TEL (Telecom NZ Ltd)

[troyvdh]

....woof....woof....wooof......woooooof......gnarl .......

[duncan macgregor]

....woof....woof....wooof......woooooof......gnarl ....... Thats more like it, we invest to make money or should i say thats the only reason the astute investor invests. Who cares if the company is perceived to be holding the country to ransome, or if the share price has dropped from over $9-00 to just over $3-00 thats not the point.
The point is will the share price plus dividends increase faster in the future than a bank deposit or not?. The company was run by an arrogant woman in the past, who creamed the shareholders for millions as the share price halved, with the customers being less than happy. Only a fool would have predicted the share price would do anything other than go down with the situation the way it was.
Thats in the past, its tomorrows market that counts, TEL have only themselves to blame for the very poor public perception they have to overcome before anything changes. Macdunk
I was told by TEL that i cant get broadband in my new house the computer guy says i can and that TEL are still playing silly buggers.

[beacon]

Behold now, the rise of the phoenix...

[duncan macgregor]

How would the computer guy know if TEL can deliver ADSL or not? There may be several reasons why you cant get it (your house is on a RIM or pair gain system, there are no ports left at the exchange, the phone line has been ULLed) which only TEL would know. I speak from a position of having to trust either telecom or the computer guy who says that i can get it and tel string you along. New house in a new subdivision,underground wiring, guy next door has it.
The man i spoke to from from TEL had an understanding of the system even less than my, own, which is pretty basic. The computer guy suggests to dump TEL which is a good option after the way they look after their customers questions with all sorts of contradictory statements. Macdunk

[Zaphod]

As an experiment, why don't you call another provider see what they have to say?

Typically, these "computer guys" know/suspect that fixed-line ADSL services have been delivered in area, but have absolutely no idea as to whether your specific property is actually in the ADSL coverage area.

You may also be in a borderline service, in which case Telecom (and the others for that matter) often state that it is unavailable. I'd say they're actually doing you a favour in this case.

[duncan macgregor]

TEL broke $3-00 on the way down today. I would have thought $3-00 would have been the resistance for a few weeks at least. Who is game to say how low it will go now that the dollar is dropping with the result of overseas punters getting out. i would think $2-50 to $3-50 over the next couple of years with reduced dividends is what to expect. Might keep close watch on it as a trading share. Macdunk

[Zaphod]

I think it will continue downwards for a while yet, while both Telecom and the market (generally) come to grips with the new playing field that has been created as a result of the split.

It'll be very interesting to see what happens in the new wholesaling market. I expect a slew of new providers will invade offering all sorts of new niche services, but eventually I think we will see some consolidation perhaps back into a few key players.

IMO Telecom have positioned themselves very wisely by purchasing Gen-I. I think this division will present them with some significant value enhancing opportunities in the future.

In the mean-time I'm quite happy to sit on the side-lines.

[craic]

Today I banked $1,500 dividend for the final quarter. If I look up the data, I find that TEL pays one of the highest annual divs on the market and their P/E rating is one of the lowest. The capital value will go up and I will still be getting my high divvies. Years ago on this forum there was a guy who made a living buying and selling TEL on its ups and downs. I hear all the screaming about quality but I am Hawkes Bay rural on the end of a lot of copper strung on some very dicey posts (wooden) through many paddocks and I have no complaints. Four steady dividends each year compared to some of the flashy ones - who don't actually pay a dividend?

[duncan macgregor]

TEL broke $3-00 on the way down today. I would have thought $3-00 would have been the resistance for a few weeks at least. Who is game to say how low it will go now that the dollar is dropping with the result of overseas punters getting out. i would think $2-50 to $3-50 over the next couple of years with reduced dividends is what to expect. Might keep close watch on it as a trading share. Macdunk TEL down to $2-84 at the moment in a crashing market. Even I would have expected the share price to meet some resistance higher than this. I would be interested in opinions from the TEL suppoerters and averaging down brigade who might come forth and give us an insight to what they think the bottom will be. This should develop into a good buy once the crash is over. Macdunk

[Kropotkin]

220cps bottom :)

...b better not be too muxh lower or I'll be out of a job!

[POSSUM THE CAT]

I wIll think about buying somewhen it drops bellow 250cps

[Jim]

I bought a parcel for the fantastic yield that it offered. Consider the term deposit rate are coming down TEL give a good yield.

[CAM]

I bought a parcel for the fantastic yield that it offered. Consider the term deposit rate are coming down TEL give a good yield.

.......if they can maintain the level of dividend

[beacon]

good signals ...

[GTM 3442]

Why buy ?

Once upon a time TEL had an advantage in cellular - coverage was much better than BellSouth. Not any more.

Once upon a time, TEL had an existing copper network which gave them an entree to most of the country for network access. With the advent of a national fibre/wireless network rollout, the playing field has levelled. So - not any more.

Once upon a time, TEL was north of six bucks, too - not any more.


I reckon we'll end up with one "National Telecommunications Infrastructure Company" which will be similar in function to an electricity lines company. Maybe two.

What are the chances of it being TEL ?

Which will mean what for the share price ?

[Kropotkin]

I reckon we'll end up with one "National Telecommunications Infrastructure Company" which will be similar in function to an electricity lines company. Maybe two.

What are the chances of it being TEL ?

Already do - it's called Chorus.

[Mick100]

hi snoopy
I,m looking at adding another high yeild share to my NZ portfolio
I see telecom have a yeild of 10% based on last years dividends
They have quite a high payout ratio of 76%
They say capital expenditure will be higher than previously, going forward
Do you think the dividend (29c) is sustainable?
What are the main strengths and weaknesses of telecom at the moment?

TIA
,

[Snoopy]

hi snoopy
I,m looking at adding another high yeild share to my NZ portfolio
I see telecom have a yeild of 10% based on last years dividends
They have quite a high payout ratio of 76%
They say capital expenditure will be higher than previously, going forward
Do you think the dividend (29c) is sustainable?
What are the main strengths and weaknesses of telecom at the moment?

TIA


Mick, CEO Paul Reynolds has told us that the TEL dividend will be 6c for each of the next four quarters for 2009 and 2010. We can believe him because Telecom will simply manipulate their advertising spend and promotions to give exactly the result they forecast. They are playing the long game, building "broadband to the box" in all the medium and small towns, and fast tracking the new mobile phone network. Effectively Telecom have written off 2009 and 2010 in terms of 'growth' in the interests of building absolutely the best networks they can economically justify.

From the way TelstraClear are running scared over the competitiveness of their own existing cable network, I think Reynolds is headed along the right track. By 2011 I expect Telecom to be the default wholesale choice. All the time vigorous promotion will minimise the loss to their retail base. In the meantime we will have to suffer the pain of an 8.6% yield (based on a $2.80 share price) . Buy in if you can stand it.

SNOOPY

P.S. I heard one report that said the Telecom dividend would no longer be fully imputed during this restructuring phase. Not sure how much truth there is in it.

[craic]

If TEL maintains its dividend, then its share value will increase. I have just dropped companies that are all promises and no dividend in favour of dividend payers. The no-dividend mob drop just as fast in a down turn.

[Deev8]

I heard one report that said the Telecom dividend would no longer be fully imputed during this restructuring phase. Not sure how much truth there is in it.In the management commentary (http://www.telecom.co.nz/binarys/mda_q4_2008_final.pdf) on the annual result Telecom said:

Telecom anticipates the level of imputation of future dividends to be as follows:

For the year ending 30 June 2009, probably nil imputation of dividends; and
For the year ending 30 June 2010, Telecom continues to predict full imputation (at the imputation rate of 30/70) however this prediction is highly sensitive to a number of factors.

Telecom will provide an updated view with its 2009 third quarter results.

[Major von Tempsky]

But for some of us like me who hold TEL through a company with heaps of imputation credits saved up (well over 2 years worth re coming TEL dividends) who cares :-)

Since well over half of TEL is held overseas by increasingly desperate speculators in terms of needing cash you can't expect a rational TEL market until they are disposed of.

Also, for short sellers on the NZ market about the only realistic target in terms of guaranteed sizeable turnover is TEL.
It'll be nice watching them squirm in torture as the market turns :-)

[Lizard]

Thought I had better put my comments on MvT's "predictions" thread over on the TEL thread as well, so that if anyone wants to debate the specifics for TEL, they can do it here, rather than take the other thread off on a tangent.

I hadn't looked at TEL speech, until I heard they'd said they would be keeping dividend at 6cps per quarter for the next two years during the period of restructuring to provide certainty to share holders. I haven't had a detailed look at the accounts to assess how sustainable that 24cps would be beyond two years - though a quick look says it should be okay.

This dividend will not be imputed in the coming year, but going forward beyond that is still expected to be fully imputed. Unimputed the yield on $2.89 is 8.3%. Imputed at 30%, it is 11.9%.

Looking at the debt market, the effective yields on long term fixed rate bonds versus perpetual preference shares clearly seem to show that markets expect interest rates to decline. e.g. IFTHA (13.7%) versus IFT090 (10.5%), SCFHA (14.6%) vs SCF010 (10.45%). Okay, there is probably higher "equity risk" presumed in the prefs as well.

However, I would suggest that IF it can be concluded that TEL is likely to be able to continue to provide a fully imputed 24cps div beyond 2 years then a yield closer to 10.5% makes sense. Perhaps lower when the liquidity and spreads are taken into account - although offset by the lack of imputation in coming year which reduces the dividend-only IRR on a 5 year investment in TEL to 11.0%.

If it is assumed that TEL shares are still paying fully imputed 24cps in 5 years time and yields are still 10.5%, then the sell price is $3.26 in 5 years time and the actual yield on an investment in TEL over next 5 years is 12.9%. Take assumptions of slightly higher dividends or lower required yields and it is easy to pretty quickly make a case for returns of 20%pa+.

On the downside, there is an equity risk and a risk of sustainability - which needs to be looked at and compared against the risk of bonds from companies like SCF and IFT. However, for now, TEL doesn't appear a high risk investment at current levels.

[Dr_Who]

TEL looks sick as a dog. I see further downside to the sp.

So tell me again, why the shareholders continue to support the current board and the CEO? These geezers are paid very well, too well in my books for a job not well done.

$2 here it comes.

[duncan macgregor]

TEL looks sick as a dog. I see further downside to the sp.

So tell me again, why the shareholders continue to support the current board and the CEO? These geezers are paid very well, too well in my books for a job not well done.

$2 here it comes. GOOD GAWD DOC I GOT BOOED OFF THE THREAD FOR SAYING IT WOULD HIT $3-00 BEFORE IT HIT $5-00. Even i thought it might have taken longer to get this low. This company used to have a share price of over $9-00 before good old TG stuffed it up with her arrogance. Still the averaging down brigade are still hard at it averaging down bleating about dividends. Macdunk

[Dr_Who]

GOOD GAWD DOC I GOT BOOED OFF THE THREAD FOR SAYING IT WOULD HIT $3-00 BEFORE IT HIT $5-00. Even i thought it might have taken longer to get this low. This company used to have a share price of over $9-00 before good old TG stuffed it up with her arrogance. Still the averaging down brigade are still hard at it averaging down bleating about dividends. Macdunk

I recall the sp over $11 in the tech bubble boom days pre 97. I recall analyst saying that the valuation was worth $15+.. LOL. I have not owned TEL since 95. See it as a big old dinosaur, unable to change with the times. Tech moves fast and TEL moves too slow to keep up with it. In Europe they are using landline phones connected to the wireless internet that is very cheap to make international calls. In NZ our Telco use technology that is 15 years behind the times.

Some of the broking houses have downgraded TEL recently.

[devito]

I recall the sp over $11 in the tech bubble boom days pre 97. I recall analyst saying that the valuation was worth $15+.. LOL. I have not owned TEL since 95. See it as a big old dinosaur, unable to change with the times. Tech moves fast and TEL moves too slow to keep up with it. In Europe they are using landline phones connected to the wireless internet that is very cheap to make international calls. In NZ our Telco use technology that is 15 years behind the times.

Some of the broking houses have downgraded TEL recently.

South of $1 by Christmas.

[AJ]

Under $1 paying a 24c dividend LOL.

I find below $2 a push, but given the intent of the markets to sell everything it's not impossible.

I think it'll continue to drop as markets drop. I might try and pick some up at 220 ish before the Dec dividend.

[Dr_Who]

Under $1 paying a 24c dividend LOL.



When a company's profit margins are squeezed, you can expect a big cut in div distribution.

[Financially dependant]

With political leaders currently fighting over the superfund and now talking about 40% (John Key) of it invested locally, what affect will that have on the TEL share price?

Looks like it could protect the down side??

[whatsup]

Tel should be a investment quality in this economic climate IMHO.

[POSSUM THE CAT]

Whatsup I would like a lot at $2 just to put in bottom drawer

[Dr_Who]

What was the IPO price of TEL?

Does anyone have a chart that goes back to its IPO price?

How much cash do TEL have in their account and how are they gonna pay for the CAPEX in the future? VEry capital intensive to keep up with techonology.

[beacon]

Geez, was i wrong about this market! How wrong can you be .... Yet, we live and learn ..

[Deev8]

GOOD GAWD DOC I GOT BOOED OFF THE THREAD FOR SAYING IT WOULD HIT $3-00 BEFORE IT HIT $5-00. Even i thought it might have taken longer to get this low. This company used to have a share price of over $9-00 before good old TG stuffed it up with her arrogance. Still the averaging down brigade are still hard at it averaging down bleating about dividends. MacdunkNot sure that you were booed off the thread, but a few people said that they thought you had it wrong. And of course you did have it wrong as you said yourself.


I once was proved wrong when i said TEL would hit $3 before it hit $5 and that it was a downtrending dog. It did hit $5

[AJ]

When a company's profit margins are squeezed, you can expect a big cut in div distribution.

The below is from their results referenced earlier in the thread.

At Telecom’s Investor Briefing Day on 10 April 2008 Telecom advised that it was its intention, subject to there being no material adverse changes in circumstances or operating outlook, to pay out the higher of 75% of net earnings (after adding back relevant non-cash items) or quarterly dividends of 6.0 cents per share, for the years ending 30 June 2009 and 30 June 2010. In accordance with this policy, dividends for the first three quarters of the 2009 financial year are expected to be 6.0 cents per share, with the fourth quarter dividend set to achieve the full year payout target of at least 24.0 cents per share.


