Share Price Alert: Telecom New Zealand Ltd 3

Telecom NZ Ltd [TEL.NZX] shares have had an amazing run over the last month or so where the share price has taken off from $1.95 in mid April to finish trading at $2.33 yesterday, a rise of almost 20%.

With a share-price last reached in February - a 52 week high for the stock - the stock looks like getting overcooked to me and investors wishing to take a punt on anything that may come out of the fibre network rollout may want to temper their excitement because any additional revenue coming from it is many years away.

For the majority of the last year shares have been trading below 2 bucks and this is on 4 pieces of news out a month ago ( 1, 2, 3, 4 ) mostly related to taxpayer funded broadband.

The market is excited by the prospects for Telecom that subsidised broadband might bring but the payback for investment by the taxpayer and by the company itself is uncertain especially given the low speeds the company indicate their new fibre might bring and the restrictions and frustrations that will bring for customers as they realise they will not be able to do even a fraction of the things their mates overseas have been able to do for a decade or more already and that future speeds for global internet speeds (sans NZ) will be hundreds of times faster than ours.

I have a gut feeling the increased buying has come about from speculation that the company will win the majority of the tenders to rollout taxpayer funded broadband and if this happens Telecom as a company will have to be split into 2 separate companies, each presumably with its own NZX listing. Investors clearly see more value in the company as two seperate entities and see windfall profits if the company splits.

There is of course no guarantee that Telecom will win the majority of the government contracts, but more likely than not it will, and history typically shows that investors do benefit from company splits of this kind.

Market watchers though are ignoring the bungles the company has mismanaged with the introduction of new services and technology in the past so I remain skeptical of share price increases based on the possibility that the fibre roll-out will bear some positive fruit.

Until then performance for the company is likely to be more along the lines of weakening revenue, smaller profits and cost cutting.

Buy closer to 2 bucks on the inevitable pullback.


Share Price Alert Series


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Freightways Ltd 3
Goodman Fielder Ltd 2
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Telecom New Zealand Ltd 2
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Mainfreight Ltd
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Pumpkin Patch Ltd
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Xero Ltd

Telecom NZ @ Share Investor

Share Price Alert: Telecom New Zealand Ltd 2
Share Price Alert: Telecom New Zealand Ltd
Telecom New Zealand 2011 first half profit review
Telecom New Zealand 2011 first quarter profit review
Telecom Chart: Lazarus Recovery on lower volume
Telecom maybe oversold
Telecom NZ Share Price has "Jumped the Shark"
I was Wrong... sort of
Telecom NZ: TV3 60 Minutes Segment more like Corporate PR
Telecom Share Price Limbos but has it jumped the Shark?
Telecom NZ: Saint Gattung gets her Ya Ya's out
Telecom NZ: Bye Bye Paul Reynolds
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 TEL Company Reports
Discuss TEL at Share Investor Forum - Register free


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c Share Investor 2011

John Key: Budget Speech 2011

Budget Debate - 19th May, 2011 - Part 1

Budget Debate - 19th May, 2011 - Part 2

I have never seen any politician give such a riveting, witty, confident and informative speech in parliament like the Prime Minister did last night in the 2011 budget speech - he was on fire!

His speech held the attention of the whole house and he had everyone eating out of his hand, not perhaps for his politics, but the mere delivery of his message. The house was captivated by his display of knowledge of things financial and the answers he had to rebuff Phil Goff's sorry speech that was filled with inconsistency, doubt, half truths and knowledge of the economy that a 2 year old might have. -apparently, according to Phil, the global financial crises was over in 2009.

It is clear that John Key is the man for the time, he knows it, Labour know it and the overwhelming part of our population does as well.

As Matthew Hooton said yesterday, "you have 2 choices come November 26, a Labour Party run by Phil Goff or a Labour Party run by John Key".

Johnny, has out Laboured Labour.

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c Darren Rickard 2011

Larger Incentives for Sky City CEO Make Sense

There is nothing like a good and appropriate incentive to get an individual to do a better job and in the case of Sky City Entertainment Group [SKC.NZX] CEO Nigel Morrison , to retain his services for a longer period.

The Sky City board announced yesterday that Morrison's incentive package will be sweetened to potentially triple his current incentive package which currently sits at interest free loans to purchase $1.2 million shares based on hitting a number of financial targets.

