Forum Archive Index - February 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi hugh,

>
>
>Now, lets see. If you take Telecoms latest half year dividend and
>annualise it and capitalise it at the same ratio as the property
>shares that gives a price of $3 a share. And its growing at 4%, 
>about the same as the hated property shares.....
>
>

Telecom doesn't pay out all of its earnings as dividends Hugh.  Even 
though many property companies and trusts do!  Their idea is to use 
their retained earnings to boost earnings in the future.  

Adjusting for this fact, if you annualize and capitalize *earnings* 
yield you get a share price of $6 per share, and you can buy Telecom 
shares for much less than that today.  Show me a property 
company that has been growing at a sustained 4% over the last 
10 years.  Telecom is cheaper than your property share darlings and 
growing faster! 

>
>
>And if the NASDAQ falls about 700 points it will have about the same
>overblown low yield ratio as the Dow. Unless of course you may have 
>to adjust that again for lies told by chartered accountants in their
>reporting....
>
>

I read the story today about how Cable and Wireless in the UK  have 
been trading customer groups and booking these capital transactions 
as profits.  In the USA they would have to amortize any such gains 
over a 20 year period.   Telecom NZ have been doing something 
similar with future capacity on their Southern Cross cable.  It all 
seems quite legal though.   The complaint seems to be about the 
accounting standard that allowed them to do it, rather than pointing 
to anything fundamentally wrong with what Telecom did. SNOOPY


disclosure:  Hold TEL



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