I can't see the events of the last 2 months as changing their profitablilty circumstances too much. I would still be expecting the full 6c dividend to be paid. Obviously the market disagrees with me.

What is the consenus on this board. Will the dividend be cut?

The only thing I could see as an impact is if they are funding their mobile expansion through debt. But with such larges revenues I wouldn't have thought that the case.

[winner69]

TV said last night lowest ever price for TEL yesterday

Long term chart since April 1991 (was that when it floated) has a low of 2.38 in April 1992

Proves Mr Newton was a guru eh

[Dr_Who]

The below is from their results referenced earlier in the thread.

At Telecom’s Investor Briefing Day on 10 April 2008 Telecom advised that it was its intention, subject to there being no material adverse changes in circumstances or operating outlook, to pay out the higher of 75% of net earnings (after adding back relevant non-cash items) or quarterly dividends of 6.0 cents per share, for the years ending 30 June 2009 and 30 June 2010. In accordance with this policy, dividends for the first three quarters of the 2009 financial year are expected to be 6.0 cents per share, with the fourth quarter dividend set to achieve the full year payout target of at least 24.0 cents per share.


I can't see the events of the last 2 months as changing their profitablilty circumstances too much. I would still be expecting the full 6c dividend to be paid. Obviously the market disagrees with me.

What is the consenus on this board. Will the dividend be cut?

The only thing I could see as an impact is if they are funding their mobile expansion through debt. But with such larges revenues I wouldn't have thought that the case.

Those numbers are forecast or guidances only. In this environment, you can and will find downgrades to profit guidance. The only I can see Tel funding CAPEX is through a rights issue or some form of debt issue on the market. Tel dont have much cash in the bank, so they will have to cut div to finance further debt. This is just further bad news for a firm that is being teared apart by its competitors and the govt.

I am still wondering why the CEO is getting such a high pay when the company is going to the dogs. There are no strategy for TEL to bring it out of this rout.

Disc: not a shareholder

[Major von Tempsky]

TEL is pretty good at forecasting its cashflow and in the present sort of circumstances utilities are what people still keep spending money on and which keep paying dividends.
I can't see them borrowing much or having a rights issue particularly in the present circumstances.

The interest rate is forecast to drop to 6% and rather lower next year.

When the local panic merchants like McDunk and the overseas have to sell at any price weak holders are exhausted and people compare TEL's yield with a much lower interest rate then the investors will come storming back into TEL.
I bought TEL for the dividends not capital appreciation, I don't have any debt, I'm quite happy to laugh at the panic merchants as long as they want to keep panicking.

[macduffy]

I am still wondering why the CEO is getting such a high pay when the company is going to the dogs. There are no strategy for TEL to bring it out of this rout. QUOTE.


Hi Doc.

The CEO came with an established reputation and track record in telecoms and that is something you have to pay internationally competitive rates to attract. Anything ( or, rather, anyone) less would be a huge risk and TEL has suffered in the past in this respect.
I think you need to give him a bit longer to see results from his management. It will always be a hard battle against govt regulation and control but I'm picking that TEL will re-establish its record as a steady earner and relatively high yielding utility.

;)

[duncan macgregor]

[QUOTE=Major von Tempsky;2288
When the local panic merchants like McDunk and the overseas have to sell at any price weak holders are exhausted and people compare TEL's yield with a much lower interest rate then the investors will come storming back into TEL.
I bought TEL for the dividends not capital appreciation, I don't have any debt, I'm quite happy to laugh at the panic merchants as long as they want to keep panicking.[/QUOTE] MVT My system needs people like you so why dont you keep averaging down?. When i hear someone say they dont mind losing dollars in share depreciation as long as they get cents back in dividends it makes me wonder who left you the money to squander. TG ran the sp from over $9-00 to about half that creaming you millions in fees and bonuses. This new guy has the sp dropping as fast as ever with a salary that is four times higher than the prime minister. Still as long as you are happy then who am i to shake my head in amazement. Macdunk

[duncan macgregor]

So at what price would you buy into TEL McDunk? ...

I became an owner last week and bought more this week and will probably buy more under 2.40 (av price for me) unless better targets appear (and there are quite a few!). TEL's attractiveness will change on the 23rd Oct when the good doctor improves TEL risk/reward profile ... Only 3 trading days to go. ;) BELG its not a case of at what price its a case of improving prospects to hold the existing price. Remember this company had a sp over three times higher, but with diminishing prospects. It still is a company with diminishing prospects. Definately a bad long term buy, but might end up a short term trade. Macdunk

[Dr_Who]

How will TEL fund $2.4 billion capital expenditure?

Cut div and raise capital from shareholders?

[shasta]

How will TEL fund $2.4 billion capital expenditure?

Cut div and raise capital from shareholders?

Probably another series of bonds, overseas institutions will use them as a currency/yield play.

[Dr_Who]

Probably another series of bonds, overseas institutions will use them as a currency/yield play.

The words are "credit crunch". It is a hard ask to raise over $2.4 b in bonds in today's market esp with the govt breathing down TEL's neck. Looks like they will have to lower div.

[shasta]

The words are "credit crunch". It is a hard ask to raise over $2.4 b in bonds in today's market esp with the govt breathing down TEL's neck. Looks like they will have to lower div.

Your missing the point here, Telecom Bonds are seen as virtually Govt bonds by the overseas institutions...

They won't do a capital raising & dillute any shares, of course not.

There is plenty of cash out of the share market placed in banks etc, whereas bonds offer a better rate & Telecom isn't going under anytime soon!

Overseas investors use Telecom as a currency play as well

[POSSUM THE CAT]

Belgarion how much are you bidding

[Ptolemy]

The investor presentation on the TNZ website explains their increased capital requirements over the next few years and infers debt financing for the increased capital requirements over 2009 and 2010.

http://www.telecom.co.nz/binarys/telecoms_w850_mobile_network.pdf

There is no plan to cut Divs in the next two years.

[Sheikh Al-Kadhem]

I've just had a look at their investors site and after flicking through their shiny book of dreams. My "back of a fag packet" calculations seem to indicate the market price is very generous :).

So I guess my money will stay in the bank for now, alas :(.

All in my opinion of course, share prices may go down as well as plummet etc. and I could spend all day telling you about the investment mistakes I've made in the past ;).

[POSSUM THE CAT]

Belgarion I am looking for a lot more panic than you are. I was just after your idea of the panic?

[macduffy]

At the risk of this being deemed a "post of little" quality, for what it's worth I agree with 90% of what belgarion's saying.
The main difference is that I'm not game to say that this is the effective bottom so I'll wait for a few more signs of a market upturn.
So many tempting stocks!

;)

[AMR]

Belg are you a motivation speaker by trade? Why the relentless optimisim since subprime began?

But yes I too have noticed the panic, the amount of fear out there seems to suggest a bottom. My friends now have now replaced their "wazzup dog" greetings with a more concerned "Hey how are your shares?" to which I reply I sold out and they slump their shoulders and say they're long term investors.

So yes, definitely an excess of fear.

[craic]

I see that AXA is freezing investors funds as a 'precaution' I wonder what they will do with their 160.5 million TEL shares?

[winner69]

I see that AXA is freezing investors funds as a 'precaution' I wonder what they will do with their 160.5 million TEL shares?

Only frozen mortgage funds .... but one day, just maybe, the markets will not open and then nobody will be able to sell

[fish]

Tel were looking very good value at the close today so bought at $2.27
I presume institutions are dumping to get cash-3 separate sells of 100000 shares were placed in the closing 15 mins at 2.26 2.27 and 2.28 .
Also today re-mortgaged some land with asb at 7.95 % for 6 months to enable me to keep buying-interest on this will be tax deductble as used to buy shares to provide income .

Tel have reduced their dividend for this year to a minimum of 24 cents but could be more
Interest rates are going to keep falling so in 6 months should be able to get a cheaper rate .
Also falling interest rates should have a big effect in time on increasing sp tel through bigger profits and much higher rates of return for investors than fixed interest .

Has anyone done any projections for various scenarios of interest rates over the next few years ?
Is the next tel dividend in 4 weeks time going to be 6cents and no imputation credits ?-ie will we receive 4 cents plus witholding tax credits

[Major von Tempsky]

Watch the announcement tomorrow morning at telecom.co.nz/investorcentre - 10.am. I think, it should confirm the 6cps.

TVNZ (the voice of the Socialist Government) were trying to start a rumour tonight on the 6pm news that there was more Telecom regulation coming up - I'm trying to get to the bottom of that but I suspect that TEL has just moved in line with the DOW today of minus 486 points, given that most of its shareholding is domiciled overseas and TEL is just a peripheral part of their holdings.

[Snoopy]

TVNZ (the voice of the Socialist Government) were trying to start a rumour tonight on the 6pm news that there was more Telecom regulation coming up - I'm trying to get to the bottom of that.


I think you are talking about the commerce commission having yet another look at Telecom and Vodaphone's mobile network termination charges Major. A third party looking to enter the mobile market has complained......

SNOOPY

[duncan macgregor]

Watch the announcement tomorrow morning at telecom.co.nz/investorcentre - 10.am. I think, it should confirm the 6cps.

TVNZ (the voice of the Socialist Government) were trying to start a rumour tonight on the 6pm news that there was more Telecom regulation coming up - I'm trying to get to the bottom of that but I suspect that TEL has just moved in line with the DOW today of minus 486 points, given that most of its shareholding is domiciled overseas and TEL is just a peripheral part of their holdings. Looks like your 6c dividend will be paid major with profit down by a third. I wonder how long before the $2-00 a share gets breached. Its down hill all the way from now on in this sector. Macdunk

[Hoop]

Can't make head or tail of the NZX announcements in notepad form

All the data is at http://www.telecom.co.nz/content/0,8748,200681-1563,00.html?nv=tpd
or
if just want first Quarter presentation (50 pages) PDF format
http://www.telecom.co.nz/binarys/q10809_result_briefing_presentation.pdf

[Major von Tempsky]

I'm quite happy with the TEL presentation at 10a.m. Everything is in line or better with previous guidance, the 6cps dividend is being maintained and is only 74% of earnings. Southern Cross dividends are coming in rather better than expected, the capital expenditure on AAPT is going to reduce substantially, TEL is approaching the government about having its return on investment in some activities restricted to 6% compared to 15 to 16 per cent in the EU and says its found some sympathy already on this.
Also said that one Tel outfit in Australia has gone under already in the present economic situation.
Vodafone must be hurting badly with its kamikaze approach and stands to lose far more proportionately and absolutely than TEL in any further regulation. Pity that Vodafone aren't quoted on NZX so we could enjoy their pain :-) - wouldn't be surprised to see Vodafone get sold off by their parent at some stage.
Of course the simple minded headline writers still haven't got the effects of the Yellow Pages sale out of their tiny little brains yet, when they do we could see the entrance of realism.
At just 24 cps dividend a year (and I have a couple of years worth of imputation credits saved up in my personal investment company) TEL is a damn good sustainable yield on present prices which is more than can be said for most of the NZX. And of course when imputation credits return its will be 50% better! Plus the growth further out that Paul Reynolds is talking about.
(P.S. I don't intend to bandy words on this thread with totally unqualified idiots like MacDunk who don't own any TEL shares and who specialise in agent provocateur tactics.)

[Deev8]

Its down hill all the way from now on in this sector. MacdunkYes - there's a rumour that we are all going to give up telecommunications completely.

[fish]

Yes - there's a rumour that we are all going to give up telecommunications completely.

I have a strong feeling the source of that rumour has been out buying TEL today .
Bought some more myself today-they are such good value -in the next 13months a minimum of 30 cents is going to be paid out in dividends and thereafter its planned to increase dividends plus imputation credits will be added.
Meanwhile the macdunks of this world will be getting 6% or less on their bank investments next year less tax and inflation

[ritchie]

whats the cut off date you have to be in on for the divie plse

[Financially dependant]

I have been following the TEL share price lately and my theory suggests that we will see a good bounce on Monday.

There is good resistance at the 220c mark with yield investors picking up cheap stocks with close to 20% yield (high buy side numbers).

If the Nat's get in this weekend it will add fuel to the fire (fibre investment plus redirecting kiwi saver into local investment).

The only downer would be a bad day on the dow but is all green ATM!

Lot's of if's and buts but seems to be panning out!

[Lizard]

whats the cut off date you have to be in on for the divie plse
Record date (http://www.nzx.com/markets/NZSX/TEL/announcements/4753149) 28 November.

(In Australia, it will trade ex-div from 24/11 - I'm not sure whether you need to allow time for settlement in NZ prior to record date, but if in doubt, check with your broker)

[Snoopy]

There is good resistance at the 220c mark with yield investors picking up cheap stocks with close to 20% yield (high buy side numbers).

If the Nat's get in this weekend it will add fuel to the fire (fibre investment plus redirecting kiwi saver into local investment).


I couldn't resist either Financially Dependent. The 20% yield is of course historical. I bought at $2.24 (sadly my average entry price is rather higher, but that is water under the bridge). With a 24c dividend the gross yield is 10.7%, without imputation credits for 2008 and a planned 16% gross yield with imputation credits for 2009 it is a compelling story.

One negative is that under Reynolds there seems to be a 'build it and they will come' mentality. Whereas under the much criticised Gattung leadership, at least the profitability of the company was in balance with the capital expenditure being made. Having said that IMO the much share reduced TEL share price more than compensates for this risk.

If I was braver I would have just doubled my holding in Telecom last week. Fortunately or unfortunately there are other compelling investment opportunities out there for my cash. I will probably buy some more TEL shares over the next twelve months. But with the state of the world markets and some apparently crazy offshore holders, I am not convinced that timing to the day or week of my TEL share purchases is of the essence.

SNOOPY

discl: hold TEL

[Zaphod]

One negative is that under Reynolds there seems to be a 'build it and they will come' mentality. Whereas under the much criticised Gattung leadership, at least the profitability of the company was in balance with the capital expenditure being made. Having said that IMO the much share reduced TEL share price more than compensates for this risk.


I don't think that this is solely the result of Reynolds; Labour's ideology has been one of increased competition and investment. If Telecom had not complied, the company may have been ripped apart rather than operationally separated.

