Forum Archive Index - June 2001

["Peter" <pmaiden@xtra.co.nz>]

Snoopy - sorry to keep you up late but that was a great post about TLS fundamentals.

Yes you are right - for every seller there is a buyer, as that's how a market works. That interaction between sellers and buyers is what is represented by the line on the TLS chart. The actual price shown by this line is not really relevant, it is the trends that are shown that is important.

 

My comments, and those of Thaedrus, about TLS were based solely from a reading of the chart - the result of that interaction between sellers and buyers.

 

We made no mention of the fundamentals.

 

The conclusion was if one wanted to buy TLS why not wait until the downtrend had finished and a definite uptrend had started.

 

I cant argue with what you said about Telestra. They are by far a market leader in the Australia telecommunications market. They do have a strong brand and the financial performance has improved year on year.

 

On the downside they have found out that Australia is not immune to the global view of the telecommunications sector.

 

Another factor is that until Telestra become fully privatised they are exposed to being treated like a political pawn.

 

As Telestra have reported they will not being achieving double digit growth this year. Many analysts are saying that the likes of Telestra may never achieve the growth they have expericienced in the past for some time - or ever again. Subdued demand and diminishing margins are a problem with these telcos globally. Even the 'heroic US consumer' isn't buying as many mobile phones as they used to. Telcos continue to get downgraded around the world and Telestra is not immune to that.

 

It is the apparent maturing of an overserviced industry, and the sobering and slow-dawning realisation that the industry is not destined to generate double-digit growth in perpetuity that will drive the value of the Telestra share price over time.

 

No doubt the Telestra price will be a lot higher sometime in the future - but when is the question.

 

Irrespective of what the fundamental value of Telestra is, why buy their shares now when the price is trending downward. All the indications are that it will continue to do so for a while.

 

Phaedrus has just stolen my thunder with his recent post.

 

Think about what he has just said.

 

Cheers

 

Peter

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