Five things you should know before you start your work day on March 1

/Peter Lozinski / Postmedia

And a pleasant March morning to everyone! Shari Kulha here with the top business stories you ought to know about. We have a few reaction stories from budget observers, including one reporting that business is unhappy about Morneau’s lack of policies to address the U.S. threat; that and all our coverage can be found here. But in balance the country got back to business as usual.

MORTGAGE POORER

Laurentian Bank reported its first-quarter earnings yesterday, and said it has bought back $268 million worth of problematic mortgages. Geoff Zochodne reports that the country’s eighth-largest bank by market cap said net income was $59.7 million, an increase of 23 per cent from a year ago. Diluted earnings per share were $1.41, up eight per cent.

Bottom line: The bank has a $392-million target on mortgage buybacks, which could still vary, as it includes about $124 million in potentially problematic loans that were underwritten in its branch network and sold to an unnamed third party. The bank doesn’t expect a material hit on its operations, funding or capital, and said the paperwork problems looked to be unintentional.

CAUGHT UP 

Maricann Group’s $70-million cannabis deal fell through as investment banks told the marijuana company they won’t go through with a $70-million bought deal because of an insider trading investigation. Maricann board members Raymond Stone and Neil Tabatznik have resigned.

Quote: A Feb. 8 OSC letter advised Maricann that CEO Ben Ward was being scrutinized for activities while he was CEO of Canadian Cannabis Corp. Maricann said it didn’t know of the situation until it got the letter. “The Company is unaware of any facts that could reasonably lead it to conclude that this investigation has had, or will have, any impact on the ability of Mr. Ward to … carry out his duties as CEO or director of the company.” 

WINNERS WINNING

With all the talk of e-commerce usurping brick-and-mortar stores, how is it that TJX Companies, with its Winners and HomeSense brands, continues to outperform? That’s one question, but another is how it does so without even a website on which to promote its wares. As Hollie Shaw reports, customer traffic was up in all of the company’s divisions and was the primary driver behind same-store sales increases. 

Quote: “TJX has cultivated a particularly loyal and specific shopper over the years,” says Jennifer Marley, with retail advisory firm Sklar Wilton & Associates. “The Winners shopper loves a treasure hunt and they have come to expect that.”

ALPHABET & OTHER BETS

New revenue-recognition rules in the U.S. suggest that investors should receive the same information as the top executive in an organization. In Alphabet’s case, that means if the CEO gets financial results for YouTube (a unit of Google, which is a unit of Alphabet), so should investors. But Alphabet doesn’t disclose such specifics even to CEO Larry Page. And though Alphabet is public, Google is private, so no disclosure is required even when its CEO, Sundar Pichai, gets the breakdown.  

Bottom line: By making it a division with its own CEO, Alphabet insulated Page from knowing Google’s revenue specifics. Sure, he’d rather spend his time thinking about human immortality than ad-targeting algorithms, but it also makes Alphabet’s financial statements less revealing. And that’s how a big corporation keeps big secrets.

ITS OWN DRUMMER

Spotify, the biggest global music streaming company, filed for a direct listing of up to US$1 billion with the SEC yesterday, becoming the first major company in the recent past to do so. A direct listing would help Spotify list without having to raise new capital or hire a Wall Street broker to underwrite the offering. The company wants to list its ordinary shares on the NYSE under the ticker symbol SPOT.

Bottom line: Revenue for Spotify came in at 4.09 billion euros (US$4.99 billion) in 2017, compared with 2.95 billion euros a year earlier. Its operating loss widened to 378 million euros from 349 million euros. Spotify said it has 71 million premium subscribers and about 159 million monthly average users.

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