Thursday, November 27. 2008Too Much Information.......John Linton Too little ability to understand what it all means. Too many things seem to be happening simultaneously lately with a plethora of 'information' requiring some sort of examination as, at least from my viewpoint, most of the information deluge seems, at least on a cursory reading, to contradict the information that immediately preceded it - or maybe it is simply that I can't understand what seems to be going on in the commercial 'world' generally and the Australian communications market specifically. I thought that the TPG annual general meeting report was a model of succinct information delivery and was very impressive in almost every respect. As a brand new shareholder in SOT I was pleased to get promised a half year dividend equal to 10% of my investment and to know that TPG was doing so well and was scheduled to do even better: http://www.asx.com.au/asxpdf/20081126/pdf/31dtthbtc6ycvk.pdf I still find it remarkable that TPG is so much more efficiently run than every other communications company in Australia that it makes more money per shareholder dollar than any other investment in Australia (quite possibly in a far wider area than that - other than places like the Golden Triangle) but there is no disputing the presented figures - especially in the context of where they were reported. I suppose I would have expected a little more detail supporting the FY2009 projections (5 months into the planning period and an AGM should have made that both possible and expected I would have thought and this did create the one scintilla of doubt in my mind) and I remain surprised, probably more than surprised, that the report confirms that TPG has over 1,200 employees yet still outperforms the industry overall in net profit per revenue dollar - even better than Telstra which is very encouraging to know that a monopoly can be outperformed in a key area of endeavour. I was vaguely surprised by the announcement that Internode was going to resell Telstra's ADSL2 network having made a not insignificant investment in a small ADSL2 roll out of its own. I was even more surprised by the 'sub announcement' that Internode was also going to re-bill Telstra's wire line services though I assumed that this would have been part of the 'whole of business discounting' concepts so beloved of monopolies. Not that there is anything remotely wrong with picking up the revenue from wire line re-billing (and I imagine the profits associated with the call charges) but it seemed to be another change of direction for Internode and one that seems to be more in line with a desire to quickly 'bulk up' its annual revenues as part of a sale/listing process rather than a strategic move of some sort; now seems an odd time in that company's life to finally move into such an old fashioned product/service. I will be interested to see how Internode deal with the price disparities between their own ADSL2 costs, the costs they pay Optus for the ADSL2 services they have only recently been offering and now the Telstra ADSL2 costs. Perhaps it will be simplified by simply stopping selling the Optus ADSL2 services and moving the few customers on those services to Telstra but that will still leave, without of course knowing any of the contract details, a pretty large gap between Internode's internal ADSL2 costings and the costs they will be charged by Telstra for an identical service. I only base that on the two ISPs who have published ADSL2 pricing based on the Telstra ADSL2 network (PeopleTelecom and Pacific) whose ADSL2 prices are simply not competitive. I read the statement of claim by AFACT against iiNet yesterday and feel that my initial view that iinet is in a for a great deal of expense and considerable 'pain' is, if anything, understated. Only a complete fool would ever be stupid enough to venture a view on what the outcome of any court action is going to be and I would like to retain at least the illusion that I am not a complete fool - yet. I can say that the statement of claim is worded in exactly the way I thought it would be and it does confirm that AFACT has gone to a lot of time and a great deal of cost to build the body of evidence it's legal advisers determined would be necessary to substantiate the points they would need to prove in court to obtain the short, medium and long term results they are looking to establish. So, it looks to me as though AFACT's counsel will proceed to court with everything they had on their wish list and had pre-prepared to argue while iiNet continues to bluster about "executioners" and "not knowing who uses our IP addresses" and other fatuous and self denigrating nonsense. Perhaps when they find a suitable legal team to act on their behalf the first thing iinet will be told is to stop their representatives making a bad situation even worse by making any comment that makes them look as stupid, and as 'guilty' as they have in the past. On the other hand - "Never mind the law suit - X-Box Live content downloads are free". For Heaven's sake! Then there was yesterday's tender submitting event. I have no idea of the contents of the various submissions and therefore have no view, even if I would be capable of understanding the contents of any of the submissions (which I wouldn't), on how good, bad, compliant, non-compliant those documents are or aren't. What is apparent is that, whatever the contents of the documents, there is a very high probability that by this time next year there will be no executed contract to build a NBN.This will be partly because of the ridiculous RFP, partly because Telstra can't allow anything to happen at all and partly because the whole fiasco is such a mess the Senate will tie any process up in knots while they examine every aspect of it. Of course, if Telstra somehow manages to win then Australia, in some years time, could have a NBN priced like this: http://www.australianit.news.com.au/story/0,24897,24710963-15306,00.html So we have the last of the main 'independent' ISPs throwing in its hand and reselling Telstra's ADSL2, you have the fourth or fifth or whatever 'largest' Australian ISP (I can never understand how iinet keeps referring to itself as "Australia's third largest ISP" - don't they read the information in the public media?) being dangerously engaged in serious litigation that will, whatever anyone may think now, take a major toll of a great many aspects of that company and Telstra determined to make a dog's breakfast of the ill fated/ill conceived/massively badly executed NBN tender process that will ensure virtually all investment in communications infrastructure over the coming year (with the possible exception of that by TPG) is brought to a halt. Maybe if I stopped reading the daily 'press' I would be less confused? Trackbacks
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Did you follow TPG's share price yesterday? You could have made 35% in one day!
