Canadians yet to embrace buying groceries online, survey finds

Canadians are happy buying their books and music on the web but aren’t yet embracing online grocery shopping, suggests a recently released report.

According to the results of an online survey of 1,000 Canadians in August, 92 per cent of respondents said they shopped online but only 15 per cent said they had bought groceries on the web.

While almost 40 per cent of online-shopping spending was linked to entertainment purchases, just four per cent was tied to food and groceries.

“With online shopping in general, even in the past with other categories, there had to be an incentive for customers to try it out, to get away from their usual habits, give it a try. And then if there was some benefit they would try it again,” said Suthamie Poologasingham of J.C. Williams Group Ltd., which looked at the online grocery market in its Canadian E-tail Report.

“I think we’re at that stage with grocery and online.”

Canada lags behind the U.S. and U.K. when it comes to online grocery shopping, added Poologasingham.

“Once they understand there is some convenience behind it – if retailers are able to provide those conveniences and the same products they would provide in store – I think we will see more Canadians getting on board.”

Some companies without physical grocery stores – like Grocery Gateway, which partners with Longo’s in the Toronto area – deliver boxes of groceries, including fresh produce, to the doorsteps of their customers, while IGA, Thrifty Foods and Costco offer some delivery services as well.

Summerhill Market in Toronto teamed up with the delivery service InstaBuggy about six months ago and has seen 30 per cent to 40 per cent growth each month in its online service, said co-owner Christy McMullen.

“I don’t know if everyone will do all of their shopping online. I think they still like the experience of coming in the store, but when you have these big bulky items and you’re in a rush or you don’t have time, then I think online is a really great alternative,” McMullen said.

While books and clothes ordered online can linger on a porch, in an apartment lobby or a mailbox, food has to be packaged carefully to keep from spoiling or bruising.

To get around that, some retailers including Loblaw and Walmart Canada have adopted a click-and-collect program. The customer orders online and then swings by the store to fetch the order.

Jeremy Pee, Loblaw senior vice-president of e-commerce, claims about 80 per cent of customers who try it once return for a second visit.

“We are expecting to see online grocery shopping grow,” said Poologasingham.

“We are seeing from other studies that it is growing, so people are looking at it and trying it out at least once.”

The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

Courtesy: The Globe And Mail

Chinese rivals are creating a ‘black cloud’ over SolarEdge

After a 50-per-cent drop this year, Israeli solar company SolarEdge Technologies Inc. looks cheap to most analysts. Short-sellers are betting the pain has just begun.

Bearish bets against SolarEdge, whose technology makes rooftop solar usable for home appliances, climbed to a record 21 per cent of shares outstanding this week. The stock has tumbled this year as growth in the U.S. residential market slowed and the main American competitor, Enphase Energy Inc., engaged in a do-or-die price war. Add to this that one of its largest customers, Elon Musk’s SolarCity Corp., said it will build the components it buys from SolarEdge in-house after merging with Tesla Motors Co.

Now investors have latched onto a new bogeyman: China. Companies such as Huawei Technologies Co. and Sungrow Power Supply Co. are targeting rooftop solar installations for U.S. home owners – SolarEdge’s biggest market – after displacing competitors in the commercial segment with lower prices. The push prompted Goldman Sachs Group Inc. to recommend selling SolarEdge shares earlier this month. Analysts at Axiom Capital did the same, warning that the company’s streak of earnings beats would “come to an abrupt end.”

The Chinese firms’ “announcement that they want to get into the space has created a black cloud over SolarEdge and Enphase,” Jeff Osborne, an analyst at Cowen & Co. in New York, said. “Unfortunately, when a black cloud of future competition surfaces, it’s going to stay there for awhile.”

Axiom analyst Gordon Johnson set a $10 (U.S.) price target for SolarEdge shares by the end of 2017, arguing in an Oct. 14 note that the company’s growth and profit margins would be eroded by Chinese entrants to the market. SolarEdge stock closed Friday at $14.73.