[peat]

Tel gotta be worth more on Monday with Nats in due to the proposed subsidies I mean investment.

[duncan macgregor]

I told SNOOPY a few pages back that i see the day when wires along the wayside will be obsolete. I think if phones, and computers were invented today, we would not bother to have wires and poles along the roadside. The new technology might send messages along the power grid system or simply use wireless.
TEL have this perceived reputation of being the greedy giant holding back progress in this industry, forcing the govt to open the industry up to competition. This in turn will only reduce the bottom line for share holders, who have been brainwashed into watching the TEL management rip the company off swilling at the trough.
TEL will have a smaller income base with an increased developement cost to even stand still. TEL might end up in the used pole and scrap wire industry sooner than they expect.
I would think the sp will continue to downtrend along with profit margins until management start reversing the poor public image. Macdunk

[Major von Tempsky]

To allow rational, logical and informed discussion on TEL to resume after a posting by you-know-who.

I see TEL are up 15cps today, I would suggest that they have bottomed.

And I would further suggest that the change in government provides a much better environment for TEL where for example a reasonable investment return is allowed on TEL's huge investments.

What has happened has been theft by the State and various commentators (Matthew Hooton for example) and some people in the Nat Party have noted that TEL has had a very rough deal. TEL is the biggest investment for many funds and investment vehicles and there are lots of people who can see it has been picked on.
Sooner or later (sooner in today's economic environment) Vodafone's overseas masters and ditto Telstra-Clear are going to start demanding a decent return or letting it be known they're interested in a trade sale. Marginal, smaller Telcos and IT firms will be goin to the wall, I read of one just the other day.

[Dr_Who]

VCT is way ahead on the broadband fiber cabling. TEL is playing catch up game constantly and in the meantime the competitors are eating them alive.... WOOF WOOF!

[craic]

Blloks. TEL are a majority repository for overseas fund managers AXA 160M Coowlth Bnk 193M wstpk Bank 151M to name just a few. The bits of cable around AK are of no consideration TEL price is governed by the big overseas investors and they are acting and reacting to the shuffle thats going on in the financial world. The miniscule buying and selling thats going on here and affecting the quoted price is of no consequence in the long term.

[peat]

I see TEL are up 15cps today

And I would further suggest that the change in government provides a much better environment for TEL where for example a reasonable investment return is allowed on TEL's huge investments.

What has happened has been theft by the State

I think these were my points. well articulated MvT. Under a Nat govt its got to be a whole lot less likely that the State will make another intrusion on business as it did with TEL and with AIA. So immediately there is less risk. Probably of no consequence with AIA now, its a done deal, but perhaps now VCT is more secure as well.

Even John said something about it today
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10542144
Mr Key told Radio New Zealand: "Hopefully just a change of government will give some confidence to the economy".

PM Talkin his book heheh

[onlinesid]

TEL is half price compared to beginning of the year. Is this a good time to buy?

[TwinkleToes]

The answer to that question depends on what you think the future earnings are going to be. Is the E going to shrink; if so, by how much?

[duncan macgregor]

TEL is half price compared to beginning of the year. Is this a good time to buy? When T GATTUNG took over the reins the sp was over $9-00.
When she left after creaming the company with her snout in the trough the sp was about half that. The 90 day movig average is about $3-60, the 30 day moving average is about $2-40 and the sp is $2-38. If you are into TA you would leave it well alone. If you are a fundamental type investor then you look at tomorrows prospects compared to yesterdays results. The dividend results get smashed down with the dropping sp making it a bad investment in the past.
The prospects for the future are decreasing in tandem with the sp. Fishing about for the bottom in a down trending share is a very risky business especially a company that has a poor public image. The downtrending NZ dollar comes into play with this company which looks like another negative. Its only my opinion which hasnt changed since the sp was three times what it is today. Macdunk

[Dr_Who]

Both the fundamentals and the TA looks sick for TEL, I am afraid. They will have to either reduce div or cap raising to fund ongoing CAPEX. Competitors are eating away TEL's bottom line. TEL is more reactive than proactive. Thats what you get when you've been complacent for far too long.

[Zaphod]

I told SNOOPY a few pages back that i see the day when wires along the wayside will be obsolete. I think if phones, and computers were invented today, we would not bother to have wires and poles along the roadside. The new technology might send messages along the power grid system or simply use wireless.


Wireless networks have a number of technical drawbacks, such as the issues surrounding coverage, interference and signal contention.

IMO there will always be a place for both fixed line and wireless access technologies. It is simply a matter of choosing the technology that best fulfils a customer’s requirement.

[onlinesid]

Another drop in the price in the last few days ... why? Is it because of more shares alotment?

[AJ]

The fall is just the general trend of the markets in the last couple of days.

Still big resistance at $2.20 by the look of it. And I think the first dividend of 6c is safe atleast. I would guess the following dividends will also meet their prediction/promise of 6c.

Will be interested to see if the $2.20 mark holds on Monday if there's another big down day in the states. .FTSE has started off mildly up.

[Zaphod]

There's a fair chunk of business in this acquisition, as they service some of NZ largest companies in key sectors such as Oil & Gas, Primary produce and Education sectors.


Gen-i grows with North Island acquisition
IT services company buys-out more franchise operators

Gen-i has acquires the Gen-i franchises operated by Real Time Computing in the Manawatu, Wanganui and Taranaki regions

The company says the buyout is designed to strengthen Gen-i’s service delivery, ensure a greater focus on Gen-i’s business priorities and extend its technical reach and capabilities.

“The RTC franchise, known locally as Gen-i Central and Gen-i Taranaki, is a very successful business employing over 70 people across offices in New Plymouth, Palmerston North, Wanganui and Hawera,” said Steve Mills, Gen-i’s general manager of NZ corporate sales. “It is the largest of our regional franchise groups, with a diverse range of clients across the local government, health, agriculture, corporate and energy sectors.”

RTC had been placed on the market by its owners, and the acquisition is a result of many months of planning, Gen-i says. Settlement is targeted for 12 December.

Real Time Computing became a Gen-i franchise in 2005, after a long-standing local presence as a Computerland franchise. It has offices in New Plymouth and Palmerston North and satellite offices in Wanganui and Hawera.

Gen-i bought another franchisee, Computer Plus Otago, in February.

[Lawso]

Sorry, Zaphod, but WTF has this got to do with TEL?

[shasta]

Sorry, Zaphod, but WTF has this got to do with TEL?

Telecom took over Gen-i a few years ago, & they have been "merging" the businesses ever since.

At a previous employer, i wanted to have Gen-i come in & overhaul the IT network, but they weren't setup for that kind of service.

Basically it's an add on to Telecom's services

[Zaphod]

Yes, Gen-I is the ICT wing of Telecom and has some exciting opportunities before it, especially in the managed services area that links their IT and Telecommunications products.

You can read a bit more about them here:
http://www.gen-i.co.nz/about/Pages/about.aspx

Note that they service both the public and private sectors, although the big hardware and software vendors are muscling in on the public sector in a direct fashion these days.

Perhaps this is a good opportunity to start a discussion about Gen-I and their role in the future of Telecom? From what I can see here, it has hardly (if at all) been discussed.

[Zaphod]

I have not seen Telecom discuss Gen-I's revenues separately, however considering reported (but undisclosed) "strong revenue growth", ar 12.5% market share of the entire NZ ICT market, offices through-out NZ cities, a nascent presence in Australia and the 2500-odd employee's, I think it is safe to say that it is and will continue to play a significant part in Telecom's future either way.

[Wozza]

I have not seen Telecom discuss Gen-I's revenues separately, however considering reported (but undisclosed) "strong revenue growth", ar 12.5% market share of the entire NZ ICT market, offices through-out NZ cities, a nascent presence in Australia and the 2500-odd employee's, I think it is safe to say that it is and will continue to play a significant part in Telecom's future either way.

Page 6 - http://www.telecom.co.nz/binarys/q10809_result_briefing_presentation.pdf

Gen-i is responsible for approximately one third of Telecom's revenue in NZ. You would be right to consider this significant.

[onlinesid]

2.49 closing today :)

One question from a newbie. How do I find out about deviden? If the company gives out divident and when?

[777]

2.49 closing today :)

One question from a newbie. How do I find out about deviden? If the company gives out divident and when?

Start by going to their website. Most if not all companies websites have an investor area where what you are asking is available. By the way it is dividend not dividen or divident.

http://www.telecom.co.nz/stream/0,8747,200679-1547,00.html?nv=sd

[Yossarian]

2.49 closing today :)

One question from a newbie. How do I find out about deviden? If the company gives out divident and when?

That was just some end of month "finessing'... the sp jumped just before close; back down this morning.

This stuff really annoys me...

[macduffy]

Telecom gets $797m bid for AAPT
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10546091

An interesting development ...

Assuming TEL can conclude satisfactory arrangements for the Aussie end of its trans-Tasman business, it sounds like a good deal. Let's hope it goes through!

[Dr_Who]

Where will the growth for TEL come from after the sale of AAPT? Certainly not from the NZ market as they are being eroded by the competitor and Govt regulation.

[Zaphod]

Where will the growth for TEL come from after the sale of AAPT? Certainly not from the NZ market as they are being eroded by the competitor and Govt regulation.

With respect to both Australia and New Zealand, IMO Gen-I could quickly become responsible for more than 1/3 of revenue.

[Zaphod]

There are certainly growth opportunities for that division of the operation in both NZ and Australia.

We've had significant problems finding suitable corporate-level IT partners in Australia, that have the necessary critical mass. From our experience, there are a lot of small localised operators, but few large national providers. This IMO is a significant opportunity for Gen-I.

[Major von Tempsky]

Telecom is the sum of a whole lot of parts doing different things and obviously from the reports some parts are growing quite quickly and equally obviously in the future they will therefore be a much bigger percentage of Telecom.
Most analysts make the mistake of looking at Telecom as a static defensive operation instead of a dynamic one.

Investors who hold Telecom don't really care if landlines or whatever die and Telecom ends up as just Gen-i as long the company grows, imputation is restored and dividends grow.

Similarly in the past analysis that showed Yellow Pages wasn't going to do too well in the future ended in Yellow Pages being sold off to reckless private capital bods and a capital return made to TEL holders.
If some outfit wants to make a reckless enough bid for AAPT I'm sure that would be sold as well (and sucks to all the TEL enemies who have been beating as hard as they could on AAPT for yonks).

[AMR]

Seems to be a base forming for TEL. An RSI divergence too, OBV seems to be bottoming out as well. First time I've not been a TEL bear for a long time.

[fish]

[QUOTE=absolut-advance;236513]Personally I have a serious dislike for this company and would never invest a penny in it, but I see what you mean, it appears in consolidation/accumulation phase.
The Zone between $2.50 and $2.60 could provide resistance however. Clearance of $2.60 would be a Bullish sign in my opinion. But first it has a few other hurdles to clear.$2.20 Providing Support for now.

Sp will rise as interest rates fall for 2 dominant reasons
1)Cost of borrowing is major expense for Telecom and this should fall rapidly.
2)Will make more sense for investors to get a 10% plus dividend from Tel than 5% or less in bank
Currently I have been buying between 2.23 and 2.40 -minimum of 24cents dividend this year increasing next year and tax credits returning-when tax credits resume dividend would be equivalent to 40cps if stays at present level-although i believe if interest rates fall enough and costs fall substantially-could be lots more .
Am buying using my asb margin lending account-interest now down at 8.3%pa

[Yossarian]

I saw some speculation that a global recession would play into incumbents' hands as other players will find it harder to compete and/or find funding and will be less likely to invest unless the business case is secure. This would deter the more speculative 'build and they will come' attitude prevalent in some smallish telcos.

Also consumers might hunker down and stick with what they know?

[warthog]

So they've finally shut down Ferrit.co.nz ... Should save them a few bucks.

Another one of Gattung's great ideas put to rest. Even the name alone counted this business out from day one.

[Stranger_Danger]

Oh no, Ferrit has closed!

Where will I find another site that has market dominance, a clear point of difference and reason to exist, pricing power with most of it passed back to the client and a compelling offering that results in it going viral rather than needing to spend tens of millions of dollars on advertising?

Oh wait..Ferrit was just a site with credit card processing facilities, lists of items that other suppliers were selling and a brand consisting of a dumb name and a fortune spent, operated by a dinosaur telco?

Oh....and they took 4 years to shut THAT down...?

Oh dear.

P.S This is the upside of recession. Things that should never have existed cease to exist.

[lissica]

Oh no, Ferrit has closed!

Where will I find another site that has market dominance, a clear point of difference and reason to exist, pricing power with most of it passed back to the client and a compelling offering that results in it going viral rather than needing to spend tens of millions of dollars on advertising?


It's funny, I was just thinking how successful something like Torpedo7 was compared to Ferrit, when they both started about the same time I think.

[warthog]

Oh no, Ferrit has closed!

The sow was in the market for a vacuum cleaner so the hog was sent to undertake the acquisition.

Now, call the hog old-fashioned for pondering the fine-print of the Ferrit terms and conditions, but they basically spelt out the end of personal privacy for any information given over to the sneaky beast, so LV Martin & Son got the sale for a few dollars extra.

LV Martin & Son weren't much better in terms of service, either. The hog predicts a similar fate to the hairy beastie unless things change there.

[Deev8]

LV Martin & Son got the sale for a few dollars extra.Didn't LV Martin & Son also sell through Ferrit?

It always seemed like a perfect recipe for confusion, having two internet sales channels that clearly identify the same retailer with different prices and different terms and conditions - buy direct for $x plus shipping costs, buy through Ferrit for $y including shipping etc.

[Major von Tempsky]

Any apology from Druncan MacGregor yet?
I well recall him trying to panic TEL shareholders into selling at $2.15 on the grounds of pure personal prejudice and they are now $2.66 and likely to go considerably higher.

Speak Up Druncan!
We'r'all listening this time....

[craic]

I have 20,000 reasons to rejoice here and listening to the financial gurus on talkback, I see a rush on these shares although TEL was never mentioned. With a P/E of about six and a 10% return in a market where people are likely to get less than 3% on bank deposits shortly, not buying TEL is a form of insanity. Even if the buy-in price doubles, it will still be better than bank interest. I heard Mary Holmes on 2ZC yesterday and what a dead loss she is!

