Thursday, February 25, 2010

Share Investor Rant: Annual Meetings

When I got my The Warehouse Group [WHS.NZ] invitation for a series of 5 "investor presentations" across New Zealand I was drawn especially to the ones in Christchurch and Tauranga being held on March 15 and 16 respectively.

They kick off at 5.30pm and 4.45pm.

So what? you ask.

Well apart from the fact that it is in Christchurch/Tauranga and I cant attend because I am fabulous Aucklander, if I was in Christchurch or Tauranga I would probably be able to attend.

All the other meetings are on during the middle of the day or morning and this is the traditional time for shareholder meetings for New Zealand listed companies.

I must confess, I have never been to a shareholders meeting and I own shares in 17 different companies. I should go but the reason I haven't been? Like most people I have a day job that keeps me busy and a family to support.

I would love to go to an annual meeting before I retire (if I ever do)and see other people attending that are below the age of 65.

Now I am no conspiracy theorist but what is the deal here?

I am thinking that companies have always conducted themselves in this way, so it has become somewhat of a bad habit to have annual meetings at inconvenient times for most shareholders.

Perhaps listed companies don't want shareholders like me to turn up to their meetings ? I am a bit of a stirrer and my contemporaries are more likely to give directors and CEOs more of a hard time than the generation before us.

Companies conduct "investor presentations" during their working hours for larger shareholders and analysts and these times are convenient to them, why not us little younger guys?

I think it is time directors come to the party and realise that their annual meeting hours do not suit the bulk of their shareholders and it is time we gave them a swift reminder it is us who owns the company.

Perhaps if we got more big mouths like me at annual meetings the good work done by Bruce Sheppard and his NZ Shareholders Association wouldn't be as badly needed as it clearly is.

Shame I cant bring this rant up at a meeting.


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c Share Investor 2010

Wednesday, February 24, 2010

Telecom NZ: Bye Bye Paul Reynolds

That squiggly new Telecom NZ [TEL.NZ] logo is starting to look like the most prophetic image for a company's future, rather than representing "anything the customer wants" in a positive way it currently seems to be telling customers that we don't know what the hell we are doing, we don't really care and the future looks grim - for customers as well as Telecom.

Four XT outages since December have led to the resignations of Telecom's chief transformation officer, Frank Mount, and Alcatel-Lucent's New Zealand head, Steve Lowe and Telecom shareholders have so far seen the thick end of $15 million go south for compensation packages for lost XT coverage.

We have yet to see the losses that are surely mounting from not only existing customers deciding to leave the network but also new customers deciding to go elsewhere instead of with XT.

When launched in August last year with much fanfare and Richard Hammond, Anna Streton and Zoe Bell fronting an expensive marketing campaign, XT was going to be the next big thing in mobile in this country with world-class coverage second to none.

It turned out to be a turkey that was introduced in a slap dash way without sufficient financial backing where it counts - spending enough on building the network.

Vodafone New Zealand spent more than a billion dollars building their network and that was many years ago. Telecom NZ spent around $600 million stitching their apparent equivalent of two cans and a piece of string.

Of course Telecom NZ have a history of cost cutting (except when it comes to executive pay packets and buying AAPT) Teresa Gattung, former CEO, introduced a CDMA mobile network in the 1990s when urged not to by experts. It was a redundant system that only a handful of countries used but it was cheap and it was duly purchased and that is why the XT network needed to be built.

Many of the same executives that were on the Telecom board when CDMA was introduced are still on the board today and it seems the failure for Paul Reynolds to look back on company history means he is repeating the same old mistakes. This has become Telecom NZ company culture - think short-term, ignore the obvious and hopefully it might go away. Clearly that extends to customers as well.

For Telecom shareholders the scenario is starting to look even worse. Long-term, shareholders haven't done particularly well and the XT mobile failure means that future performance looks grim. XT was going to be the new growing revenue stream for the company as their other divisions wallow in negative revenue growth but that has been put on hold temporarily.

If the XT network isn't fixed and fixed properly soon, consumers will have less faith in Telecom's mobile offering than they already do and losses for the company and shareholders are going to be significant - possibly the straw that broke the camels back, which happens to large monopolies as their arrogance blinds them to reality.

Paul Reynolds accepted a total package of around $3 million last year and he received more than half of that in performance incentives (hello!) and Telecom shares. This was in a year that profits and the share price were substantially down

Paul is Telecom NZ CEO, he is ultimately responsible for company performance and he gets paid handsomely for it.

Saying sorry, as he has admitted (see below) is simply not good enough.




He has to do the right thing, he has failed and the company he heads is in turmoil because of it. Paul needs to fall on his sword.

I don't expect this to happen because of that Telecom culture again, many Telecom directors and execs have made blunders costing millions and left years after with millions of shareholder bonuses in their pockets - hi Ms Gattung.

Telecom shareholders need to put pressure on those at the top before the company disconnects, for good.

Telecom NZ shares were down 6c to NZ$2.30 at close of market yesterday on higher than average volume. On the NYSE this morning NZT shares are down nearly 5%.

Expect another rorting today on the NZX.

Image


Telecom NZ @ Share Investor

Long Term View: Telecom NZ Ltd
Stock of the Week: Telecom Ltd
Revisiting Telecom

Getting cute and fluffy with Teresa Gattung
Telecom NZ Hangs up
Business Gobbledygook puts up barriers to communication
A Rare Breed
Telecom NZ facing a watershed period
Biology a major key in "glass ceiling" for women
Telecom rewards Gattung for mediocrity

Download every available TEL Annual Report Free


Discuss this stock at Share Investor Forum - Register free

Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
Usually ships in 24 hours

Buy The Intelligent Investor & more @ Fishpond.co.nz

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c Share Investor 2010

Tuesday, February 23, 2010

Long Term View: Telecom NZ Ltd




In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO.

The calculation of returns includes dividends and tax credits.

Lets have a look at Telecom New Zealand Ltd [TEL.NZ] this time. I have skipped to the end of the alphabet here because Telecom is in the news and it is bad news, again. When I started this series I was convinced that this company would be one of those that would show better returns than most would think given that its share price is currently around its 1992 IPO level. Lets see.

With NZ$5.95c in net dividends paid (see chart above & 1997, 1999, 2009 TEL Annual Reports ) (the reason why I thought the returns would be better than simply looking at the share price and ironically the reason why the company is struggling and getting so much bad publicity - too much paid in dividends and not enough investment back into the company) and another 33% of that figure gained for those eligible for associated tax credits, makes just over a 450% return (see chart below for share price percentage gain against the average of all NZX indexes) over the 18 year listing which gives an annual net return of around 25 %.

This is approximately 35% better than the return from the average of all NZX indexes.





Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
New Zealand Refining Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd


Telecom NZ @ Share Investor

Stock of the Week: Telecom Ltd
Revisiting Telecom

Getting cute and fluffy with Teresa Gattung
Telecom NZ Hangs up
Business Gobbledygook puts up barriers to communication
A Rare Breed
Telecom NZ facing a watershed period
Biology a major key in "glass ceiling" for women
Telecom rewards Gattung for mediocrity

Download every available TEL Annual Report Free

Discuss this stock at Share Investor Forum - Register free


Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
Usually ships in 24 hours

Buy The Intelligent Investor & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010