Forum Archive Index - May 2002

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

Hi Russ,
 
>
>
>Next question...anyone have opinions on where they're going?  We're
>down in the 2 year low territory now..any chartists see a bottom in
>sight?
> 
> 

The only prediction I will make with certainty is that, currency 
movements aside, Telstra NZ and Telstra AUS will be moving in exactly 
the same direction ;-)

I would caution you on worrying about where the bottom is in the 
Telstra share price drop.   Of more interest to me is where the top 
will be in several years time.  Telecommunications has had a bit of 
a boom and bust history and I think where TLS will go 'share price 
wise' will depend on the amount people are prepared to pay for the 
new value added services: broadband and new developments in mobile 
phones. This is, of necessity, speculative and if you look on the 
focus investment group I have been indulging in just such 
speculation.  Please read my scenario on the TLS debt thread and 
see if you agree or disagree with it. I'd rather not proceeed to the 
next step based on one person's speculation only!

The next step, as I see it, is to forecast the capital expenditure 
requirements of TLS and how these match up with future revenue 
streams.  I see this as critical because I see TLS as a classic big 
risk big reward trade off.  If TLS backs the right technology they 
will effectively control the telecommunications highways all over 
Australia.  They won't have a monopoly but with a market share of 
some 85% they will be in an almost unassailable position *if* they 
get things right!  If they pick the wrong technology the door will 
be open for AAPT and Optus.  TLS profits could be crushed, and 
the TLS share price will head further south.

Now, what can the Telstra share price history tell us about what is 
likely to happen?   It will reflect past sentiment towards 
telecommunications companies (which has changed).  It will reflect 
the likelihood of some cash rich overseas corporation coming and 
taking a cornerstone stake in Telstra (there aren't any cash rich 
telcos left that can do it now), it will reflect the growth of dial 
up internet (largely complete and irrelevant) and other historical 
factors.  In other words the driving factors that make up the 
movements in the price of TLS have completely changed and as such any 
study of the TLS chart is, very likely, *a complete waste of time.*

See you on the focus investment group where I will be attempting a 
more fundamentalist based approach as to what sort of returns you 
can expect if you buy into Telstra today.

SNOOPY

disclosure: hold TLS.  Looking to add to it if ther numbers stack up.







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