[Phaedrus]

On 20/10/08 TEL began firing Buy signals when a 100 day RSI oscillator broke above its OverSold level for the first time in years. This was an isolated unconfirmed signal and the OBV (On Balance Volume) was in a clear downtrend. Almost exactly 3 months ago TEL made a Bullish Divergence with the RSI oscillator (green circles). Note that volume was below average at that time and so it did not confirm this signal. Two months ago TEL gave a trendline break buy signal (small green arrow). Again, volume failed to confirm this signal. A month ago, the OBV gave a Buy signal when it broke above its trendline for the first time in over 6 months. Volume was rising, but was still below average. A week ago, TEL broke above the trading range it had been in for 3 months. Note the volumes in the histogram plot at the bottom of the chart (Green bars mark "Up" days and the blue line marks the average volume level).

http://h1.ripway.com/78963/TEL130.gif

[onlinesid]

Thanks Ph ... and AA, AMR for the previous thoughts ... Those who had done their homework on TEL, and the likely OCR movements, and then acted on AA and AMRs observations on the 10/12/08 would have entered between 2.25/35 without much difficulty and may now be holding large parcels ...

If the uptrend continues, can I mark up a victory for the FAs?

Question now is: Should I be averaging up? ... ;) ... (Or wait for FBU's results?)

That's exactly my question too! :-D

[duncan macgregor]

Any apology from Druncan MacGregor yet?
I well recall him trying to panic TEL shareholders into selling at $2.15 on the grounds of pure personal prejudice and they are now $2.66 and likely to go considerably higher.

Speak Up Druncan!
We'r'all listening this time.... Major , What a short memory you have. I get ridiculed for saying the market would downtrend leading up to a crash after the olympics. I then get told that the only reason i got out the market is because i was to stupid to buy shares in a downtrend. Now i get told by some dumb cluck that i missed out on a good thing by not riding the share down from $4-40 at the start of the year to whatever is is today not foreseeing the dead cat bounce. Keep buying major you deserve them.
The market is in great danger of continuing to trend down only a fool would think otherwise.
I take it major you think otherwise so good luck all the best. Macdunk

[Phaedrus]

If the uptrend continues, can I mark up a victory for the FAs?

TEL a victory for FA's? 'Fraid not Belg - quite the reverse! In fact TEL has been a fundamentalists nightmare. Seduced by the high yield, they considered they were buying "value" as the long downtrend ground inexorably on. Look back through the threads and you will find fundamentalists buying up large at prices in excess of $6.00.

More recently, back in March when TEL was trading at $3.80, ShareTraders most respected fundamental analyst estimated its value at "around $5.20".
Your comment Belg? "Largely agree with you Snoopy (but) mines a bit lower as my expectation of 'growth' is less and the cost base may be hard to control in the short term. A Belgarion vote for TEL!!!"

MvT, another staunch FA advocate, calculated TEL's worth at that time as "somewhere well north of $5.00".

TEL was in a short, medium and long-term downtrend.

In short, TEL has been a textbook example of the wisdom of staying well clear of downtrending stocks. A victory for FA Belg? You could hardly have chosen a worse example!!!!!!!!

[macduffy]

Question now is: Should I be averaging up? ... ... (Or wait for FBU's results?)

QUOTE.

Given that interest rates probably still have some way to fall, TEL still looks a Buy to me but strictly on the basis of a short term trade with a tight floating Stop-loss.

;)

[ratkin]

Its FA which will decide the long term future of the stock.
The rest is just short term noise


Do you think that dividend will be maintained though ?

[Snoopy]

More recently, back in March when TEL was trading at $3.80, ShareTraders most respected fundamental analyst estimated its value at "around $5.20".
Your comment Belg? "Largely agree with you Snoopy (but) mines a bit lower as my expectation of 'growth' is less and the cost base may be hard to control in the short term. A Belgarion vote for TEL!!!"


You are referring to this post Phaedrus.

http://www.sharetrader.co.nz/showthread.php?p=191670&highlight=%245.20#post191670

I think it is important that sharetraders see that so that they get the full context of what I said.

Back in March 2008 Telecom had not committed to building a new 3G WCDMA mobile network, a $574m investment that is due for completion in June 2009. Since I was valuing Telecom by yield that investment decision, and the faster that expected role out of fibre to node for improved broadband, has affected the yield for this financial year. These are major factors in the reduction of Telecom's quarterly dividend from 7cps over FY2008 to 6cps in FY2009. So Belgarian has been proved right when he said the cost base might prove hard to control in the short term.

The loss of imputation credits over this period of expanded new investment will also affect my 'yield valuation' of Telecom. CEO Paul Reynolds is playing a medium term game here. At this stage I think we shareholders have to back our new CEO's instinct that some short term pain will be worth the long term gain.

So what is my yield valuation of Telecom now? If we take the term deposit I rolled over two weeks ago as a 'rate indicater' of 4.8% and I use my two percentage points above bank rate rule of thumb that means we should be looking at a gross yield of 6.8%. Based on an annual dividend rate of 24cps (with no imputation credits) we can calculate a 'fair valuation' of the Telecom share price as follows:

24/P=0.068 => P= $3.53

For FY2010, if we assume 'partial imputation' (let's say 50%) then we can recalculate the fair value share price as:

24/P=(0.034+0.034*0.7) => P=$4.15

In summary at $2.60 odd, IMO there is plenty of room for upside in the Telecom share price over the next few months.

SNOOPY

discl: hold TEL

[winner69]

.......... and I use my two percentage points above bank rate rule of thumb that means we should be looking at a gross yield of 6.8%. .........

SNOOPY

discl: hold TEL

Question - why only 2% for the 'equity risk' premium for TEL

Especially when Telecom bonds (which probably rank ahead of TEL shares) appear to yielding about 6.6%-7.0%

So add 2% points to that and to get a 8.8% yield on the share 'fair value' for the share is $2.72 .... not far from where it is today ....... as Phaedrus would say spooky eh ... even using your assumptions about equity risk premiums


Interesting subject what is a reasonable equity risk premium, especially seeing there has been effectively a negative premium for the last few years and that is why capital loss (even on solid NZ shares like TEL) has been so horrendous

Just challenging your assumptions

[Major von Tempsky]

Waal, you could always invest a finance company, you know the sector well known for breaking the rules on diversified investments, related party transactions, loans to directors, and risky loans to half baked property developments including resort development in Fiji, and a continual stream of whopping great lies - and with interest rates galloping backwards with a long way to go yet.
Or you could invest in a government (taxpayer) guaranteed bank with returns galloping rapidly backwards to 3%.
Or you could buy a house with property due to fall another 6% or so this year. Or commercial property to find that your tenants don't renew their lease and its impossible to find new ones.
Or you could buy gold bars and keep them under the bed on account of the widespread history of corporates (Ray Smith &) making off with them, for a zero return.
Or you could send the money overseas for a lower return than NZ to an economy in worse shape than NZ.

Just challenging your assumptions.

Or you could invest in TEL which has already hit bottom, far lower than it should have gone by any rational analysis. And in Sept this year at least partial imputation will be restored and later full imputation and some growth. For a potential yield of at least 13.8% and a reliable present day minimum floor yield of 9.2%.
It's a no-brainer. And when both Major von Tempsky and Belge agree on something it's a very rare event that even dull minds should take note of.

[ratkin]

How safe is the div though? Nobody seems to want to answer this

[Dr_Who]

How safe is the div though? Nobody seems to want to answer this

Doesnt look very safe at all.

TEL will need to spend a huge amount to upgrade the infrastructure. Tehy will need to either raise debt or borrow. Either way the shareholders will have to pay for it.

[duncan macgregor]

The point of the whole debate is will the very low dividend which i base on the log term holders buy in price be mantained?. I would hazard a guess and say very unlikely, considering the ammount of money required to keep pace with upgrades. When good old TG took over the reins she destroyed half the share price during her reign. On top of that she creamed millions in salary and perks.
Today we have had a dead cat bounce with the same bunch of idiots telling us its a great buy. Its the future that counts, the past is over, its tomorrows prospects that we have to work out. Increased expediture which will reduce dividends, or borrowing which will reduce profit just to keep pace in this fast changing industry. The TEL prospects have steadily worsened over the years with a steadily declining share price. I dont see much changing in this hostile investing environment. Macdunk

[ratkin]

Looking forward to this high speed internet thats supposedly arriving soon. Does anybody know how to find out how far you are from an exchange?

[winner69]

Looking forward to this high speed internet thats supposedly arriving soon. Does anybody know how to find out how far you are from an exchange?

Ratkin ... you are probably closer to a fibre fed roadside cabinet ... I'm kms away from from the nearest exchange and broadband wasn't worth geting for years ..... until they put one of these cabinets just down the road


With new super duper things i wonder what the 'small premium' to get it will be?

[ratkin]

Has to be another plus for the company , its going to charge more for something that is fairly essential.
Its going to make a big difference personally , will be able to watch live sports from around the world , Will be able to trade prices on UK horse racing and world wide tennis events Thats if it is as fast as they claim.

Everybody is going to want to watch TV etc on their PC and like they say this is going to chew through the data which will make even more money for telecom.

The day when we are all watching content from the internet isnt far away , there are also game consoles which increasingly use the internet for multiplayer games etc. Even radios are now turning to the internet for their reception , much better than shortwave

People making a big mistake if they think telecom just a declining line rental company. Internet providing is the new elecricity , and telecom going be right at the centre of it

[Snoopy]

TEL will need to spend a huge amount to upgrade the infrastructure. They will need to either raise debt or borrow. Either way the shareholders will have to pay for it.


TEL are already spending huge amounts upgrading their infrastructure, and it is increasing. To be specific about the capital spend over the last few years:

FY2003: $600m
FY2004: $608m
FY2005: $703m
FY2006: $751m
FY2007: $844m
FY2008: $987m
FY2009: $1,100m (2008 A/R company forecast)

That last figure will be higher as Telecom has subsequently decided to roll out 3G WCMDA nationally. So since 2003 capital expenditure has more or less doubled.

I guess you can argue that in times of rapid technological change, even this amount of expenditure may not be enough. But when you compare this with what the competitors are spending (Telstra $0, Orcon - a few switches in some Telecom cabinets in Auckland), you would have to conclude that Telecom is likely to end up in a relatively stronger position.

IMO it is unlikely that Telecom will have to raise more debt. Last year TEL gave shareholders back $1,113m of capital to shareholders because they were sitting on too much money. Do you really think they would have done that is raising more funds from shareholders or banks was anywhere near the top of their agenda?

Dr Who is right when he says shareholders will have to pay for infrastructure upgrades. But this expenditure has already been planned and budgeted for. Net profit for Q1 FY2009 was $149m (that is after the greatly increased capital expenditure I was detailing earlier), which works out at 8.1cps. Yet the amout paid out to shareholders was 6cps in dividends.

Consequently I think any suggestion that dividends will be cut still further within the next two years at least, are at best ill informed and at worst scaremongering.

SNOOPY

discl: hold TEL

[Zaphod]

What continues to amaze me is that the fourth business unit of Telecom, namely Gen-I, that contributes 1/3 of the total revenue stream is hardly mentioned in these forums. In fact when I bought the name up many months ago, I was questioned as to WTF it had to do with Telecom!

Can you accurately calculate future SP, dividend rates and future revenue streams while ignoring such a substantial portion of the business?

[winner69]

What continues to amaze me is that the fourth business unit of Telecom, namely Gen-I, that contributes 1/3 of the total revenue stream is hardly mentioned in these forums. In fact when I bought the name up many months ago, I was questioned as to WTF it had to do with Telecom!

Can you accurately calculate future SP, dividend rates and future revenue streams while ignoring such a substantial portion of the business?

Still pretty passionate about Gen-I there Zaphod .... as Belg once pointed out must be emotionally tied to them?

I don't think many ignore Gen-I .... most know that Telecom deal with both consumers as well as big business/corporates as well .... its just that they don't mention these segments by name.

Yes Gen-I does drive 26% of Telecom revenue and EBITDA. No doubt where Telecom have opportunities for growth even though the aspirations shown on presentations are just for continuation of past growth ... albeit trying to manage margin pressures. Chris Quin is a good guy and has the capabilities to drive this business unit (or should u say department) forward.

Is that how you see it?

[Zaphod]

Having mentioned Gen-I once in a post I am quite bemused that it would be classed as being emotionally tied to the company!

What I do see is that the division is neither mentioned nor factored into the vast majority of SP/Div etc. calculations posted on here, despite it comprising 1/4 (thanks for the correction!) of the revenue stream. The vast majority of posts concentrate on the core telecommunications service & technology provided by Telecom itself. That is of a concern, since Gen-I have steadily been building market share in NZ particularly amongst the large corporates and represent one of the only large IT service companies that have true national coverage.

From a hardware perspective Gen-I's margin is rather thin, however their main revenue stream comes from solution analysis, design, development, service and support. This is an area that IMO, is likely to see further growth.

[Major von Tempsky]

If you guys bothered doing any reading you would have read TEL's words about maintaining dividend at 6cps over the year ahead.
Maybe ignorance is excusable for non TEL shareholders (but why bother commenting from a position of ignorance?).....but I've always found the best way to read everything about a company is to buy some shares in it.

[macduffy]

Hi Major.

I'm a TEL shareholder.
Maintaining the div at 6cps per quarter is/was certainly TEL's intention. However, that statement was made some time ago and a lot of water, most of it pretty dirty, has flowed under the bridge since then. We'll have to wait to see if that intention can be fulfilled, and for how long.

Cheers

;)

[bull....]

I think telecom only stated they would maintain the current div for a set period of time , think it was 2 years.

[macduffy]

I think telecom only stated they would maintain the current div for a set period of time , think it was 2 years.

.... but I would think that all bets could be legitimately called off in the circumstances of a global credit crisis and world-wide recession?

;)

[Dr_Who]

Do you guys know that future overseas calls have no boundries?

With high speed internet, there is a number of companies that offer overseas phone calls from the internet for free and very cheap rates. Ive downloaded a program that allows me to make phone calls to UK etc for free and other countries at very cheap rates.

http://www.internetcalls.com/en/index.html

As for the ISP, it is a very competitive sector with VCT in on the game.

