, while also ensuring a strong future for Indigo with full ownership by a team that has demonstrated a deep commitment to Indigo’s mission,” Indigo board chair Markus Dohle said in a statement.
The last two years have seen Indigo encounter a ransomware attack that downed its website for a lengthy period and the departure of several board members, including one who said she experienced a “loss of confidence in board leadership.”
Victoria’s Vecima Networks Inc. (VCM-T) increased 5.4 per cent on the premarket announcement of the US$20-million acquisition of the Cable Business assets of Casa Systems Inc. (CASA-Q)
To facilitate the sale, Casa and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
“We view the acquisition as potentially positive for the company as it could offer up new product categories and/or new customers,” said Acumen Capital analyst Jim Byrne in a research note.
Toronto-based Stack Capital Group Inc. (STCK-T) was higher on the premarket announcement that portfolio holding Prove Identity Inc. has entered into a strategic partnership with BetMGM, a sports betting and gaming entertainment company.
The partnership will allow BetMGM, a subsidiary of MGM Resorts International (MGM-T), to use Prove’s Pre-Fill identity solution across its entire sports betting platform, including all of MGM’s U.S. land-based and online sports betting, major tournament poker, and online gaming businesses.
“Partnering with BetMGM, a leader in digital sports betting and casino services, represents a meaningful milestone for Prove,” said Stack CEO Jeff Parks in a release. “While Prove’s Pre-Fill solution is already used by 1,000+ businesses worldwide, including 9 of the top 10 US Banks, this partnership only serves to further validate the strength of the technology, and the benefits that it delivers.”
Spotify Technology SA (SPOT-N) intends to raise prices on its plans by about US$1 to US$2 a month in five markets including the UK, Australia and Pakistan by the end of April, Bloomberg News reported on Wednesday, citing people familiar with the matter.
Shares of the Swedish music streaming service rose 8.2 per cent in response to the report.
Spotify will raise prices in the United States, its largest territory, later this year, according to the report.
The company is also going to introduce a new basic tier that will offer music and podcasts — but not audiobooks — for the current $11 monthly price of an individual premium plan, the report said.
The new basic tier is the first of what will be several new pricing options from Spotify, the report added.
CEO Daniel Ek said earlier in February the company has “plenty of levers to pull, including price increases,” adding the investments in the podcasts were a drag on the business in 2023.
Tesla Inc. (TSLA-Q) rose over 1 per cent a day after a near 5-per-cent drop as the automaker missed first-quarter delivery estimates.
The Austin, Texas, company said Tuesday that it delivered 386,810 vehicles worldwide from January through March, almost 9 per cent below the 423,000 it sold in the same quarter of last year. It was the first year-over-year quarterly sales decline in nearly four years.
Sales also fell short of even the most bearish Wall Street expectations. Auto industry analysts polled by FactSet were looking for 457,000 vehicle deliveries from Tesla Inc. That’s a shortfall of more than 15 per cent.
The company blamed the decline in part on phasing in an updated version of the Model 3 sedan at its Fremont, California, factory, plant shutdowns due to shipping diversions in the Red Sea, and an arson attack that knocked out power to its German factory.
But TD Cowen Analyst Jeffrey Osborne wrote in a note to investors that weaker March sales indicate that incentives, including discounts and a free trial of “Full Self Driving” software, “did not work as demand deteriorated.”
On Wednesday, the Financial Times reported Tesla will send a team to India this month to scout locations for a proposed US$2-billion to US$3-billion electric car plant,
Tesla’s reported push into India comes at a time when EV demand is slowing and competition heats up in its main markets of the U.S. and China, causing the EV maker to report a drop in first-quarter deliveries and missing estimates.
The company will send a team from the United States by late April to study sites for the plant, with a focus on states that have automotive hubs such as Maharashtra, Gujarat and Tamil Nadu, the report said, citing people familiar with the matter.
On the decline
WSP Global Inc. (WSP-T) fell 5.4 per cent after prominent U.S. short seller Spruce Point Capital Management LLC revealed a short position in Montreal-based engineering and professional services firm.
In a report released Wednesday, it expressed concern over its valuation, accounting practices and potential for M&A activity.
