John Linton .......lead to easily predictable scenarios....unless you are a slow thinker.
It's far too early in the morning to be writing a blog but jet lag is not something that you can just 'will' away. I am using the time forced upon me to try and make sense of what effects, if any, the increasing uncertain financial situations around the world may have on our company and its immediate competitors and, perhaps more importantly, its suppliers. Not having any expertise at all in any area of international finance or trade or anything else doesn't help nor do the various contradictions in the various analyses of the few writers I have tended to rely on over the years. Nevertheless I have tried to determine what is happening in the areas of the markets in which we operate as part of the first quarter results we are about to conclude next weekend.
The results we will achieve for the first three months of this financial year will be OK - slightly up on what we would have thought was a reasonable achievement but characterised by a strong July, a very strong August and a disappointingly weak September. October, November and December have, in the past, been very strong months for Exetel but the weak September is a concern in that context. So in these early hours of Sunday morning the various daily figures for September so far are indicating a slowing of the growth achieved in the two previous months almost across the board in terms of residential services and from the little I can gather from our supplier's 'movements' it would seem quite likely that they are experiencing similar trends - though that is based on supposition rather than fact of course.
Of more concern to me, hence the initial references to the uncertain state of so many of the developed world's economies, is whether the weaker than predicted September residential order figures for us are directly related to the increasing layoffs around commercial Australia and the general weakening in overall demand or are due to particular lack of action by us or increased actions by our competitors? I doubt that the reporting we currently have in place is anything like sophisticated enough to provide any sensible base for deriving an answer to that question but I have spent some of Saturday and now the small hours of Sunday morning trying to form some sort of sensible, and helpful, view. On balance it does seem to me that the current 'softening' is at least being influenced by financial pressures in the residential markets in which we operate and given the semi consensus of financial analyst's predictions that does constitute a concern for the coming few months.
I think I am more inclined to the view that the overall residential market is weakening (at least for almost all providers except for Telstra and possibly TPG) due to the personnel layoffs within our suppliers and some of the more obviously over staffed competitors which is the surest indicator of results not being what were expected. It seems that the 'accountants' are more in charge of many communications company's decision making at the moment with 'marketing/sales' voices significantly muted. Not exactly an Earth shattering conclusion given that uncertain financial times always result in financial conservatism and a more knowledgeable person than me would have simply started from such an obvious premise.
Over the days between now and midnight next Friday we will need to re-look at our current assumptions and then reach a set of decisions on how we proceed into the second quarter of this financial year. However, unless something changes we will need to take a more conservative view that we are currently taking in terms of investments and expenditures. Lucky the last three weeks have been so pleasant and reviving.
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