I see TEL is a dying dinosaur with eroding profit margins.

[duncan macgregor]

I notice this good staunch NZ company doing its little bit to wreck the NZ economy. TEL about to out source 250 jobs to the Philippines. Bad enough all the factories fleeing the country to slave labour countries in order to compete, but surely this is getting beyond a joke. I can see the day when NZ will be a country of peasants milking cows, or herding sheep with all the bright young people forced to work over seas. Dont tell me MVT that they have to do this to compete when they pay the top brass extortionate salaries, and perks. Its on similar lines to the Wells Fargo bank recently bailed out sending their executive staff on a junket trip to Lasvegas. Macdunk

[lissica]

I notice this good staunch NZ company doing its little bit to wreck the NZ economy. TEL about to out source 250 jobs to the Philippines. Bad enough all the factories fleeing the country to slave labour countries in order to compete, but surely this is getting beyond a joke. I can see the day when NZ will be a country of peasants milking cows, or herding sheep with all the bright young people forced to work over seas. Dont tell me MVT that they have to do this to compete when they pay the top brass extortionate salaries, and perks. Its on similar lines to the Wells Fargo bank recently bailed out sending their executive staff on a junket trip to Lasvegas. Macdunk

It's all relative isn't it ;o)

I work in Australia. Many would consider NZ wages to be 'slave labour' also.

[foodee]

MacDunk

I hear you.
Would be interested in your ideas(if any) on how to deal
with these situations.

[duncan macgregor]

MacDunk

I hear you.
Would be interested in your ideas(if any) on how to deal
with these situations. You fight for your countries position first, You look after your own interests against the opposition. You never surrender your advantages giving it to the opposition on a plate. If you dont your life style level will drop to their life style level. You only have free trade with richer life styles than your own, unless you want to descend to theirs. We in NZ are heading into third world status simply because we are to stupid to work out the cold harsh reality of the road we have taken. When all your intelligent offspring live and work overseas, you might think that old macdunk was right after all. Macdunk

[peat]

someone else already said it, and its true - you're obsessed with being right MacDunk :p


a corporation doesnt have the same interests as a state. telecom doesnt care about NZers std of living only its shareholders. the FTA with China is a different issue

[duncan macgregor]

someone else already said it, and its true - you're obsessed with being right MacDunk :p


a corporation doesnt have the same interests as a state. telecom doesnt care about NZers std of living only its shareholders. the FTA with China is a different issue Thats why i dont care about telecom. Its a NZ company that should first and foremost look after its workers best interests which includes the people at the bottom of their workforce. I always looked after my workers best interests and was well rewarded in return. TEL look after the top brass at the expence of all the little people. Future forecast is the downtrend in share price to continue. Arrogance receives its own rewards as you will notice in returns to the shareholders over the last few years. Macdunk

[Year of the Tiger]

Outsourcing, you know it does have it's entertainment value. And cheaper than sky as well.... :D

Probably not quite the same thing but good for a laugh... happy listening

http://www.overstream.net/view.php?oid=shrttdrusca6

YOTT

[Year of the Tiger]

Macdunk, you're old? :eek:

I had you pegged as a young buck. ;)


Yankiwi, you really must come along to an Auckland get together of the troops. Macdunk has been to a couple that I've been to and I assure you he could toss the caber and pipe the haggis as well as any young buck from Scotland... ok ok, so maybe I exaggerate a tad... :D

Macdunk is a good dude, just ask Shrewdie, Serpie, Oiler, Strat... and the list goes on. They all agree to disagree on most issues and that is a healthy attitude.

He may have rested back into the flow of "sort of" retirement but I think there is a lot of fight in Macdunk yet..

Here's hoping he gets down to the big metropolis over the winter months for a catchup with the Aucks crew....

YOTT

[foodee]

You fight for your countries position first, You look after your own interests against the opposition. You never surrender your advantages giving it to the opposition on a plate. If you dont your life style level will drop to their life style level. You only have free trade with richer life styles than your own, unless you want to descend to theirs. We in NZ are heading into third world status simply because we are to stupid to work out the cold harsh reality of the road we have taken. When all your intelligent offspring live and work overseas, you might think that old macdunk was right after all. Macdunk


No, no MacDunk, you have got me wrong.
I happen to agree with you.
I am merely interested in how the tide could be turn.

Cheers

[minimoke]

As an aside is anyone getting email via telecom or is just me?
edit - nope not just me as an un-happy customer! It looks like officemail and @xtra.co.nz customers are without a service

[Dr_Who]

Anyone want to guess the TEL half year profit?

Can TEL meet their forecast profit?

[duncan macgregor]

I would think that TEL might have had more up top than announce 250 jobs lost to the philipinnes before the govt announces 1.5 billion in infrastructure to up grade and install fibro cable. They have learned nothing it seems their arrogance in times like this is ridiculous. I venture to say that the shares will take another hit and the downtrend will continue. Macdunk

[The GrandMaster]

Point taken. But one can't help thinking that if they were to repatriate their call centre you would be lambasting them for not looking after their shareholders' best interests.
hiawatha

shush - you'll give away his secret

[craic]

Another hit today? As long as its a home run, I don't mind.

[ratkin]

Much of the 1.5 bn infrastructure spend going be coming telecoms way

[dragonz]

Much of the 1.5 bn infrastructure spend going be coming telecoms way

Totally agree ratkin. Brought on close @ $2.59. Large turnover today.

Would be nice to see a quick movement back to $2.80 tomorrow.

[bull....]

What a shocker profits down 59%

[dragonz]

What a shocker profits down 59%

I'm not suprised. They have been pissing thier customers off for years. Mind you I had a hell of a time with Vodafone until I got thier CEO's personal email address and started sending them copys of all my correspondance with customer service. Fixed the problem real quick.

Sold my small holding for $2.64. A grand profit $180 bucks :o

Will watch closely at the end of the day for any panic selling before the weekend. Could be worth another short term play.

[Yossarian]

nah, this was expected and priced in - don't expect much action today

Note EBITDA 'only' dropped 5.5%... and revenue was actually up slightly

[fish]

nah, this was expected and priced in - don't expect much action today

Note EBITDA 'only' dropped 5.5%... and revenue was actually up slightly

agree-great cash flow-revenue 2837 million for 6 months

This shows how robust the income stream is for TEL .

Great returns likely in the future

[George]

No mention of Tel lately here, what are the thoughts for short/medium term
prospects. Ex div and with markets down it is at previous support
levels. Tempted at 2.26 and think US must rally at some point, all
that money must have an effect, maybe????
George

[fish]

No mention of Tel lately here, what are the thoughts for short/medium term
prospects. Ex div and with markets down it is at previous support
levels. Tempted at 2.26 and think US must rally at some point, all
that money must have an effect, maybe????
George

has to be a good buy at any price under 2.40 -which gives a current 10% return
and with ocr likely to fall further next week you are unlikely to to go far wrong and more likely to achieve good returns

[macduffy]

I think our tech experts would tell us that TEL SP is weak and currently in a downtrend.
Personally, I'd be waiting for it to show a bit of strength before considering any buying.

;)

[George]

Cheers Macduff/Fish
A 3 yr chart shows that Tel could get back over 3.00
and still be technically in a long term downtrend.
Question is whether the sharp drop since July is overdone.
Needs to get over 2.80 but by then most of the profit is gone.
A small position perhaps!!

[fish]

Re-entered today. :) ... looking for 2.20 or below to add more.

I suspect TEL is used as a proxy for the nz dollar-amongst other things-hence the expected further fall in the nz dollar plus negative market sentiment has resulted in this fall rather than any fall in nav or expected profit.

A good time to buy if you want dividend returns in the future

[onlinesid]

When's the next Telecom dividend? I thought it's 28th feb?

[Major von Tempsky]

Next dividend is Friday night next week, 13/14 March.

You guys should burn your silly meaningless charts and pay attention to the fundamentals.

TEL is in an uptrend caused by the favourable comparison of its dividend yield % with declining interest rates. Half the imputation credits are expected to be restored in the next September dividend which a rough mental calculation means a gross dividend yield % of 12.5%.
Which bank is going to pay a sustainable 12.5% going up later to 15%? Ditto finance companies and real estate.

The uptrend is disguised by exogenous unrelated shocks from overseas and as Belge says by ****ers who want to use TEL shares as a proxy for speculating in the NZ dollar and by the fact that most TEL shares are owned overseas. That doesn't change the fundamentals, it simply means that more cheap TEL shares are there for sensible NZ investors. Also it's likely that the John Key government will not be inherently anti TEL as Helengrad was, but even sympathetic to getting a reasonable investment return from its huge investments.

[George]

MVT, if I buy TEL and it is in an uptrend I expect to be in profit.
But from what point did that uptrend start, say 2.50 or higher,
I would now be at a loss???
I didn't get in at under 2.30 because of work and it bounced
but those levels indicate a POSSIBLE multi bottom so still
have a chance, but can't see any uptrend yet.

[Grimy]

but can't see any uptrend yet.

Yeah, I'm having a bit of trouble seeing it too George. I hold TEL and am certainly looking to add more, but while the SP is heading south I don't call it as being in an uptrend.......

[bull....]

Telecom is consolidating in a sideways channel at the lows , normally this pattern is bearish but one should always wait for confirmation of breakout direction before acting.

2.20 - 2.80

A break below 2.20 would be very bearish for telecom.

Volume indicates substantial distribution occurring , probably into the hands of the mum and dad dividend yield people as some people seem to think this is a great div story.

This stock is high risk now as govt decision on broadband if unfavourable to telecom may cause the price to gap lower big time on any announcement.

[duncan macgregor]

[QUOTE=Snoopy;104663].

Yes. I think the winner will be Telecom. The exact opposite to what Mr Market thinks. I backed my bet on Friday by buying more Telecom shares. Perhaps you might be interested in the case against Mr Market...

Since the local loop unbindling announcement the Telecom share price has gone down from around $5.50 to $5 and then $4. This reaction is not an unexpected reaction to 'bad news'. What I think is unusual is the way the price fell: By 10% on announcement and by a further 20% in the month following. If the smart money was really so sure about this 'catastrophic event', why did the market price not fall sooner to $4? Furthermore if you look at the company announcements by Telecom over that subsequent month I can find nothing of consequence. My conclusion is that over this last month the market has been adrift. Mr Market has no idea what the value of Telecom is, except that it is probably between $4 and $5 (a huge range). There is my cue to take advantage of manic depressive Mr Market....
/QUOTE] Now that the share price has crashed to $2-39 it should give the FA people an opportunity to buy lots more in order to access those lovely dividends. Macdunk

[Snow Leopard]

Next dividend is Friday night next week, 13/14 March.

You guys should burn your silly meaningless charts and pay attention to the fundamentals.

TEL is in an uptrend caused by the favourable comparison of its dividend yield % with declining interest rates. Half the imputation credits are expected to be restored in the next September dividend which a rough mental calculation means a gross dividend yield % of 12.5%.
Which bank is going to pay a sustainable 12.5% going up later to 15%? Ditto finance companies and real estate.

The uptrend is disguised by exogenous unrelated shocks from overseas and as Belge says by ****ers who want to use TEL shares as a proxy for speculating in the NZ dollar and by the fact that most TEL shares are owned overseas. That doesn't change the fundamentals, it simply means that more cheap TEL shares are there for sensible NZ investors. Also it's likely that the John Key government will not be inherently anti TEL as Helengrad was, but even sympathetic to getting a reasonable investment return from its huge investments.

One could argue that the accelerated downtrend was broken by the [rather tentative?] uptrend shown here. :)

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/NZX/NZX-TEL-20090306.png

However I am sure others would argue otherwise. :p

May your investments and/or trades go with you ;)
Paper Tiger

[Phaedrus]

(A cautionary tale that we can all learn from.)

http://h1.ripway.com/78963/TEL37.gif

Seduced by the lure of luscious dividends, MvT was buying into TEL despite its ongoing downtrend.

Alas.

[Snoopy]

(A cautionary tale that we can all learn from.)

Seduced by the lure of luscious dividends, MvT was buying into TEL despite its ongoing downtrend.

Alas.

And you were also buying TEL Phaedrus, with your post on this very thread dated 30-01-2009? Of course you never actually admitted buying TEL. And if you did you no doubt got out again at a small profit or loss, before resuming MvT attack mode! However there were lots of tantalising hints in that 30-01-2009 post of yours:

"On 20/10/08 TEL began firing Buy signals when a 100 day RSI oscillator broke above its OverSold level for the first time in years. This was an isolated unconfirmed signal ..."

"Two months ago TEL gave a trendline break buy signal (small green arrow). Again, volume failed to confirm this signal."

"A month ago, the OBV gave a Buy signal when it broke above its trendline for the first time in over 6 months. Volume was rising, but was still below average."

before the final verbal garnish....

"A week ago, TEL broke above the trading range it had been in for 3 months"

Whether you actually bought or not Phaedrus, the quotes read like you 'wanted to buy in', but just couldn't make that final commitment in a substantial way as all of those indicator ducks never quite lined up.

Perhaps I am taking more from between the lines than I should. But the main 'problem' I read is that volume of shares traded are too low to make any of these TEL buy signals more than tentative and isolated. The problem with this strategic point is that if you wait for volumes to get back to pre credit crunch levels it may be ten to twenty *years* before you can buy Telecom shares again. In the meantime your money is in the bank earning a galling 3.5%, while we TEL shareholders are enjoying a return of three to four times that amount in dividends every year. Sure our capital has taken a hit. But we are under no obligation to sell to Mr Market. Shareholders like the Major and I can *afford* to simply wait for market conditions to improve while the dividend cash rolls in.

You speak of the 'ongoing downtrend' as though it is destiny. The only way future reality will align behind this proposed destiny is if people drastically curtail their calling habits in perpetuity, there is a mass move away from Telecom as a provider (including wholesale), investors will want out of Telecom because the returns in the market elsewhere are 'just so much better' AND that Telecom will become desperately short of cash and need to raise more of it via a share issue. I am afraid that I do not buy that implied future scenario. In fact I do not buy any of the building blocks that make it up. And to suggest that local loop unbundling two years ago started a downward trend that 'proves' that the perpetual decline scenario will happen is, IMO, claptrap.

