Forum Archive Index - May 2002

["winner69 ." <wwinner69@hotmail.com>]

Another solid and uninspring result from Telecom. Revenues flat, margins 
flat and of concern reducing operating cash flows. Still have high levels of 
debt and earnings per share declining. Not much to get over excited above.

Reporting consistent earnings seems to be the name of the game for Telecom 
in these torrid and volatile times. Amazing how 7 of the last 8 quarters' 
earnings (eliminating a couple of one-offs) have all fallen between $151 
million and $172 million. No surprises there.

Growth company? No. Revenues (eliminating that Southern Cross dividend) 
hardly growing now. March quarter growth only 0.3%. Revenues appear to have 
plateaud out at the current $5.57 billion.

Margin (defined as earnings as a percentage of sales) constant at 11.4% on a 
rolling 4 quarter basis. No percievable improvement here. Before the foray 
into Australia margins were 24%. Amazing that since late 1999 revenues have 
increased 56% but all the other things in between have increased by 80% 
which means earnings are down by 25%.

Telecom are touting much improved cash flows. Driven from much lower capex 
which is not always not a good sign for a 'growth' company. Marco says they 
will spend less capital to repay debt.

Does seem something wrong with the more importsnt operating cash flows 
though - the cash f;ow feom operating activities and excluding investing and 
financial activities. On an annual basis (ie 12 months to March) this years 
operating cash flow (eliminating the Southern Cross dividend) is only $1,250 
million compared to $1,560 million in the year to March 2001. In spite of an 
increase in revenues of $170 million operating cash flow is down $330 
million. Doesn't make sense and I have asked for an explanation from Marco.

My full year forecast - well it has to be $630-$650 million before any 
abnormals like writing down some of the AAPT investment. Not a total 
disaster but on this basis hardly supports a much higher share price than 
what it is now.

Snoopy - you are going to get your regular 5 cent divvie. Any comments?







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