I suspect the market might rally again today also. I wish I had acted on the information you drew my attention to on Monday. Do you think you will sell in the short term John, or are you sticking to your instinct and hanging on for the wave? Comments (2)
I look at the share market several times a day as I have shares and, like most other people, I have seen their value drop week by week for the last 12 months.
I know absolutely nothing about the share market and my comments about TPG's share price falls have been made several times since the 'merger'. As far as I can see the TPG share price, even now, should be well North of $A1.00 but there is clearly something that keeps driving the price South (something other than the general fall in the ASX). The short answer is that I would sell at a 100% profit and not regret then seeing the price deliver the 1,000% profit the base financials seem to indicate it should. I will probably buy more TPG shares if the price falls to 10 cents again but would wait and see if the price drifts higher. PLEASE REMEMBER I HAVE NO KNOWLEDGE OF SHARE PRICES OR MOVEMENTS!!!! Comments (4)
Yes I understand you are just commenting on your own actions and not trying to advise in any way. Your blog post (and allow me to correct myself - it was on Tuesday) just sparked my own research (in fact I read yesterdays SOT announcements prior to you posting today) which I was 'tempted' to act on.
I am just interested in how you go - working in a tiny accounting firm I see and calculate many share transactions and fortunately for me I find that fascinating at times. Comments (2)
I buy 'blue chip' stocks In Australia and I still have the overwhelming majority of value of my shares in IBM that I bought for ten years as an automatic deduction from my salary and commission in the late 1960s and 1970s and have never sold.
I just couldn't resist buying some shares for 'pocket change' that the TPG price of sub 10 cents made so compelling and that was the only reason. I don't know why they're so "wrongly priced" - doubtless if I'm silly enough to hold on to them for any length of time I'll find out. As with all my 'gambling' - I think if you can double your money it's time to cash in and go home. Comments (4)
"two ISPs who have published ADSL2 pricing based on the Telstra ADSL2 network (PeopleTelecom and Pacific) whose ADSL2 prices are simply not competitive. "
Well John, after many happy years with Exetel the draw of finally being able to connect to ADSL2+ even though its on a Telstra Dslam was too great. I have been hoping that oneday Exetel may have been able to offer ADSL2+ on Telstra Dslams. The Pacific / Pacnet deal of 30GB per month and uploads not being counted for $74.95 has finally tempted me away from Exetel -- mind you I have been more than happy with my stay at Exetel. I still have Exetel HSPA so I will maintain a connection with Exetel, maybe oneday you will have an ADSL2+ offering for me on the Medowie Exchange (MDWI)NSW. cheers and hope to come back if plans are availble one day. Comment (1)
I agree with you John on the share price being undervalued on TPG.
I guess the market were not pricing in the FY guidance for 09 after years of underachieiving with the previous clowns in charge at Soul. David Teoh appears to have cleared the decks & with the company re-affirming the EBITDA of $93 million atfer 4 months trading, the share price should head north. Interesting to see TPG announcing naked dsl plans, going after iinet. Speaking of iinet, do you believe their operations will suffer with this costly legal court case against them. Comment (1)
I think the law suit against iinet will cost money (circa $A1 million) to defend which won't concern iinet too much but the management time that will be required would adversely affect any organisation.
To date they have either completely underestimated the likelihood of: a) believing they would be sued b) if they were sued, losing such a law suit c) The disruption this will cause their operations from the moment they were served the documents and they have displayed a naievete in public staatements that is surprising. How that develops is anyone's guess - if it was me - I'd settle now - nothing positive is going to come out of this for iinet. If they continue their previus public 'bravado' they are going to regret it. Comments (4)
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