Chief financial officer Ronen Faier brushed off the threat of Chinese competition in an Aug. 9 earnings call, saying SolarEdge had taken share from Chinese competitors in Europe and that it would be hard for them to quickly penetrate the U.S. residential market amid new regulatory standards.

“In the residential market, they’re very, very, very beginning, and I’m less worried on their chance to gain market share,” Mr. Faier said.

He declined to comment further in an e-mail, citing a regulatory quiet period.

While SolarEdge’s fourth-quarter earnings per share beat analysts’ expectations, revenue of $124.8-million was below the average estimate.

The Herzliya Pituach, Israel-based company has taken pains to diversify away from the United States and SolarCity. U.S. revenue as a portion of the total dropped to 68 per cent in fiscal year 2016, down from 73 per cent a year ago, executives said on the call.

Short-sellers are underestimating the barriers to entry for Chinese companies, said Michael Morosi, an analyst with Avondale Partners in Nashville. U.S. banks will be reluctant to finance the installation of unproven Chinese solar panels, and meeting new regulatory requirements, such as automatic shut off features for fire safety, will increase their costs, he said.

“I’m not convinced the Chinese have the right solution to be a long-term player,” said Mr. Morosi, who has maintained his buy rating on SolarEdge. “The market is overly pessimistic with respect to their ability to compete and defend share and defend their margin.”

Ten out of 13 analysts surveyed by Bloomberg recommend buying SolarEdge shares. That includes JPMorgan Chase & Co., whose analysts said the company’s technology, strong balance sheet and expansion outside the United States made it a “safe haven” amid the broader solar industry slump.

Despite the overhang of Chinese competition, Mr. Osborne at Cowen is also keeping his buy rating on SolarEdge. He says it’s too early to declare Huawei and other Asian companies the inevitable winners.

Also on The Globe and Mail

Why the floor is falling out from under solar companies
(BNN Video)

Courtesy: The Globe And Mail

Alibaba says Katy Perry to headline Singles’ Day

Chinese e-commerce giant Alibaba Group Holding Ltd started the countdown to its annual shopping festival Singles’ Day, promising consumers – and investors – a bonanza of fashion shows, virtual reality and U.S. pop star Katy Perry.

The one-day event, held annually on Nov. 11, sees billions of dollars of goods sold via Alibaba’s Tmall platform at steep discounts, and is a barometer for the firm’s performance. Transactions last year broke past $14-billion.

The celebration, launched seven years ago by Alibaba, has already eclipsed the combined sales of the equivalent events in the United States: Cyber Monday and Black Friday.

However, Alibaba’s accounting practices for the event came under scrutiny this year by the U.S. Securities and Exchange Commission (SEC). Some merchants have questioned whether results from the event are really as high as reported.

The firm, headed by billionaire businessman Jack Ma, plans to expand Singles’ Day sales globally this year, opening up Hong Kong and Taiwan as the first markets outside China where consumers will be able to buy international products via Tmall.

The plan is part of the firm’s efforts to reduce reliance on China, where it generates the bulk of its revenue, and where flagging economic growth threatens to slow Alibaba’s earnings.

“Last year we brought many international brands to China for the first time,” Alibaba Chief Executive Daniel Zhang told reporters in Hong Kong on Thursday.

“We are bringing them to consumers in Hong Kong and Taiwan for the first time this year, and next it will be Southeast Asia and the rest of the world,” he said.

This year’s event would feature a performance by Katy Perry, virtual reality shopping, and a live-streamed fashion show in Shanghai allowing viewers to pre-order items as they appear on the catwalk, the firm said.

The sales are a key channel in driving transaction volumes, where consumers can get cut-price deals ahead of time, but the transaction only goes through on the day itself.

Courtesy: The Globe And Mail

Samsung in talks with LG Chem for new smartphone batteries: report

Samsung Electronics Co Ltd is in talks with LG Chem Ltd to supply batteries for its new smartphones, the Nikkei newspaper reported, citing sources.

