Tuesday, January 29, 2008
BoSacks Speaks Out; How Quebecor can Thrive
Here is an interesting story. To me it is so clearly an issue of disconnected perspective that I am almost stunned by the reporter's "take" on the issues.
Well, not really stunned because it is a Wall Street perspective. You know what I mean , bottom line profit, outstanding shares, that sort of thing. This was clearly not written by a reporter who knows anything about the printing world nor the presses that this story might have been printed on. Nope. To this reporter presses don't matter and Quebecor World and it's staff is just a small cog in a shareholder's diversified portfolio.
"Emotions get in the way but they don't pay me to start crying at the loss of 269 lives. They pay me to put some perspective on the situation."
Quebecor's media interests can thrive with sale of Quebecor World: analysts
The Canadian Press, 2008 - Canadian Press
MONTREAL - A complete sale of Quebecor World would allow its parent company Quebecor Inc. to thrive as it focuses on expanding its presence as a Canadian media conglomerate, industry observers said Thursday.
Quebecor Inc.'s prospects are led by its strong cable operations at Montreal-based Videotron and a portfolio of newspapers, including the Sun Media group and recently acquired Osprey newspapers.
The media business, which also includes television and Internet, hopes to enter the cellphone business in Quebec through a spectrum auction.
"The media side has a very positive outlook, it's doing quite well and Quebecor World wasn't that big of a deal to Quebecor Inc. anymore," said one analyst who didn't want to be identified.
The parent company's share value has dropped 25 per cent since November, in large part because investors feared it will sink money into the struggling printer.
Late Wednesday, Quebecor World received an American court order providing protection under Chapter 11 of the U.S. bankruptcy code. That enables the company to borrow up to $750 million immediately from Credit Suisse and Morgan Stanley to help fund operations while Quebecor World restructures.
"Once I know they are not going to put money in, my comfort level grows," said a second analyst, who added that cutting ties would allow Quebecor Inc. to focus on its core business without distraction.
"The best outcome could be strong indication from (Quebecor Inc. CEO) Pierre Karl Peladeau that Quebecor Inc. is no longer going to be involved in supporting Quebecor World."
The printing business was founded by Peladeau's father.
Quebecor Inc. had attempted a last-ditched rescue for Quebecor World by teaming with Tricap Partners to provide a US$400 million lifeline to the printer.
Its banking syndicate refused to sign off and the parent company was unwilling to increase its financial position. It also said this week it wants the printing business to be renamed so as not to confuse investors about the state of Quebecor as a whole.
Analyst Jeffrey Fan of UBS called Quebecor Inc.'s decision to walk away from the proposed rescue plan the right one.
"We believe these actions reflect Quebecor Inc.'s decision to surrender control of Quebecor World," Fan wrote in a report earlier this week.
He said Quebecor Inc.'s share price should increase post Quebecor World and upgraded his rating on the stock to "buy" from "hold."
"We believe there is attractive potential upside for Quebecor Inc. shares and in a volatile market, we expect the shares to outperform."
Investors who own Quebecor Inc. stock like its media assets and aren't looking to own a vehicle that indirectly invests in another questionable business, said one analyst.
Quebecor officials couldn't be reached for comment Thursday. But earlier this week, company spokesman Luc Lavoie insisted Quebecor World is a good company, that has faced financial pressures.
"The perception should not be that the company is in bad shape, it's actually in a good shape now that the situation in terms of credit will be frozen," he said in an interview.
Quebecor World's financial numbers are expected to remain meshed in its parent company until it is completely sold.
Removing these contributions would dramatically reduce the company's size and geographic reach.
In 2006, Quebecor Inc. lost $93.9 million on $9.8 billion of revenues. It employs 43,000 employees, including some 28,000 by the printer.
Since 2002, Quebecor Media's operating income has increased annually while Quebecor World's contribution has steadily declined.
Quebecor Inc.'s share price had climbed in the days following the bankruptcy protection filing. However, it lost 88 cents or 2.8 per cent to $30.34 Thursday on the TSX.
Quebecor World's shares, which have been hovering near all-time lows in recent weeks, more than doubled in value on Thursday.
It gained 25 cents to 36.5 cents with 48.2 million shares traded - making it the most actively traded issue on the Toronto Stock Exchange.