Winnipeg Free Press

Winnipeg Free Press (Newspaper) - January 28, 2015, Winnipeg, Manitoba C M Y K PAGE B8 B 8 WINNIPEG FREE PRESS, WEDNESDAY, JANUARY 28, 2015 BUSINESS winnipegfreepress. com Great rates get you started. Great people actually get you there. Rates subject to change without notice and available only in- branch. * WestEarner � TFSA Account only. Interest calculated daily and paid monthly. ** Interest compounded annually, paid at maturity. 54 month RRSP/ RRIF/ TFSA GIC 2.20% ** TAX- FREE SAVINGS ACCOUNT 2.00% * or Downtown / 230 Portage Avenue / P: 204.956.4669 Kenaston / 125 Nature Park Way / P. 204.452.0939 cwbank. com/ retirement S AN FRANCISCO - Apple had another blowout quarter thanks to its new plus- sized iPhones, which helped the company smash sales records for the holiday season. Apple said Tuesday it sold 74.5 million iPhones during the three months that ended Dec. 31, beating analysts' expectations for the latest models of Apple's most popular gadget, introduced in September. The surge in iPhone sales drove the company's total revenue to US$ 74.6 billion, up 30 per cent from a year earlier. CEO Tim Cook told analysts demand for the phones was " staggering," and noted results would have been even higher if not for the impact of the strong dollar on overseas sales. Net income rose 38 per cent to US$ 18 billion, as Apple reported earnings of US$ 3.06 a share. Analysts surveyed by FactSet were expecting earnings of $ 2.60 a share on revenue of $ 67.39 billion. Apple also forecast revenue for the current quarter between US$ 52 billion and $ 55 billion. The midpoint of that range is just below the average analyst estimate of US$ 53.6 billion for the period ending in March, when sales typically fall from their holiday- season peak. Apple Chief Financial Officer Luca Maestri said in an interview revenue for the current period will increase between 14 and 20 per cent from a year ago, despite the strong dollar, which has forced other companies, such as Microsoft, to lower their forecasts. " We feel very good about the March quarter," Maestri said, calling the December results " pretty amazing." Apple has set records with each new version of its iPhone. The company sold 51 million smartphones during the holiday quarter in 2013, when its iPhone 5s and 5c models were new. Bigger screens are one reason for the popularity of the iPhone 6 and 6 Plus. Apple had resisted when other companies such as Samsung began introducing smartphones with bigger screens. But its iPhone 6 has a 12- centimetre screen, measured diagonally, while the 6 Plus screen measures 12.7 cms. That compares to a 10- cm screen on iPhone 5 models. " It took Apple a long time to come to grips with the fact that the market did want the bigger screen," said Gartner tech analyst Van Baker. " They finally closed the gap on a feature they were missing, which their competition had capitalized on." The surge in sales of Apple's signature smartphones helped make up for an expected decline in sales of iPad tablets. The company sold 21.4 million iPads, down 22 per cent from a year earlier. Sales of Mac computers rose nine per cent, and Apple saw overall revenue gains in all geographic regions. The new models also helped Apple increase its share of the Chinese market. Apple doesn't break down iPhone sales by country, but a report issued Tuesday by research firm Canalys estimates Apple sold more smartphones in China during the last quarter than any other maker, including South Korea's Samsung and the Chinese companies Huawei and Xiaomi. Still, some experts worry Apple's strength could become a weakness. Apple makes more money from iPhones than any other product, including its iPods, iPads and Mac computers. That could leave it vulnerable, as the overall smartphone market shows signs of slowing growth, warned Colin Gillis, a tech stocks analyst with BGC Partners. He said Apple depends on iPhones for nearly twothirds of its revenue. " Selling north of 70 million of anything is fantastic. But what's going to happen a year from now?" he asked. " The strength today has potential to become a weakness down the road." Maestri downplayed those concerns. " We are growing our portfolio in many ways," he told The Associated Press, citing the upcoming Apple smartwatch, which will ship in April, and the recent launch of Apple Pay, the company's mobile payments system. He also said iPad sales were " a bit better than we were expecting" and added new apps for business users, produced in partnership with IBM, should help iPad sales in the future. Apple shares closed Tuesday at US$ 109.14, down 3.5 per cent, but rose more than five per cent in after- hours trading on the report. - The Associated Press TORONTO - Tim Hortons is refusing to say how many employees will lose their jobs at its headquarters and regional offices in a reorganization of its operations announced Tuesday. A spokeswoman for the coffee chain said it's " still in the process" of notifying staff members who will be affected by widespread changes to its Oakville, Ont., offices and regional offices across the country. " We're not in the position to confirm the number of people impacted," Alexandra Cygal wrote in an email. Tim Hortons, which was taken over by Burger King Worldwide Inc. last year, has been widely expected to cut office jobs. While the company plans to keep its headquarters in Oakville, staff outside its restaurants were not protected by Burger King's promise to maintain jobs at Tim Hortons franchises across Canada for five years. The licensing company for Tim Hortons franchises employs 1,800 people in office jobs, distribution centres and manufacturing facilities, its website