If US global investors have to pull all their money out of Telecom, and the share price heads south for a spell, then let them sell. In the long term it will make no difference to the operational performance of Telecom, or the ultimate share price. And whether TEL shares are bought in an uptrend or a downtrend makes no difference to that future fair value share price either.

SNOOPY

discl: hold TEL

[Major von Tempsky]

Thanks Snoopy, very carefully researched and as learned and accurate as ever. A scholar and a gentleman which is rather more than I can say for at least 2 of the commentators.

In the meantime I'm enjoying a very healthy TEL dividend income (I'm off to Australia for a holiday next month) and I'm looking forward to the start of restoration of imputation credits in September - and frankly I don't really care what the price of TEL is, its irrelevant me, its not what I bought them for. Eventually, well before I kick the bucket, I'll be in profit again but I won't have any IRD worries because I've held them long enough.

Some people buy only or predomanantly for capital gain and God or psycho-history (read Asimov - The Foundation) punishes them - lots of negative movements and no end of grief or worry about possible or pending IRD investigation of them.

[STRAT]

Hi Snoopy,

With the likes of "This was an isolated unconfirmed signal ..."" and
"Again, volume failed to confirm this signal." and "Volume was rising, but was still below average." my guess would be he didnt buy but that is of course unconfirmed :D

[winner69]

You guys have to realise that Snoopy et al do not 'mark to market' their investments. They treat a TEL and RBD share essentially as a bond - the 'face value' is what they paid for them and the 'coupon rate' but the dividend yield is.

As long as the cash dividends are coming through it doesn't really matter what is happening to the capital value of the 'bond' they have invested in ..... just like many/most (mum and dad investors ) don't keep track of the capital value of their fixed interest investments like govt stock or capital notes. Like how many people realise their NPX notes are now worth only about 70% of what they paid for them or that govt stock a few years ago is worth a lot more than what the face value is .... those people (like Snoopy et al) are only in it for the regular cash payments an expectation that they will get their capital back iat majority.

Even though Snoopy et al maybe a little more riskier than the real bond way they do have the advantage that the 'bond' does not mature on a certain date .... they can hold forever if that is what they want and in most cases inflation is on their side as well. (and no we won't go down the path of capital losses are not losses until crystalised .... Snoopy doesn't run a mark to market book anyway)

So let Snoopy et al carry on with their de facto 'bond' investing .... probably over time they do pretty well out of it anyway.

Bit worried about their strategies about the growth part of their portfolios (like SCT etc) though but thats another story

[Phaedrus]

Snoopy, I have always advised against acting on isolated, unconfirmed signals. Regardless of whether they are acted on or not, these tentative signals nevertheless do provide us with objective evidence that TEL's long downtrend is weakening. Good news eh?

You concede "Sure our capital has taken a hit. But we are under no obligation to sell to Mr Market." So, you both subscribe to the myth that you haven't actually lost until you sell!

You say I "speak of the 'ongoing downtrend' as though it is destiny." I use the word "ongoing" in the sense that the downtrend is extant, still in existence - not for a moment would I suggest that its continuation is inevitable.

The MvT chart is simply a potent example of the folly of buying downtrending shares - regardless of their dividend yield.

[macduffy]

The MvT chart is simply a potent example of the folly of buying downtrending shares - regardless of their dividend yield. QUOTE.

Seems simple enough to me.
It doesn't matter whether you are buying for capital gain or income. Why buy a share when it's in a downtrend ? Waiting for an upturn will almost always mean buying at a lower price and a higher yield.

:cool:

[winner69]

The MvT chart is simply a potent example of the folly of buying downtrending shares - regardless of their dividend yield. QUOTE.

Seems simple enough to me.
It doesn't matter whether you are buying for capital gain or income. Why buy a share when it's in a downtrend ? Waiting for an upturn will almost always mean buying at a lower price and a higher yield.

:cool:

... and the other hand Snoopy (as a de facto bond investor) wouldn't sell his govt stock as interest rates rise .... ie capital value (bond price) falls ..... he would hold to duration and get his money back in full while collecting the interest

In Snoopy's world the coupon price of his TEL bond (ie the share) is what he paid for it .... and he is not compelled to cash it in at any time ..... and as i said above even if inflation has to help he'll get his coupon value back

[macduffy]

As someone who leverages hard to take positions in stocks the falling price of a stock hurts. But if you're not leveraged - why is it a myth? Surely it's a fact? Or are you implying that one should cash up and look for better options?

I read that as meaning that we sometimes kid ourselves into thinking that we havn't taken a loss, just because we havn't sold!
Very self-deluding if the stock in question is a dog and unlikely to ever recover our purchase price. Arguably doesn't apply to TEL but depending on when they were bought, some positions will take a long time to come back into the money.

[Stranger_Danger]

I break my leg.

Is it broken

(a) At the time I break it.

(b) The time I accept I have broken it, and go to the hospital.

If I never go to the hospital, is my leg not broken?

[STRAT]

I break my leg.

Is it broken

(a) At the time I break it.

(b) The time I accept I have broken it, and go to the hospital.

If I never go to the hospital, is my leg not broken?LOL. Perfect :D

[Snoopy]

Snoopy, I have always advised against acting on isolated, unconfirmed signals. Regardless of whether they are acted on or not, these tentative signals nevertheless do provide us with objective evidence that TEL's long downtrend is weakening. Good news eh?


The news that a downtrend is weakening is only good news if you subscribe to the theory that a share price 'should' always behave in an orderly way. A steep downtrend reduces its ferocity. Then the share starts to rise a bit indicating that a new tentative support level before the share price falls again, kissing that tentative support line. The share then bounces along in a trading range before those big institutions realise what a bargain the share has become. Accumulation starts until a fired up fundamentalist manager decides the investment case is compelling enough to break free from the buy ceiling offers of his peers. The share price then rises and the chartists notice the accumulation. Momentum builds until first the new uptrend is firmly established. The problem is in *this* market, this is not how share prices are behaving.

As an example when Restaurant Brands issued their February 2009 profit upgrade the share price put on 15% in a single day, up to 69c. That is a large chunk of any share valuation to give away, and a very sudden recovery from when the share price hit what must be close to the all time low of 57c 'off market' just days previously.

So no, the fact that a share price downtrend is weakening by various signals does not build my confidence that we may be near a bottom.



You concede "Sure our capital has taken a hit. But we are under no obligation to sell to Mr Market." So, you both subscribe to the myth that you haven't actually lost until you sell!


No, I concede that I have lost capital when a share price falls. But that only matters if I *need* capital at that time. In the cases of Telecom and Restaurant Brands, I am much more interested in the dividend flow, which is largely not correlated with short term share price movements. As far as I am concerned the share price just floats around and the dividends keep getting harvested.



You say I "speak of the 'ongoing downtrend' as though it is destiny." I use the word "ongoing" in the sense that the downtrend is extant, still in existence - not for a moment would I suggest that its continuation is inevitable.


You know that Phaedrus, and I think it is a point worth emphasising. But I think many readers when they see the word 'trend' cannot help but assume that 'all market influences in a state of continuation' means that more likely than not, that trend will continue. And we tend to put what is likely to happen at the forefront of our minds.



The MvT chart is simply a potent example of the folly of buying downtrending shares - regardless of their dividend yield.


Your chart Phaedus shows the Major buying in late in 2006, then showing what a 'fool he is' come late 2008 because of the subsequent share price decline. But did the Major expect to have to sell up late in 2008? I suspect not. Does the Major expect to spend all day in front of a computer screen just so that he can 'escape' sudden share price falls? I suspect not. Is the TEL share price decline noticably worse than the performance of the NZX over that same period? I suspect not.

Given the Major's expectations and his globe trotting lifestyle I don't think he is in any trouble. Compare the 'plight' of the Major to the former trader poor Macdunk, forced to eke out his days as a meagre fisherman as the beachfront coastline supporting his humble shack erodes into the sea....

SNOOPY

[duncan macgregor]

Old macdunk is laughing at your stupidity along with your pompous friend who are both going down the gurgler in this market. Remember it was me that harped on at you for years buying more and more of your downtrending stocks blinded to all reality. I picked the market to down trend leading to a crash you two bought more and more now worth less and less, and i sold up to sit this crash out. Bet you and the major wish you had half my foresight looking back in hindesight. Its no use trying to buffoon your way out of it, you are both a couple of investing no hopers that make the real investors rich. TEL has been one of the biggest dog investments starting from the time good old TG took up the reins and creamed you lot for millions before leaving. Macdunk

[Dr_Who]

All the profit from TEL has gone to the CEO's pay package, nothing left for shareholders.

[duncan macgregor]

... and the other hand Snoopy (as a de facto bond investor) wouldn't sell his govt stock as interest rates rise .... ie capital value (bond price) falls ..... he would hold to duration and get his money back in full while collecting the interest

In Snoopy's world the coupon price of his TEL bond (ie the share) is what he paid for it .... and he is not compelled to cash it in at any time ..... and as i said above even if inflation has to help he'll get his coupon value back WINNER 69. Lets take a closer look at this fundamental hold at all costs stupidity that SNOOPY and MVT risk their savings on.
Lets take a look at some of the companies that SNOOPY has averaged down on over the last three years and allow for dividends.
1,TEL three year high of $5-80 down to $2-35.
2,RBD three year high of $1-35 down to 69c.
3,SCT three year high of $2-60 down to 71c.
4,TUA three year high of $2-30 down to 56c.
You can find glowing reports on those companies both here and sharechat over that period of time with statements claiming how right it was to buy more all the way down.
CONCLUSION.
FUNDAMENTAL ANALYSIS IS AS USEFULL AS TITS ON A BULL
MACDUNK

[Phaedrus]

Hiawatha, deteriorating fundamentals would prompt you to sell a stock that you held, surely?

Are you not then selling to someone who is either unaware of these changes, or their import? A greater fool?

Even fundamentalists rely on there being a market "to unload onto should things go haywire"!!!

How come a decision to sell based on deteriorating market sentiment "smacks of hucksterism" - but a decision to sell based on deteriorating fundamentals doesn't?

What cant and hypocrisy!

[duncan macgregor]

HIAWATHA, A share is worth only what the market is willing to pay for it. If you ignore market sentiment as SNOOPY along with MVT do, the market will bite you on the bum. The market uptrends and downtrends with very little fundamental reason. Sometimes it will crash taking fundamentely would be sound companies down with it.
To sit there like a possum in the headlights means that sooner or later you will get run over.
The market in general told me to get right out at the start of 2008 simply by looking at market sentiment.
To sit smugly saying you know better than the market is the road to higher places[ like jumping out a window from a great height]. Macdunk

[Phaedrus]

Some people buy only or predomanantly for capital gain and God or psycho-history (read Asimov - The Foundation) punishes them - lots of negative movements and no end of grief or worry about possible or pending IRD investigation of them.

Well, there it is. Buy for capital gain and God will punish you!

As if divine retribution is not sufficient discouragement, you will also fall foul of Asimov's fiction and the IRD!

No wonder MvT sticks with an approach that minimises any risk of capital gain.

One query, though - How come investing for capital gain incurs God's wrath, but investing for income doesn't?

[STRAT]

Aint this all getting silly.
Anyone with half a brain uses both and this silly old debate should surely be put to rest. I must confess this the first time Ive seen Religion and Nobility/moral high ground being used as arguments for stepping entirely into the FA camp. Good one guys. Too funny.

[Xerof]

Whenever I sell shares I face East, cut up my holding statements and cite three Hail Elliots, ....doesn't everybody do this???? or do others chew on raw garlic

[Lego_Man]

Whenever I sell shares I face East, cut up my holding statements and cite three Hail Elliots, ....doesn't everybody do this???? or do others chew on raw garlic

Nah, i say my hails to Adam Smith.

[Lego_Man]

That's crap. A share is worth only what the company itself is worth, which depends in turn on that company's earning capacity. If the market doesn't reflect this, then the market is clearly wrong.
hiawatha

Wow, that's simply an incredible post. Basic economics tells us nothing really has an intrinsic value.

How much is an LCD worth on an abandoned desert island when you're dying from dehydration?

What would you pay for a snow machine in the middle of an Alaskan winter?

[STRAT]

When I buy a share I don't contemplate selling it. This is different from someone who deliberately buys a share, which he hopes will rise in value, for the purpose of selling it when it reaches its peak. It's certainly true that I would sell a share whose fundamentals had deteriorated - I'm as interested in survival as the next investor - but I'd feel rather guilty in doing it.
The person who plans on selling at the peak is deliberately passing the downside to the greater fool he hopes exists. Not only that, but this forms part of his overall strategy. In other words he is simply trading on the ignorance of others. This is hucksterism.
hiawathaCome on mate, Cut it out, youre making my eyes water :D

[Stranger_Danger]

Hiawatha,

Regarding "It's easy to quote extreme circumstances but we are mostly concerned with what a product's value would be in the normal situation."

I assume this means you are bidding for defaulted sub-prime loans in Detroit at 100% of the value of the loan?

Or, if you're keen on a bargain, 90%?

[onlinesid]

Hey guys, TEL is doing less badly today ... wohoo

Fundamentalism is just too hard, may be easy if you're a hardcore accountant.

I just keep reading news and share trader (such colourful characters of differing views), look at graphs on Yahoo finance, and feel my gut feeling ... but I'm not expert, I just keep on learning of how to read market signals I guess ... like someone here says ... the trend is your friend :)

[manxman]

When I buy a share I don't contemplate selling it.
hiawatha

Of course not. Nor does anyone here or they would all be paying tax on their capital gains. Of course the market gets it wrong in pricing shares and everyone is free to bail out when the share price gets overcooked. They provide stability to the market if they do it well.

[Snow Leopard]

And so it came to pass that the TEL thread did become the preeminent thread for debate on the Sharetrader website.
No more did the forums visitors rush to the NZO thread for their daily fix of superior posted effluent when the great names (and MacDunk) had locked horns in an utterly pointless idealogical debate using the usual techniques of name calling, etc.

