Wednesday, May 31, 2006

Cry Me A River

Unless the Canadian dollar cools off, he warned that manufacturers, such as Bombardier, would have little choice but to move jobs to the United States or elsewhere to remain competitive. Bombardier says its costs in Canada have increased by hundreds of millions of dollars relative to its largely U.S. dollar revenue base.

Bombardiers chicken little threats to cut jobs are hogwash. The reality is their drop in earning is BECAUSE they already cut jobs.
Bombardier's first-quarter earnings fell after a charge for job cuts at its train-making unit, but business jet deliveries and prices rose, the company said on Tuesday.
And then they will come cap in hand and ask for more corporate welfare from Ottawa to bail them out. And the reality is that Bombardier's problems are perenniel. Less to do with the dollar than the collapse of the American airline industry, and competition in Europe.

MONTREAL -- Bombardier Inc. posted a 56% decline in net income for the fiscal first quarter amid a 6% drop in revenue, as slower rail-equipment sales in Europe, the strengthening Canadian dollar and the financial struggles of U.S. airlines weighed on results.

Bombardier stock derailed over results

Cameron Doerksen of Versant Partners in Montreal said Bombardier's aerospace margin of 2.8 per cent in the first quarter was only slightly higher than the 2.7-per-cent reported a year ago.

The margin "is essentially unchanged from a year ago despite higher deliveries of business jets that were presumably sold at better prices," he wrote in a research update.

In the transportation -- or rail -- unit, the first-quarter margin was 3 per cent, up from 2.4 per cent a year earlier.

Mr. Doerksen questioned the company's ability to sustain higher margins in the longer term.

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