The new deal allows Morrison to receive SKC shares worth up to $3.6 million immediately rather than wait for 2-3 years as per the old plan. This incentive is based on the company’s financials for the six month period to 31 December 2010, which were announced to the market on 16 February 2011. Incentives based under a long-term incentive plan are in addition to his salary, which was stated in last year's annual report as $2,556,408.

Now it is not often that I champion increased pay packages for CEO's and boards (you can bet other executives will be getting bigger pay packages in the near future) but under Morrison's tenure profit for the company has risen from $102 million before his appointment to a record $129 million to June 30 2011 (see 2010 Annual Report) so his bonus for results and retaining him for the medium term is a very good move by the board and one that other boards should look to to incentivise CEOs.

My only gripes are that given his track record of raising profit by 30% in 3 years the potential tripling of his pay appears mostly for retaining him rather than his past results and that the board sought a waivier from the NZX rather than consulting owners like myself who would have gladly voted some sort of increase in incentive.

Nigel Morrison therefore will be under intense pressure to deliver big increases in profit over the next 3 years and I can only see one more big result coming in 2012 full year to 3o June due to the 2011 Rugby World Cup before he will have to spend some big money either buying another casino somewhere in Australasia or spending much larger sums that he already is to increase foot traffic through his casinos.

Of course this sort of incentive does have the risk that the CEO will take bigger risks to get his bonus but he does have a track record of good results wherever he has been in charge and as he is an accountant by trade they tend to be completely focsed on the bottomline before anything else and that cannot be a bad thing at all where shareholders moola is concerned.


Disc: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor

Share Investor's Total Returns: Sky City Entertainment Group Ltd
Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
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Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports

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c Share Investor 2011

Share Investor's Total Returns: Michael Hill International Ltd

I have written about returns for stocks on a general basis in the Long Term View series of posts and the Long VS Short series but in this series, Share Investor's Total Returns, I will be giving my actual returns for stocks in the Share Investor Portfolio for as long as I have held them.

The return calculation will include dividends earned along with qualifying tax credits and of course any capital increase in the share price. It will be a total return over the length of holding of the share expressed in overall dollar figures with an individual value per share of what the stock currently is held at.

The fifth stock in this particular series is a big long term punt in the portfolio and one that I have held for nearly 3.5 years, Michael Hill International Ltd [MHI.NZX]

The current holding of 10000 shares was kicked off by an initial purchase of 1000 (adjusted for a 1:10 share split in November 2007) in November 2007 plus 2000 in June 2008 and in July 2009.

The stock cost a total of $7165.84. It has returned net dividends of $569.72 and total tax credits of $279.32, with $92.00 in brokerage.

I am eligible for the full tax credit so if the gross dividend (net dividend plus tax credits)is added and brokerage taken off my full return over the total holding period of 3.5 years is $757.04

The current capital value of the company in the Share Investor Portfolio as at 13 May 2011 is $9200.00. The capital gain therefore is $1942.16. This gives a total return on this share of $2699.20. This is a 37.5% return over 3.5 years or 10.71% net per annum.

I hold MHI therefore at a total cost of $4558.64 or 45.5c per share.


Disc: I own MHI shares in the Share Investor Portfolio


Share Investor's Total Returns Series

Freightways Ltd
Mainfreight Ltd
Sky City Entertainment Group Ltd
The Warehouse Group Ltd


Michael Hill International @ Share Investor

Michael Hill International: "Takeover" Undervalues the Company
Share Investor's 2011 Stock Picks
October 2010 Top Stock: Michael Hill International Ltd
Michael Hill International: Is Kim Kardashian the right fit?
Michael Hill International: Tall Tales & Rumours
Hill Family makes Claytons Takeover bid for Michael Hill International
Michael Hill International Ltd: 2010 Full Year Profit Analysis
Long Term View: Michael Hill International Ltd
Michael Hill International: 2010 half year profit commentary
Michael Hill Makeover kicks off
Michael Hill International: 2009 full year profit commentary
Toughen Up: What I have learned from the hard times
Stock of the Week: Michael Hill International
Michael Hill TV3 60 Minutes Interview
Long VS Short: Michael Hill International
Marketwatch: Michael Hill International
Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles

Discuss MHI @ Share Investor Forum
Download MHI Company Reports

Buy Toughen Up: What I've Learned About Surviving Tough Times



Toughen Up - Fishpond.co.nz




c Share Investor 2011