says. Tim Hortons has five warehouse distribution centres, in Calgary, Guelph and Kingston, Ont., Debert, N. S. and Aldergrove, B. C. - The Canadian Press WWW. SAFEWAYCHAMPIONSHIP. CA LIVE RESULTS . ON- SITE REPORTING CurlManitoba appreciates the support of these Championship Sponsors: 2014 CHAMPIONS - TEAM STOUGHTON Catch all of the action at the Keystone Centre as Manitoba's best compete in the 2015 Safeway Championship. CALL KEYSTONE BOX OFFICE AT ( 204) 726- 3555 FOR EVENT TICKETS. FEBRUARY 4 TH - FEBRUARY 8 TH , 2015 KEYSTONE CENTRE, BRANDON TICKETS: DAY PASS: $ 25 FULL EVENT PASS: $ 100 EVENING DRAW PASS: $ 10 ON SALE NOW AT KEYSTONE CENTRE M OSCOW - Russia has seen its credit grade cut to junk status for the first time in more than a decade, a big blow for a country that wants to be a world economic power. The downgrade by Standard & Poor's reflects the country's growing economic problems, such as the collapse in the value of its oil exports and the impact of Western sanctions. But it is also rare for a country with such low debt levels. The Russian government announced Tuesday an anti- crisis plan that aims to fix the budget and achieve a surplus by 2017. Here's a look at why the downgrade happened and what it means. Why the downgrade? Standard & Poor's on Monday cut Russia's rating to BB+, a non- investment grade the country last held in 2004, when it was still recovering from a painful financial collapse in the 1990s. The downgrade puts it at the same level as Turkey, Indonesia and Barbados. The agency cited the slide in the ruble, which has fallen some 50 per cent in recent months, and lower revenue from oil exports. It noted Russia's financial system is weakening, and the central bank will increasingly have trouble supporting it. Russia's economy is expected to contract by four to five per cent this year for the first time since 2009, when the economy was hit by a global crisis. Investors pulled $ 152 billion out of the country last year, compared with an average of $ 57 billion annually during 2009 to 2013. Foreign currency reserves have dropped below $ 400 billion for the first time since August 2009. What it means for Russia A country's credit rating determines how expensive it will be for the government to borrow on international markets. That cost eventually affects how expensive loans are in the broader economy, for companies and consumers. As Russia does not borrow much on international bond markets, the impact on its public financing costs is likely to be limited - unless Russia, battered by the financial crisis, decides to go and borrow abroad. But the downgrade amounts to a warning on the risks of investing. Many global investment funds will not buy debt that is classified as junk by two of the three agencies. So far only S& P classifies Russian debt as junk, so the country could feel a bigger financial impact if one of the other two agencies - Moody's and Fitch - downgraded their ratings as well. There is no guarantee that will happen, since, overall, a junk credit rating is surprising for a country that has very low levels of public debt. Analysts at SEB, a leading Nordic bank, questioned the downgrade of a country " with debt of around 11 per cent of GDP and fiscal reserves of some 14 per cent of GDP." In an email to clients, they also noted " there has been no indication of a reduced willingness to service government debt." How are the markets reacting? Despite initial losses, the ruble gained 1.3 per cent against the dollar in early evening trading on Tuesday while the MICEX stock index was 1.8 per cent higher. Neil Shearing, chief emerging markets economist at Capital Economics in London, said the market reaction was sanguine because the downgrade had been largely anticipated: " Given the dramatic deterioration in the economic outlook over the past six months it was always a matter of when, not if, the ratings agencies took action." Alexander Kudrin from Moscow- based investment bank Sberbank CIB said the long- term market reaction to the downgrade depends on if or when the other two major ratings agencies will cut Russia's grade to non- investment. What's next? Finance Minister Anton Siluanov on Tuesday unveiled an anti- crisis plan that will freeze the level of government spending and reform the economy. The plan aims to get a budget surplus as soon as 2017 and " so that we do not burn recklessly through Russia's sovereign reserves." The spending limits, however, could weaken the economy by curbing investments in infrastructure projects that help drive growth over a period of years. That could mean fewer jobs in the long term. President Vladimir Putin's spokesman Dmitry Peskov slammed the downgrade - in comments to RIA Novosti he called it " a decision that has little to do with the economy but a politically motivated one." Mikhail Kasyanov, Russia's prime minister from 2000 to 2004, said it is a reflection of how Western leaders feel about Russia's economic prospects and Putin. He saw no improvements as long as the standoff between Putin and the West over Ukraine continued. " With the current government there will be no return to the old days - neither for the rating, nor for the global co- operation," Kasyanov told The Associated Press. - The Associated Press By Brandon Bailey By Nataliya Vasilyeva Russia's credit rating plunges, ruble slides Downgrade is political, president's office says Tim Hortons mum on cuts iPhone sales soar over holiday season Demand was ' staggering': CEO Tim Cook SHIZUO KAMBAYASHI / THE ASSOCIATED PRESS FILES A surge in iPhone sales has boosted Apple's total revenue 30 per cent since last year. B_ 08_ Jan- 28- 15_ FP_ 01. indd B8 1/ 27/ 15 9: 38: 46 PM ;