Samsung, the world’s biggest smartphone maker, scrapped production of the fire-prone Galaxy 7 and said it would take a hit to its operating profit of about $3-billion over the next two quarters as a result.

The company had blamed faulty batteries for the original problem in its flagship device, but has given no indication about the cause of the overheating seen in the replacements.

The companies are discussing ways to supply batteries to Samsung’s new smartphones starting next year, the report said.

Samsung’s subsidiary, Samsung SDI Co Ltd, is the dominant battery supplier for the Note 7, supplying around 70 per cent of the batteries globally, according to analyst estimates.

Samsung and LG Chem were not immediately available for comment outside regular business hours.

Also on The Globe and Mail

South Korea braces for Samsung fallout

Courtesy: The Globe And Mail

Nintendo unveils next-generation gaming console Nintendo Switch

Japan’s Nintendo Co Ltd launched Nintendo Switch, its next-generation gaming console, as the company looks to catch up with rivals Sony Corp and Microsoft Corp.

Nintendo Switch, the company’s first console since Wii U in 2012, is a hybrid device, doubling up as a traditional console as well as a handheld device.

The Kyoto-based games company, which plans to launch the console globally in March, did not reveal pricing details on Thursday.

The console’s success will be crucial to Nintendo as the firm still places console gaming at the center of its business, even as casual gaming shifts from living rooms to smartphones.

Sales of Nintendo’s Wii U console have reached 13 million units since its launch. Its predecessor, the Wii, launched in 2006, has sold 101 million units to date.

The disappointing sales added impetus to shareholders and observers urging Nintendo to embrace smartphone gaming. Nintendo finally announced its entry into mobile last year and earlier this year decided to bring some of its popular characters to mobile. That led to the runaway success of its game Pokemon GO.

The company plans to debut its game franchise Super Mario Bros on Apple Inc’s iPhone in December.

Analysts have said Nintendo’s family-oriented game titles compete with smartphone games more directly than titles from rival console makers Sony and Microsoft, which focus on high-end graphics targeting core gamers.

Nintendo had said earlier it would release a short video about the announcement.

The company’s shares closed up 3.34 per cent in Tokyo on Thursday.

Also on The Globe and Mail

Why Pokemon Go shows the way to an augmented reality future
(The Globe and Mail)

Courtesy: The Globe And Mail

EBay revenue rises 5.6 per cent

EBay Inc forecast quarterly revenue and profit for the crucial holiday shopping season largely below market estimates, sending its shares down 8 per cent in extended trading.

The company forecast revenue of $2.36-billion to $2.41-billion and adjusted profit from continuing operations of 52-54 cents per share for the current quarter.

Analysts on average were expecting revenue of $2.40-billion and earnings of 54 cents per share, according to Thomson Reuters I/B/E/S.

EBay has been working to reinvent itself since parting ways with PayPal, its main growth engine, in July last year.

The company has been offering a bigger selection of products and more brands and requiring sellers to give more details on products to attract younger shoppers and better compete with Inc and brick-and-mortar retailers that are beefing up their online presence.

Revenue rose 5.6 per cent to $2.22-billion in the third quarter, beating the average analyst estimate of $2.19-billion.

Net income fell to $413-million, or 36 cents per share, in the quarter ended Sept. 30 from $539-million, or 45 cents per share, a year earlier.

Excluding items, Ebay earned 45 cents per share, beating the average estimate of 44 cents.

Courtesy: The Globe And Mail

Netflix shares surge as big bet on original shows finally seen paying off

Netflix Inc’s shares jumped 20 per cent on Tuesday – on track for their best day in more than three years – as original shows helped the company add far more subscribers than expected in the third quarter.

The boom in subscriber additions, coming off disappointing second-quarter subscriber growth, allayed some concerns about the company’s expensive bet on producing original content such as the Winona Ryder-starrer sci-fi series “Stranger Things”.