“After conducting a forensic financial review of WSP Global, a Montreal-based engineering and professional services firm, Spruce Point believes WSP is experiencing growing financial and business strains that are being masked by aggressive and non-standard financial reporting, accounting and reduced transparency,” it said. “Based on our investigation, we estimate a 25% to 50% downside risk, or approximately $110.00 -$165.00 per share.
“The report highlights several key concerns with the Company, including: WSP appears to be under greater financial and business stress that is evident by its increasingly opaque financial reporting; Cash flow and earnings quality appear to be embellished by aggressive and problematic accounting revisions; WSP’s Board leaders and Audit Committee appear in need of fresh oversight, with new members independent of management and the clubby Montreal business community and WSP shares present a poor risk/reward while trading at an unwarranted premium to peers.”
West Fraser Timber Co. (WFG-T) was down 2.8 per cent and Vancouver-based Mercer International Inc. (MERC-Q) rose 0.5 per cent after announcing they are dissolving their 50/50 joint venture in Cariboo Pulp and Paper.
West Fraser will be the sole owner and operator of the mill.
West Fraser president and CEO Sean McLaren says the move better positions the company to support the mill and provide ongoing certainty to its workforce.
Meanwhile, Mercer CEO Juan Carlos Bueno says the dissolution will allow the firm to direct resources to areas that better align with its long-term focus.
West Fraser says the mill employs almost 300 people.
Earlier this year, West Fraser announced it was permanently closing a sawmill in Fraser Lake, B.C., closing another in Maxville, Fla., and indefinitely curtailing operations at its Huttig, Ark., sawmill.
Montreal-based electric snowmobile manufacturer Taiga Motors Corp. (TAIG-T) plummeted over 53 per cent a day after saying it is pausing production and temporarily laying off around 70 workers.
The company, which also makes electric watercraft, says its decision is in response to a challenging economy and an exceptionally mild winter.
Taiga released quarterly and annual results today but did not hold a conference call with investors, and a spokesperson said managers would not be available for interviews.
It says its net loss was $72.5-million in 2023, compared to a loss of $59.5-million in 2022.
Taiga says it wants to better align vehicle production with seasonal demand and reduce operating costs.
It also wants to begin selling vehicles through dealers.
Walt Disney Co. (DIS-N) closed down 3.2 per cent after shareholders rallied behind longtime CEO Robert Iger, voting Wednesday to rebuff activist investor Nelson Peltz and his ally, former Disney chief financial officer Jay Rasulo, who had sought seats on the company’s board.
The company had recommended a slate of directors that did not include Mr. Peltz or Mr. Rasulo.
The dissident shareholders had said in a preliminary proxy filing that they wanted to complete a successful CEO succession at Disney and align management pay with performance.
Disney announced in November 2022 that Bob Iger would come back to the company as its CEO to replace his hand-picked successor, Bob Chapek, whose two-year tenure had been marked by clashes, missteps and weakening financial performance.
Mr. Iger was Disney’s public face for 15 years as chief executive before handing the job off to Mr. Chapek in 2020, a stretch in which Mr. Iger compiled a string of victories lauded in the entertainment industry and by Disney fans. But his second run at the job has not won him similar accolades.
Intel Corp. (INTC-Q) dipped 8.2 per cent in the wake of disclosing deepening operating losses for its foundry business, a blow to the chipmaker as it tries to regain a technology lead it lost in recent years to Taiwan Semiconductor Manufacturing (TSM-N).
Intel said the manufacturing unit had US$7-billion in operating losses for 2023, a steeper loss than the US$5.2-billion in operating losses the year before. The unit had revenue of US$18.9-billion for 2023, down 31% from US$27.49-billion the year before.
During a presentation for investors, Chief Executive Pat Gelsinger said 2024 would be the year of worst operating losses for the company’s chipmaking business and that it expects to break even on an operating basis by about 2027.
Mr. Gelsinger said the foundry business was weighed down by bad decisions, including one year ago against using extreme ultraviolet (EUV) machines from Dutch firm ASML. While those machines can cost more than US$150-million, they are more cost-effective than earlier chip making tools.
Partially as a result of the missteps, Intel has outsourced about 30 per cent of the total number of wafers to external contract manufacturers such as TSMC, Gelsinger said. It aims to bring that number down to roughly 20 per cent.
With files from staff and wires