Of Bulls & Bears

Friday 1st December 2000

United stands tall in soft sharemarket

Rampaging bears are feasting on the carcasses of technology shares like Advantage Group (down nearly 80% since April) and Strathmore Group (down 75% since February). Even market leader Telecom has lost about 40% this year. Meanwhile, energy lines company United Networks has been a quiet achiever. Its shares have moved from $5.60 in April to a record high of $7.80 this week, a gain of 39%. This is hardly the sort of performance one expects from a utility but United is no ordinary energy company. It has jumped on the convergence bandwagon and wants to manage lines, regardless of what is carried down them. Rather than just concentrate on electricity or gas, United is about to start building its own fibre-optic networks in central Auckland and Wellington. Chief executive Dan Warnock wants United to be "the premier network company in New Zealand delivering the best possible customer service, network reliability and fair prices." Investors obviously think it can deliver, more so than they think Telecom can, it seems.

Old economy gains the upper hand

Talking of major losses by once trendy companies, it is illuminating to look at the list of companies reaching a yearly high this week. As well as United Networks, there are two banks (ANZ and WestpacTrust), two brewers (DB Group and Lion Nathan), utility investor Utilico International and agricultural services group Williams & Kettle. Only one share is vaguely speculative, the newly listed Vending Technologies. It seems solid, profitable, conservative companies are suddenly back in vogue. Perhaps the "old economy" will end up having the last laugh over all those loss-making e-commerce upstarts.

Tax for sale, $10,000

As anyone who has tried to register a dotcom address lately will know, almost every conceivable name and combination of letters has been registered. Many of those who have taken a name hope they will be able to sell it overnight for a fortune. The latest get-rich-quick tale is that of a student in the US who registered cool.com five years ago and has just been offered $US60 million ($150 million) for it. The chances of anyone being offered that sort of money for a dot.co.nz address is slim. An article in the latest Institute of Directors' journal points out the cost of a domain name is treated by Inland Revenue in this country as capital expenditure and thus non-deductible. The US authorities are more generous, allowing different treatments for sites that carry a brand name and those with a generic name. An example of the latter is www.tax.co.nz - which the authors point is up for sale, for a mere $10,000.

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