Wall Street analysts scrambled to bump up their price targets on the stock, with most of them praising the company’s focus on developing original content.

Netflix’s shares were up 18.9 per cent at $119.40 in midday trading, adding about $8-billion to the company’s market value.

The video streaming company also said it was getting ready to spend $6-billion on content next year, up $1-billion from 2016.

“The benefits of NFLX-produced original content including attractive economics and greater control are clear and we believe returns on original spend are high,” J.P. Morgan Securities analyst Doug Anmuth said in a research note.

Anmuth said he believed Netflix was on track toward 60 million plus subscribers in the United States and about 100 million internationally by 2020.

Some analysts, however, sounded a note of caution about the company’s lofty valuation and its ability to sustain its pace of growth.

“Netflix continues to spend exorbitantly for original and exclusive content, while international profitability remains elusive and competition for both content and subscribers is becoming more fierce,” Wedbush Securities analyst Michael Pachter said.

“In addition, cash burn is unacceptably high, and we are skeptical that the company can successfully build a content library that will justify its high level of spending.”

Netflix, whose competitors include Hulu and Inc, said on Monday it expects a higher free-cash-flow burn at $1.5-billion in 2016 as producing original content consumes more cash up front.

The company’s stock trades at 131 times forward earnings.


But most analysts remained bullish about Netflix and its ability to woo subscribers with its original content. At least 16 brokerages, including Goldman Sachs and RBC Capital Markets, raised their price targets on the stock.

“We believe Netflix is still quite early in penetrating international markets, and its content strategy seems poised to help subscriber growth,” Canaccord Genuity analyst Michael Graham said.

The second season of “Narcos”, a Netflix original show on Colombian druglord Pablo Escobar, has proved highly popular, following up on the success of “Orange is the New Black” and “House of Cards”.

The company plans to launch “Crown”, a show about the reign of Queen Elizabeth II, next month.

Netflix plans to release more than 1,000 hours of original programming in 2017, up from 600 hours this year.

The company added about 3.20 million subscribers internationally in the third quarter, compared with the 2.01 million average analyst estimate.

In the United States, Netflix added 370,000 subscriptions, compared with analysts’ estimate of 309,000, according to research firm FactSet StreetAccount.

“This is unprecedented growth that should drive a substantial improvement in the breadth and depth of content on the service, which should provide a tailwind to subscriber growth in 2017,” said Pacific Crest analyst Andy Hargreaves.

Courtesy: The Globe And Mail

Yahoo profit beats as emerging businesses shine

Yahoo Inc reported better-than-expected quarterly adjusted profit on Tuesday, positive news for the beleaguered company whose deal to sell its core business to Verizon Communications Inc has been shaken by a massive data breach.

Verizon’s general counsel said last week that the hack, which affected at least 500 million email accounts in 2014, could have a material impact, possibly allowing Verizon to withdraw from the $4.83-billion deal.

Revenue from Mavens – the mobile, video, native and social advertising units that Chief Executive Marissa Mayer touts as its emerging businesses – rose 24.2 per cent to $524-million.

Gross search revenue fell 14.1 per cent to $752.5-million.

Yahoo’s shares were up marginally in extended trading.

Verizon plans to combine Yahoo’s search, email and messenger assets as well as advertising technology tools with its AOL unit, which it bought last year for $4.4-billion.

The deal would transform Yahoo into a holding company, with a 15 per cent stake in Chinese e-commerce company Alibaba Group Holding Ltd and a 35.5 per cent interest in Yahoo Japan Corp as well as Yahoo’s convertible notes, certain minority investments and its non-core patents.

The deal is expected to close in early 2017, after which Yahoo plans to change its name and become a publicly traded investment company.

Yahoo’s revenue rose 6.5 per cent to $1.31-billion in the third quarter ended Sept. 30, beating the average analyst estimate of $1.30-billion, according to Thomson Reuters I/B/E/S.

