National Post (National Edition)
Wind Mobile on sales block
Bids expected to start coming immediately
Wind Mobile’s foreign owner is putting the company up for sale and any number of bids for Canada’s biggest wireless startup could start rolling in as soon as Friday.
VimpelCom Ltd., the company’s Amsterdam-based owner, has started the process to sell its interest in the Canadian operation, according to Canaccord Genuity analyst Dvai Ghose, who cited “several sources” in a note Thursday.
Bobby Leach, a spokesman for the foreign conglomerate, said the company would not comment on the analyst’s note.
“We’re a listed company. If any such major exercise were contemplated, we’d have to make a stock exchange announcement,” he said.
However, a separate source confirmed to the Financial Post that the process is underway and VimpelCom is accepting initial bids Friday.
The source said Anthony Lacavera, the Toronto-based entrepreneur who started the carrier, is one of the interested bidders and that he plans to partner with one of his former backers.
In January, Mr. Lacavera announced plans to step down as chief executive and transfer total ownership to VimpelCom, which owns Wind’s major backer Orascom Telecom Holdings SAE.
Mr. Lacavera never backed away from the wireless scene and has said he would be an interested buyer should Wind’s foreign owners decide to sell.
Now, according to the source, he plans to submit a bid through his holding company AAL Corp. and is partnering with Accelero Capital, an investment vehicle operated by the former head of Orascom, Naguib Sawiris.
Wind launched its wireless business in 2009 after acquiring spectrum during the last government auction in 2008, during which AWS airwaves were set aside for new entrants and regional players and the Big Three incumbents, BCE Inc., Rogers Communications Inc. and Telus Corp., were not permitted to bid.
Despite a series of regulatory troubles related to its foreign backers, Wind has grown its business to more than 600,000 subscribers.
However, Wind, along with the other new entrants Public Mobile and Mobilicity, have long been the subject of speculation regarding sale or consolidation.
The federal government removed restrictions on foreign investment in Canadian telecommunications companies with a market share of less than 10% and the startup carriers had a combined market share of 3% as of last March.
That leaves the door open to bidders from around the world, including major telecom players such as U.S. leaders Verizon Communications Inc. and AT&T Inc. or Britain’s Vodafone Group PLC.
Then the company said it would take a hit on first-quarter earnings. Its shares rebounded slightly
Thursday, adding 1.4% to close at $66.26 on the Toronto Stock Exchange.
Lululemon estimates it will lose between US$12-million and US$17-million of revenue in the first quarter as a result of the mistake, and the associated cost will reduce earnings by 11¢ to 12¢ per share in the quarter and between 25¢ and 27¢ for the full year. Samestore sales in the second quarter will be in the low single digits or close to flat as a result of the Luon mishap.
“How did it get to shipping without somebody trying on a pair of pants [and] stopping it before it got so out of control?” asked Sam Poser, footwear and apparel analyst at New Yorkbased Sterne Agee Group.
Ms. Day said a team is working with suppliers to identify and fix the problem. It is a multi-step process with multiple vendors involved, she said.
“If the mistake was ours, then we are obviously we are on the hook for that. But at this point in time we do not know specifically what the issue was.”
She admitted there were some “gaps” in the system and testing measures that were more subjective. “That is certainly one area that we feel that we can do a better job of controlling.”
The overly sheer fabric was used in 17% of its popular posterior-flattering yoga pants.
The retailer has hired more senior people in its quality control division will have two new sources for manufacturing its proprietary fabric, Luon, by the fall. “The big shift for us is making sure that we actually have people on site in the mills and the other environments,” Ms. Day said.
Analysts have criticized the sports clothing manufacturer for relying on too few suppliers for its pricey pants, which retail for $80 to $100.
“The ramping of their talent in quality control should help both abate fears that another issue could arise and that the current issue will be worked through quickly,” said Howard Tubin, analyst at RBC Capital Markets, said in a note to clients.
Lululemon said Thursday that it earned US$109-million in the fourth quarter, or US75¢ per share, compared with profit of US$73.9-million, (US51¢) in the same period a year earlier. It beat analyst consensus estimates of 74¢ per share.
Revenue jumped 31% to US$485.5-million compared with US$371.5-million in last year’s quarter, and sales at stores open for more than a year, a key measure for retailers, rose 10%, beating the company’s high single-digit forecast.
Lululemon anticipates profit of US28¢ to US30¢ per share in the first quarter and revenue of US$333-million to US$343-million.
Ms. Day said stores had not seen a significant uptick in returned items since the recall, but the company will have a better idea in the next weeks about how many customers were affected.