Forum Archive Index - April 2002

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

Hi hugh,

> 
>
>Maybe I should be allowed to air a dissenting view - I'm famous for 
>it ;-) Some deeper thoughts there Barry and Kim, rather than just
>accepting the conventional wisdom. 
>
>

Mind if I 'plunge down to your depths' and have a word ;-) ?

>
>
>what we have been witnessing is the commodification of the products 
>that Tel sells -their sales have come to depend on price - and 
>competition is hot. 
>
>

And the duplicate landline network all over the country is?
And a cellphone network with the greater coverage is?
And the competition for the new 027 network is?
And the carrier you can go to while still retaining your old number 
is?

'Price is a factor' does not translate to 
'their sales have come to depend on price'


>
>Their ratios aren't too hot either particularly 
>the gross dividend yield % 
>

20c per share is still a yield of 4% (based on a shareprice of $5.00) 
which equates to a pretax yield of 6%.  That is still well above what 
you can get in the bank.  And this is assuming they manage to 
squander all their retained earnings which I haven't mentioned.   Any 
growth in the business will boost this 65 return over time.

>
>and the pressures have started to produce 
>some questionable accounting practices to meet targets. 
>

I think Alan Robb had something to say about this, in an NBR article 
the short version of which was on 'Sharechat'.   Something about 
dropping the interest charges because a business unit wasn't a 
significant subsidiary but including the consolidated profit because 
the profit was significant?   I must admit I didn't like the sound of 
that!   Perhaps Ben or Phil will post the link?

>
>
>The South Pacific cable is no longer doing well 
>
>

A temporary glitch, I feel

>
>
>and they are being nibbled away at in business urban areas by fibre 
>optic competitors while Tel seems happy to sit on its copper wires 
>with a bit of a tech assist that won't win in the long run. 
>
>

Perhaps they are waiting for the high tech competitors to go belly 
up?   I'd much rather see them buy the stuff that someone else has 
paid for 'below cost' than splash out huge amounts of money on the 
latest technology with little prospect of ever getting a return on 
it. 

>
>
>So, St Theresa is a good CEO. They say. Is she as good as Rod Dean 
>was? I recall reading one of their reports when I held them and 
>looking at the executives and thinking hold on; here's a CEO 
>qualified in Pol Sci for God's sake, and their Chief Engineer is 
>qualified in Civil Engineering not Electrical Engineering & & - is 
>this the Mad Hatters Tea Party? 
>
>

Deane was a hatchet man who cut costs under instruction from the 
american owners of the time.  His style was right (too right?) for 
the time, but his time in the CEO seat is past.   And let's not 
sterotype people depending on what they did for their first degree at 
university 20 years (plus) previously. 


>
> "They must be cheap at this price" Why? Surely that depends on 
>their future performance not their historical prices. 
>
>

Their, I think appealing, dividend yield is well covered by their 
earnings.   They aren't going to be a stellar performer, but look at 
the downside risk!   I don't see much, and sometimes when the 
sharemarket takes a tank it is good to have some such shares in your 
portfolio, as I see it.  SNOOPY




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