After deducting fees paid to partner websites, revenue fell to $857.7-million from $1-billion.

Net income attributable to Yahoo rose to $162.8-million, or 17 cents per share, from $76.3-million, or 8 cents per share, a year earlier.

Excluding items, the company earned 20 cents per share, beating the average estimate of 14 cents.

Yahoo said on Friday it would not hold a call or webcast after the release of the results, citing the Verizon deal.

Also on The Globe and Mail

Yahoo secretly scanned e-mails for U.S. intelligence: sources

Courtesy: The Globe And Mail

Video game firms’ evolving hardware cycles are a player-driven shift

When Rod Fergusson was offered the chance to lead the development of a new Gears of War game, he jumped at the opportunity.

It was 2014, and Microsoft Corp., where Mr. Fergusson started his video game career 13 years earlier, had just purchased the rights to the lucrative franchise.

The Canadian software developer was a logical choice for the job. He had shepherded production on three previous Gears titles while working at Epic Games in North Carolina, including 2006’s Gears of War – the first in the series and a blockbuster success that helped to establish Microsoft’s legitimacy in the video game business.

“At that time, HD televisions were the new technology,” Mr. Fergusson says. Gears was created with high-resolution visuals that amazed consumers and reviewers. The game boosted sales of HD TVs as well as Xbox 360s, the only console it could be played on.

Microsoft is hoping Mr. Fergusson’s latest effort – Gears of War 4 hit store shelves last week – will have a similar effect and help to drive sales of the Xbox One S console, which it released in the summer.

“One of the things we like to do with Gears is have that visual showcase and help push some of the leading-edge technologies,” Mr. Fergusson said in an interview last month at The Coalition, the Vancouver studio he runs.

Gears of War 4 is a big part of Microsoft’s push to gain ground in the latest phase of a global console battle. Video game hardware is big business. In April, Sony Corp. – the market leader and Microsoft’s biggest competitor – reported sales of its PlayStation 4 (PS4) had reached 40 million units worldwide since its release about 30 months before. While Microsoft does not report specific sales figures, analysts at the time estimated sales of the Xbox One console to be about 20 million.

In the past, new hardware was released about every eight years, but that cycle is changing. Both Microsoft and Sony unveiled new models of their respective consoles after less than three years. To take on the Xbox One S, Sony released a smaller version of the PS4 on Sept. 15. Both companies have yet another model in the works, too. The more advanced PS4 Pro is scheduled to hit shelves in November, while Project Scorpio – the code name for a high-powered Xbox One – is planned for 2017.

This is a notable shift. According to analyst Michael Goodman, the primary reason for the change in the hardware cycle is the original PS4 and Xbox One could not support the new 4K and high dynamic range (HDR) displays. And unlike past TV technological transitions, this one has happened “in the blink of an eye.”

“So much about video games are about the visuals,” said Mr. Goodman, director of digital media for Strategy Analytics, noting that most TVs being sold today are 4K and within a year, he expects all TVs to also be equipped with HDR.

Right now, the new “slim” PS4 and the Xbox One S support HDR, but they can’t deliver video games in 4K. The next editions of the consoles will bring true 4K gaming; Gears of War 4 was developed so that it will deliver when Scorpio arrives.

Director of Xbox Canada Craig Tullett said Gears of War is a well-established and popular franchise that is “inherently social and connected.” He expects groups of friends who regularly play together will all upgrade their hardware en masse.

Attitudes about device upgrades have also changed. Smartphone manufacturers have established that consumers are willing to shell out hundreds of dollars every year or two on new handsets and tablets. One reason that people are willing to do that is because the apps they’ve already purchased, and they love to use, don’t suddenly become obsolete if they buy a new device.

“In the past, when a generation [of hardware] finished, you had to say goodbye to your games,” Mr. Fergusson said. The industry needed to evolve. “Getting locked into an eight-year cycle and then having to throw it all away and start over again is just archaic.”

