In the media space, the movie industry is doing particularly well. Cineplex are as good as they get in operating. They get about 80% of the revenue in Canada in the cinema business. Only paying out about 60% of what they get. They have tax pools that will protect the dividend when they convert. Not terribly economically sensitive. There is great growth in the business. 3D is really hitting home.
Companies are investing in their IT infrastructure. There is an explosion in electronic content. They get 85% of revenue from service fees and licensing. Generate a ton of cash. Ultimately they could be a pretty tasty acquisition target.
Is in 40-50% cash. We have challenges out there. The market has come a long way in the last 10 months and we are due for a pause. There is always something else coming down the pipe.
It would be normal to see some corrective activity about now in the market recovery. People have to be careful about where they have their money and to have some on the sidelines. Thinks there will be a fair amount of share buybacks given the amount of cash on balance sheets.
New competition has come into Canada and impacting them quicker than anticipated. The fact that they raised the dividend signals that they see themselves more as a cash generating machine and not so much as a growth stock.
Ultimately the Petro Canada acquisition was a good one, but there will be some disappoints in the synergies between Suncor and Petro Canada. From a public relations standpoint an environmental issue could arise south of the border.
Pays a pretty good yield, but they aren’t earning it. People would want to own this because they think it would get bought. Ultimately it probably will. It’s a company in decline.