The financial world will never be the same again

best wishes :D
Paper Tiger

[ops.normal]

The person who plans on selling at the peak is deliberately passing the downside to the greater fool he hopes exists. Not only that, but this forms part of his overall strategy. In other words he is simply trading on the ignorance of others. This is hucksterism.
hiawatha

There's a shortcoming in the logic here as you assume the seller knows the genuine price and the buyer is getting the rough end of the deal - but if any one individual doesn't have all the information (which none of us do) then no-one is really being taken advantage of...the buyer believes he has timed his exit right and seller clearly believes he has a good enough deal to warrant entry.

If this is the length you'll go to in a debate over idealogy, I've no idea how you trade even remotely objectively.

They have a phrase in Scotland for this...they call it "looking up your arse to see if your hat's on straight." Or finding a complicated solution to a simple problem.

[George]

TEL down recently while markets up, will support hold???

[craic]

TEL down recently while markets up, will support hold???

Tel is down slightly because they hav just paid a 6cps div. last week. Annualised equiv. of about 10%. In another three months they will again pay a 6cps div and so on.

[George]

TEL down again while markets up, can't be positive for sp.
Actually was down all day from its high at the start.
Does 6c div really have much to do with it. Recall in the past
sp often went up after ex date.
George

[Major von Tempsky]

As stated before the problem is not TEL but TEL's shareholders - over half of them domiciled overseas and in financial trouble themselves requiring the realisation of any sort of assets that can be turned into cash and another big chunk of shareholders who use TEL as a proxy play to speculate in the NZ dollar.
What happened last time the NZ dollar went up sharply? TEL fell sharply.
What happened yesterday when the NZ dollar went up sharply? TEL fell sharply. It was up 8cps early but ended down 1cps after the NZ dollar swallowed steroids.
(footnote: we have a few dedicated irrational TEL haters like the economic backwoodsman MacDunk who assume everyone bought TEL ages ago at the highest possible price and doesn't take account of the substantial capital return last year or the high sustainable dividend yield and the approaching return of imputation tax credits in Sept 2009).

[fish]

As stated before the problem is not TEL but TEL's shareholders - over half of them domiciled overseas and in financial trouble themselves requiring the realisation of any sort of assets that can be turned into cash and another big chunk of shareholders who use TEL as a proxy play to speculate in the NZ dollar.
What happened last time the NZ dollar went up sharply? TEL fell sharply.
What happened yesterday when the NZ dollar went up sharply? TEL fell sharply. It was up 8cps early but ended down 1cps after the NZ dollar swallowed steroids.
(footnote: we have a few dedicated irrational TEL haters like the economic backwoodsman MacDunk who assume everyone bought TEL ages ago at the highest possible price and doesn't take account of the substantial capital return last year or the high sustainable dividend yield and the approaching return of imputation tax credits in Sept 2009).

Always a good time to top up when this happens-the moment i hear the nz dollar strengthening is a good time to watch for buying oppurtunities-bought more at 2.31 at close yesterday .

[Lego_Man]

Of course not. Nor does anyone here or they would all be paying tax on their capital gains.

lol


The true investor is not a seller.

lol

[duncan macgregor]

As stated before the problem is not TEL but TEL's shareholders - over half of them domiciled overseas and in financial trouble themselves requiring the realisation of any sort of assets that can be turned into cash and another big chunk of shareholders who use TEL as a proxy play to speculate in the NZ dollar.
What happened last time the NZ dollar went up sharply? TEL fell sharply.
What happened yesterday when the NZ dollar went up sharply? TEL fell sharply. It was up 8cps early but ended down 1cps after the NZ dollar swallowed steroids.
(footnote: we have a few dedicated irrational TEL haters like the economic backwoodsman MacDunk who assume everyone bought TEL ages ago at the highest possible price and doesn't take account of the substantial capital return last year or the high sustainable dividend yield and the approaching return of imputation tax credits in Sept 2009).MAJOR, The only thing that i can think of is how long it takes the share ptice to get under $2-00 against what ever stupid price you started from. TEL is on PROLONGED DOWNTREND look up the chicken entrails major and you might get an insight to reality. Macdunk

[fish]

MAJOR, The only thing that i can think of is how long it takes the share ptice to get under $2-00 against what ever stupid price you started from. TEL is on PROLONGED DOWNTREND look up the chicken entrails major and you might get an insight to reality. Macdunk



reality is that essential infrastructure still performs in a recession People have a choice of having their assets slowly destroyed in a bank deposit earning 2 percent after tax if inflation is greater than this or of investing in infrastructure-I have been investing in vct .tel and cen this year-aND TEL WILL BE PAYING THE BIGGEST DIVIDENDS this year and effectively increasing to 15 percent in the future when imputation credits are re-established ( my margin lending account charges 6% ).

[Major von Tempsky]

Amazing how well the inverse TEL shareprice to NZ dollar currency fluctuation works.
Yesterday TEL down by 5cps, NZ dollar up by 1.6c US.
That's the 3rd time its worked like that in a couple of weeks.
In fact it's now the first clue (if u r not watching your screens all the time) that the NZ dollar has gone up.

Another interesting calculation which unfortunately I haven't bothered doing is how many days trading will it take to get rid of the overhang of overseas financial institutions who have found themselves in an unfortunate position and need to realise valuable assets....

[Major von Tempsky]

And no, before some one raises it, it's nothing to do with "The Spat with the Commerce Commission" as some hacks would have it.
A reading of the fine print is that nothing happens there until 2014 and there have been some straws in the wind such as the hurried departure of Rebstock before she was pushed out in an undignified way and one or two other sensitive things I'm not going raise as discussion here and now would inhibit developments....

[Betterwork]

Seems to be alot of support in history for TEL at 2.25... What do the TA experts think? Is now a good time for a bargain? Or is TEL about to increase its downward spiral :eek:

[duncan macgregor]

Seems to be alot of support in history for TEL at 2.25... What do the TA experts think? Is now a good time for a bargain? Or is TEL about to increase its downward spiral :eek: TEL had support at $8-25, $7-25, $6-25, $5-25, $4-25, $3-25, so no surprize in that. I wonder how long it will take before it shows support at $1-25?.
Perhaps PHAEDRUS might enlighten SNOOPY and the good MVT with the downtrending chart to assist them in averaging down and the wiser ones to predict where the bottom might end up. I did say TEL would hit $3-00 before it hit $5-00 and was proved wrong when it was about $4-00. I think that the competition will increase and the profits will drop so $1-25 in a couple of years time would be a realistic lutlook. Macdunk

[AMR]

From my (not great) experience trend is more important than support or resistance. Buying above a support in an 8 year downtrend is still bottom picking. You might get a nice short term trade out of it but as for longer term trading or active investing it might pay to look elsewhere. Maybe you could ask AA for some charts.

[Phaedrus]

Dunc, are you aware that TEL is in a (shallow) uptrend? .... and has been for about 5 months?

I wouldn't scoff at anyone buying or holding TEL right now.

Remember, no trend lasts forever.

http://h1.ripway.com/78963/TEL328.gif

[duncan macgregor]

PHAEDRUS, The point is That the fundamentals are worsening until that changes the shallow uptrend will end up in a further downtrend. The strengthening NZ dollar against the falling American dollar might have more to do with it than anything TEL are doing at the moment. TEL have to much to spend to even stand still, plus bigger and better competition to contend with squeezing profit margins. When the share price was about $10-00 everything in the garden was lovely thats when they should have looked to the future not screw the public like they did with their arrogance. The average public perception of telecom is about as low as it can get. The poor long term investors have picked a dog with this one. Macdunk

[Nitaa]

PHAEDRUS, The point is That the fundamentals are worsening until that changes the shallow uptrend will end up in a further downtrend.
Interesting. Are you now a fundamentalist?

Good to have you back...Nita, keeping you honest as always

[duncan macgregor]

Interesting. Are you now a fundamentalist?

Good to have you back...Nita, keeping you honest as always
NITA the fundamentals are the reasons behind the TA trends. Take metal mining companies for instance as an example. The charts of the ore prices all run very closely to the various company charts of share prices. Broaden your horizons you young thing, forget the tea leaves chicken entrails are the answer. My latest suggestion would be to do the exact opposite of some of this sites more out spoken fundies, Macdunk

[dumbass]

Seems to be alot of support in history for TEL at 2.25... What do the TA experts think? Is now a good time for a bargain? Or is TEL about to increase its downward spiral :eek:

yes 2.20 area has provided support and if your bullish it would be worth a punt with stop loss below support level.

however i would say from a technical perspective TEL still looks weak.

[STRAT]

NITA the fundamentals are the reasons behind the TA trends. Take metal mining companies for instance as an example. The charts of the ore prices all run very closely to the various company charts of share prices. Broaden your horizons you young thing, forget the tea leaves chicken entrails are the answer. My latest suggestion would be to do the exact opposite of some of this sites more out spoken fundies, Macdunk:eek:

What the?:eek:

What happened to Fundamentals are as useful as tits on a bull? and now TA is ruled by FA? I thought you said it was ruled by market sentiment which has nothing to do with fundamentals.:D:D:D

[craic]

Strat Taking notice of the man is a waste of energy. Been told he is a disgruntled ex postman who was sacked for falling asleep on his bicycle.

[Nitaa]

NITA the fundamentals are the reasons behind the TA trends. Take metal mining companies for instance as an example. The charts of the ore prices all run very closely to the various company charts of share prices. uhuh. Well done Macca. You are learning my dear old friend. I agree with you completely. There are exceptions of coursae but in the main its the FA that drives the market not the market driving the FA.

Give yourself a pat on the back

[STRAT]

Strat Taking notice of the man is a waste of energy. Been told he is a disgruntled ex postman who was sacked for falling asleep on his bicycle.Hey Craic, You are talkin down my mate :mad::D who has made some pretty good long distance calls when it comes to overall market perspective.

I can assure you he was never a postman. NZ post dont allow their delivery boys to wear kilts on their bicycles ;)

[dumbass]

NZ post dont allow their delivery boys to wear kilts on their bicycles ;)

I think its a safety issue as you could get that dangly bag thing caught in the chain.
its enough to bring tears to your eyes.

[STRAT]

I think its a safety issue as you could get that dangly bag thing caught in the chain.
its enough to bring tears to your eyes.Yeah thats right. Tears to the eyes and not only for the bloke on the bike but any unlucky inocent bystanders too :D

[dumbass]

sporran !!

[Nitaa]

Yeah thats right. Tears to the eyes and not only for the bloke on the bike but any unlucky inocent bystanders too :DIs that what it means by the "ball and chain" or should that be "ball in chain"?

[George]

Be interesting to see if TEL's sp is influenced
by US exchange rate with rates down but dow slumping overnight

[sharer]

The covers on the above National Broadband govt plan are coming off now (RadioNZ News), with quite a short period for "submissions" for such a big policy deal (?27 April deadline). Maybe minds are made up & its just a formality. Carefully worded to imply this is whats happening, whether or not TEL chooses to participate.
What are the implications for TEL with its recently huge expenditures on fibre & other network investments? Could CFIC make some of that irrelevant or at least misdirected?
Alternatively, could TEL go for as much as possible of the 50% apparently available to others to jointly venture with CFIC? Would that line "save TEL money" in rhat fibre extensions would be built with govt rather than TEL dollars that would have otherwise been spent for a similar result? Presumably these & siumilar questions apply to Chorus, TEL's network division mainly.
Interesting related questions also for VCT & its fibre backbone plans, and what role will be taken by Kordia as the govt's own player in this market?
All this seems to make it impossible to calculate any reasonable guesses about TEL's future.

Sharer.
disc:holding TEL since float.

[Major von Tempsky]

Good questions Sharer.
I suspect that in practice the Government like any government would like to minimise its expenditure and draw in TEL and others as much as possible. And being a National government it will want to see a good/reasonable return on assets which is all TEL wants and a striking change for Labour's regulatory puppets.
And the longer that National goes on in power the more likely it's philosophical leanings will see it move to privatising the Crown company which would give us and TEL a chance of some action. I see all this as positive.

Salut!

le Commandant.

[George]

Well, up to 244 with exchange rate nearing 60US, so perhaps
just a coincidence. Bounced off support again so maybe it's
a technical play for a while.
George

[fish]

Well, up to 244 with exchange rate nearing 60US, so perhaps
just a coincidence. Bounced off support again so maybe it's
a technical play for a while.
George


Certainly looked very strong at closing today .

The market is anticipating the worse could be over and realising if you dont get in soon you could miss out .

Still priced too low on the fundamentals .

[spruik]

Fish, you might be upsetting Macdunk...

[fish]

Fish, you might be upsetting Macdunk...

Even Mcdunk knows you have got to be in to win -buy on the dips

[duncan macgregor]

Even Mcdunk knows you have got to be in to win -buy on the dips What Macdunk knows is never play about in stormy seas trying to catch something that has been sinking for years to fluke a bit of salvage money fish.
Look for something that is improving in prospects which is a big ask in todays market.
Macdunk

[The Doctor]

Reynolds summed it up....'the best game in town'.

[beacon]

Care to elaborate doctor. I may have missed the reynolds comment. ta

[GTM 3442]

Hiawatha - "Price is really only relevant if one is buying or selling".

Um . . . not sure here.

If I pop my ten grand onto term deposit at the bank for income, I get my 6% per year. That's fine.

But if the bank pay out all the interest, but only repay eight grand of principal, I'm not too happy.

And if I buy Telecom at $4.55 for the dividend, but the price drops, I'm not too happy either.

Income at the expense of capital seems to lead to unhappiness, somewhere. . . . .

[craic]

Decided to try and ride this tiger up and down - sell high and buy back low. Put 20,000 on the market at 243 cps this morning when they were 241. And guess what,sold the lot and now they are at 248 - bugger.

[Major von Tempsky]

Craic me old mate - why did you croac?

Just remember Bob Jones last adage - never sell :-(

[craic]

If you print the chart for tel for three months you will see a series peaks and lows, four or five of each with a range of 225 to 250 or so. To sell towards the top and buy towards the low could be a very profitable exercise. If they drop again I buy back. There used to be a fellow posting on this site years ago who claimed to make a living out of the hills and hollows of tel shares.

[The Doctor]

Craic me old mate - why did you croac?

Just remember Bob Jones last adage - never sell :-(

...amended re RJI...'never sell'(at least until I've offloaded...mine!)