Being able to get players into Gears of War 4 on three different systems – the Xbox One, the Xbox One S and any Windows 10 computer – is also broadening the audience potential. “That’s what choice is about,” Mr. Fergusson said.




Percentage of Canadian adults who own a game console


Percentage of Canadians who are a gamer (defined as anyone who has played a video game on any system in the past month)


Amount contributed by the video game industry to Canada’s GDP

Source: Entertainment Software Association of Canada

Also on The Globe and Mail

ShowBiz News: Lindsay Lohan loses Grand Theft Auto lawsuit
(AP Video)

Courtesy: The Globe And Mail

Samsung flags $5.3-billion profit hit from Note 7 fiasco

Samsung Electronics Co Ltd on Friday said it expected to take a hit to its operating profit of about $3-billion over the next two quarters due to the discontinuation of its fire-prone Galaxy Note 7 smartphone.

The outlook brings to about $5.3-billion the total losses the global smartphone leader has forecast as a result of the overheating issues, after it said on Wednesday it would suffer a $2.3-billion hit to third-quarter profit.

The premium device that was meant to compete with Apple Inc’s latest iPhones at the top end of the smartphone market had to be scrapped earlier this week, less than two months after its launch, due to safety fears.

The South Korean tech giant said in a statement on Friday it expected the blow to profit to be in the mid-3 trillion won over the next two quarters – in the mid-2 trillion won range in the October-December period and about 1 trillion won ($900-million) for the first quarter of 2017.

Samsung shares, which have fallen about 8 per cent this week, edged up 0.6 per cent as of 0228 GMT on Friday, versus a 0.5 per cent gain on the broader market.

To make up for the lost revenue, Samsung said it would expand sales of gadgets like the Galaxy S7 and S7 edge phones, and make “significant changes” in its quality assurance processes to improve product safety.

Investors and analysts said that while the company had to move quickly to reassure the market about the potential financial costs, deeper losses from one of the tech industry’s most spectacular product failures could not be ruled out.

Reputational damage remained the great unknown and potentially more harmful than recall costs, with rivals in the cut-throat industry eager to pounce on any sign of weakness in the market leader’s standing among consumers.

“The sales impact on other models remains unclear,” said Kim Sung-soo, a fund manager at LS Asset Management, which owns Samsung Electronics shares.

“The end of the premium model will damage Samsung’s brand, and hurt demand for its other models. It is difficult to measure such impact.”

Samsung posted earnings of $7.2-billion in the second quarter, with mobile profits – its biggest earner – soaring 57 per cent.


The Note 7 debacle has come at an awkward time for South Korea’s biggest family-run conglomerate, which is in the middle of a leadership succession and is facing calls for a major restructuring from U.S. hedge fund Elliott Management.

Park Jung-hoon, a fund manager at HDC Asset Management which owns shares in Samsung affiliates, said that although future losses would not be as bad as the third quarter the company had to work hard to rebuild confidence.

“What’s important is whether the flagship S7 can fill the gap left by the Note 7, and how much trust Samsung can regain from consumers by the time the S8 comes out,” he said. Analysts expect the S8 to be released in the first quarter.

Key to brand recovery would be rapidly finding out and communicating what went wrong with the Note 7, which was recalled when some devices were found to be combustible and finally discontinued when customers reported similar faults in their replacements.

The company blamed faulty batteries for the original problem but it has given no inkling about the cause of overheating in the replacements.

“Samsung must announce clearly what the reason was and dispel uncertainty,” Park said.

Investors were also expecting the company to show its “commitment to shareholders” by announcing share buybacks or higher dividends, he said.

Samsung has announced financial incentives for U.S. and South Korea customers who exchange Note 7s for other Samsung products, as part of efforts to stem customer defections.

Also on The Globe and Mail

Samsung hikes cost of Note 7 fallout

Courtesy: The Globe And Mail