Forum Archive Index - February 2004

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

Hi Baa Baa,
 
>
>Rather than hold, at these
>lofty levels, I've sold 50% and will dump the remainder at the first
>sign of weakness. I don't have a lot of TEL, but I try to work the 4.5
> - 5.5 range, hence my view to take some profits, then be out, before
>the masses figure out TEL is actually operationaly flat.
> 

There are plenty of analysts out there who follow TEL, so I doubt that 
anyone will be getting much of a jump on anyone else with today's 
result.

Despite the fiasco a few years ago when Telecom declared themselves 
a 'growth stock' and halved their dividend, only to see the share price 
halve as well, I'd be extremely surprised if many current shareholders 
still believe TEL is a 'growth share'.

That means I don't expect a big exodus when people realise the 
underlying profitability is hardly growing.   But by the same token, I'd 
be extremely surprised if we saw Telecom at $4.50 again.   TEL at 
$5.50 gives a projected gross yield of 8.3%.   Barring any unexpected 
shocks I would expect the share price to creep up to around $6 which 
gives a gross yield of 7.5%, even as bank term deposit rates rise to 
around 6.5%.   

The rider here is 'barring any unexpected shocks'.    Needless to say 
*I* expect a few, even if Mr Market doesn't.   In my assessment at 
$5.50, the upside and downside risks are finely balanced and TEL is 
neither a buy nor a sell.  I guess that is why I 'hold' TEL :-)

SNOOPY



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