[Thumpa]

If you print the chart for tel for three months you will see a series peaks and lows, four or five of each with a range of 225 to 250 or so. To sell towards the top and buy towards the low could be a very profitable exercise. If they drop again I buy back. There used to be a fellow posting on this site years ago who claimed to make a living out of the hills and hollows of tel shares.


6 month chart shows 8 x 2.27 - 2.45 (7.9%) scalps. Interesting concept (range trading)

http://i167.photobucket.com/albums/u150/soundzgoodgood/TEL6mths.png

[Snoopy]

If you print the chart for tel for three months you will see a series peaks and lows, four or five of each with a range of 225 to 250 or so. To sell towards the top and buy towards the low could be a very profitable exercise. If they drop again I buy back. There used to be a fellow posting on this site years ago who claimed to make a living out of the hills and hollows of tel shares.


And where is this esteemed nameless figure now I wonder? Broke I would guess.

A few tips on trading Craic from a long term observer of the process.

The first point is real traders never admit a loss. In fact real traders never lose. Any loss is recategorised as a long term investment and used to 'prove' that long term investment does not work.

The second point is real traders never worry about dividends. That is because as their capital reduces, the dividends they can earn from that capital become insignificant. So dividends can basically be ignored.

The hills and hollows game sounds good. I played another version of it in my childhood called musical chairs. The game works like this. As long as the music continues and the market is humming to the beat the players prance around in relative bliss. However, when the music stops and you are no longer moving to 'the investment beat' there is a scramble for the exit/chair. At that point one player will find their capital/ trouser support has disappeared beacuse the chair they were going for is not where it was or there is no buyer for their shares at their prescribed exit point. However, this doesn't register on the remaining players who maintain their 100% success record. Then the music stars again, the bad memories are erased and everyone is again always the winner.

It is all very well trying to outsmart Mr Market in this situation. But if you think Telecom is a good investment then you should really adopt a startegy that sees you owning the shares. Selling out at well below fair value is IMO a strategy likely to yield well below index investment returns. Chances are when the market does really cotton on to the latent value within Telecom, there is a 50% chance you just won't be on the share register at all. Thus you have given away the easy profits all for the sake of some sort of dance with Mr Market. And Mr Market has clodhopping feet!.

SNOOPY

[John]

Thumper, I noticed that trend a while ago, haven't been trading or investing in shares for years however it's tempted me back, I've just set up a new trading account with DB yesterday and transferred in a chunk of money so we'll see how we get on....

[craic]

When things look bad I just spend more time on the axe and chainsaw and sell more firewood. The profit is lousy but it keeps me fit and I know where my next meal is coming from - mor than I can say for my involvement with the RJI empire a few years ago. As for TEL, at least I have 50 grand in the bank and thats enough to pay for two round trips for Her and I to go and see the grandkids in London - I have the boat the house the various boy toys, the still and a forty-four gallon drum of sugar so what else is there?

[Snoopy]

When things look bad I just spend more time on the axe and chainsaw and sell more firewood. The profit is lousy but it keeps me fit and I know where my next meal is coming from - mor than I can say for my involvement with the RJI empire a few years ago. As for TEL, at least I have 50 grand in the bank and thats enough to pay for two round trips for Her and I to go and see the grandkids in London - I have the boat the house the various boy toys, the still and a forty-four gallon drum of sugar so what else is there?


Fair enough Craic. You are in a good space and if you need the cash for a visit to London then the bank is the best place for it. The thing I wonder though is what interest rate is the bank going to give you? 50k isn't exactly play money. If TEL can make good their promise and restore imputation credits then that 50k, equating to 20,000 shares could see you being paid $4800 pa net. Check out some of the specials to the UK at the moment. That money could see you and your wife jetting off to the UK *every* year!

SNOOPY

[craic]

Fair enough Craic. You are in a good space and if you need the cash for a visit to London then the bank is the best place for it. The thing I wonder though is what interest rate is the bank going to give you? 50k isn't exactly play money. If TEL can make good their promise and restore imputation credits then that 50k, equating to 20,000 shares could see you being paid $4800 pa net. Check out some of the specials to the UK at the moment. That money could see you and your wife jetting off to the UK *every* year!

SNOOPY

I have been riding that gravy train for a few years and the return is boosted by a cheque from IRD each year. A week at Port Isaac for the family costs much of the $4,800! I bought a bloody chair in Kandy on my way over there three years ago and its only just arrived here at a cost of nearly $3,000 all up. If you think the fares are good now, wait a while and they will be paying you to go there. If the worse comes to the worst, I still have 21,000 AIA shares to sell to the Canadians and a few CEN and TPW shares. Sooner or later all the timber will be gone from the hill to the Kent owners in the district, my legs will be buggered from the hill and my brain addled by the fine Bourbon and Rum I make in the back shed and I will be forced to sell the house on five acres overlooking the Pacific Ocean and move into a bach down by the beach - there might even be a few dollars left from that sale.

[George]

Held this since 2.34 and thinking abt selling yesterday at
2.72 but this first time since it closed above 270 for 7
months so may hold for a while yet. Can get to 3.00 and
still be in a tech downtrend, look to sell about then but
don't want to endure another 3 month retrace. Not sure what
indicators are inidicating, others may know more abt that.
George

[The Doctor]

the management seem to have finally got their sh#t together...focussed and now ready to really get some traction in mobile...plenty of upside in the s/p imo.

[Major von Tempsky]

Anyone influenced by a "tech downtrend" instead of fundamental value analysis is likely to find themselves in the same place as Craic i.e. sold at $2.50 because it would go down to $2.15.
Also known as having lost their trouser support when the music stops (Snoopy's analogy) and being AWOL when the boat comes in.

[Phaedrus]

Anyone influenced by a "tech downtrend" instead of fundamental value analysis is likely to find themselves... sold at $2.50..... and being AWOL when the boat comes in.
Nonsense. Anyone following the "tech downtrend" would in fact have recently bought TEL - having been out of it for YEARS.

By way of contrast, let's look at the actions of MvT himself - a "fundamental value" analyst who is NOT influenced by "tech downtrends". Way back in October 2005 when TEL was around $6, MvT posted "Decided I would finally accede to Snoopy's advice and added TEL to my portfolio this morning." At the time TEL was in a clear downtrend and so, unsurprisingly, this proved to be a very badly timed buy decision. Seduced by the high dividend yield, MvT totally disregarded the on-going downtrend and continued to buy more TEL because of its "fundamental value". Again, as you would expect, these proved to be very badly timed entries and the value of MvT's capital investment in TEL continued to be eroded.

This is what happens to people that steadfastly refuse to be influenced by "tech downtrends". They fight the market. And lose.

http://h1.ripway.com/78963/TEL429.gif

[Phaedrus]

Nonsense. Anyone following the "tech downtrend" would in fact have recently bought TEL - having been out of it for YEARS.

By way of contrast, let's look at the actions of MvT himself - a "fundamental value" analyst who is NOT influenced by "tech downtrends". Way back in October 2005 when TEL was around $6, MvT posted "Decided I would finally accede to Snoopy's advice and added TEL to my portfolio this morning." At the time TEL was in a clear downtrend and so, unsurprisingly, this proved to be a very badly timed buy decision. Seduced by the high dividend yield, MvT totally disregarded the on-going downtrend and continued to buy more TEL because of its "fundamental value". Again, as you would expect, these proved to be very badly timed entries and the value of MvT's capital investment in TEL continued to be eroded.

This is what happens to people that steadfastly refuse to be influenced by "tech downtrends". They fight the market. And lose.

http://h1.ripway.com/78963/TEL429.gif


Hi Phaedrus, at what point would the Medium Term Down Trend Begin again?... When TEL makes a lower Low after a lower High.


....On the break of the Short Term Uptrend? The green trendline is a "medium-term" trendline and is quite separate from the definition of the trend itself. You can have a trendline break without a trend change and vice-versa.


I'm guessing a break below the Lowest Low that occurred in the medium term Downtrend.A break below the lowest Low ($2.20) would mean a resumption of the "long-term" (2 year) downtrend.

http://h1.ripway.com/78963/TEL429zz.gif

[George]

Wonder how it will do today, supposedly good fundamental news re broadband,
dow up overnight but dollar up 3% which others have suggested is
not good for sp.
Looking at the Aus TEL chart, noticed that it retreated sharply
from prior resistance at 220 while the NZ chart shows a close above 270.
Possible tech play only for a while - or means nothing??
George

[fish]

Wonder how it will do today, supposedly good fundamental news re broadband,
dow up overnight but dollar up 3% which others have suggested is
not good for sp.
Looking at the Aus TEL chart, noticed that it retreated sharply
from prior resistance at 220 while the NZ chart shows a close above 270.
Possible tech play only for a while - or means nothing??
George


Dont forget the official cash rate due out today usually has an effect on the sp . The exchange rate has a more variable effect on the sp and its volatility may have caused this effect to wear off .

[Major von Tempsky]

You're right - "tech means nothing".

[duncan macgregor]

You're right - "tech means nothing". MVT look back to the previous posts when TEL was trading about four dollars with you harping on about Macdunk saying it would continue to trend down and how wrong he was. When you get it so wrong and are stupid enough to put it in print the past will come back and haunt you. I wonder if you are big enough to come back and tell us all how wrong you were. TEL wqill continue long term to trend down simply because of fundamentals the TA will prove me right after the event. Macdunk

[Crypto Crude]

mackdunk-MVT look back to the previous posts when TEL was trading about four dollars with you harping on about Macdunk saying it would continue to trend down and how wrong he was. When you get it so wrong and are stupid enough to put it in print the past will come back and haunt you. I wonder if you are big enough to come back and tell us all how wrong you were. TEL wqill continue long term to trend down simply because of fundamentals the TA will prove me right after the event. Macdunk


yes mackdunk... I agree with that post......
For those of us who made bad calls, for them to come back and tell us how wrong they were...
uttt ummm.....
;)
.^sc

[duncan macgregor]

yes mackdunk... I agree with that post......
For those of us who made bad calls, for them to come back and tell us how wrong they were...
uttt ummm.....
;)
.^sc The one thing going for us SHREWDY that make the calls is that you dont make them unless you are big enough like you and my good self that front up and say I GOT IT WRONG. Incidently there was a Macdunk got it wrong thread. We all make mistakes, the problem is are we stupid enough to let one little mistake become a big mistake. That is the basic reason to run a stop loss. TEL was a huge NZ company with very little or no competition. TEL today is a company caught up in huge expenditure to even stand still with new competition coming in to undercut profit margins. The outlook has worsened the share price followed that is the fundamentals of a company caught out in its own arrogance. Macdunk

[Mick100]

good to see you posting again macdunk

Must be tough being a perma-bear at the moment with the markets going ballistic. Nevermind, I'm sure there will be another bear market one day

If I had some funds available I would be seriously considering telecom

ps, SHREWD claims he's beating you in your comp - that can't be right - put the record straight macdunk

[AMR]

Double bottom put in today (higher high), which would mark an uptrend ;)

[Major von Tempsky]

"The outlook has worsened the share price followed that is the fundamentals of a company caught out in its own arrogance. Macdunk".

Anyone know what the above sentence means? Is it English?

I can see how one could accuse Telstra of arrogance but I fail to follow the logic or evidence of accusing TEL of arrogance.
Au contraire, until the change of government you'd have to say it was the Labour Government suffering from arrogance as it desperately flailed TEL from every direction implementing expropriation without compensation. Telstra was fortunate in that Australia has a Constitution that protected Telstra from the worst of the NZ abuses.

Anyway I now look forward to TEL's August announcement progressively restoring imputation credits :-)

[Zaphod]

TEL
01/05/2009
GENERAL

REL: 1702 HRS Telecom Corporation of New Zealand Limited (NS)

GENERAL: TEL: Release - Telecom resists legal action re mobile launch

AGGRESSIVE TACTICS WILL NOT STOP TELECOM BRINGING WORLD'S BEST MOBILE NETWORK
TO NEW ZEALANDERS

Telecom New Zealand said today Vodafone had threatened legal proceedings over
the launch of Telecom's new XT mobile network.

"This is a piece of aggressive behaviour that betrays Vodafone's insecurities
about competition from Telecom's new XT mobile network, just 13 days away
from launch," said Telecom chief executive Paul Reynolds.

"Telecom will vigorously resist the request for an injunction, and we remain
on target to bring world-class 3G mobile services to New Zealanders from
6.30pm on 13 May."

Telecom's compliance with the terms of its licences was recently confirmed by
the Ministry for Economic Development, as part of its investigation into
interference issues between the WCDMA technology used by Telecom, and the GSM
technol
ogy used by Vodafone and NZ Communications.

Following a series of test measurements and analysis...Telecom's WCDMA
transmitters meet the emission limits specified on spectrum licences issued
pursuant to Telecom's management rights. (From MED letter, 9 April, attached)

Dr Reynolds said, on the information received so far, Vodafone's technical
problems with coverage and other issues were substantially of its own making,
and not the responsibility of Telecom New Zealand.

"They are now reaping the cost of this and other poor technical decisions,
and attempting to lay them at the feet of Telecom, just a few days out from
the launch of our XT network.

"This timing is curious to say the least, and observers will draw their own
conclusions.

"Telecom's engineers have already been working with their counterparts at
Vodafone, for several weeks now, to resolve these issues and this process has
been working well. We are disappointed that Vodafone has taken such extreme
steps over an issue th
at can be resolved in a more constructive way - and
most New Zealanders will be too.

"The XT network launch on 13 May will be a great day for New Zealand mobile
customers, whereas today will only be seen as a sign of desperation by a
global telecommunications giant," said Paul Reynolds.

Contact: Mark Watts, Head of External Media, 0272 504 018
End CA:00179322 For:TEL Type:GENERAL Time:2009-05-01:17:02:23

-----

Smells a bit fishy.

[George]

Saw the guy from ASB last night say that tel's sp dropped
because people had made good profits in the last 6 weeks and
they felt it was a good time to take profits!!!!!!!!!!!
How could he know why people are buying or selling.
Just minutes before heard about Vodafone taking tel to court so
felt that was the reason, if so, why would not asb say that.
I question anything these so-called experts spout.
So, was the drop on techs or fundies, is it a pullback before
a move to over 3.00, the start of another drop to support at
2.20 and possibly this time below.
George