John Linton
I was driving on Friday and on the ABC 702 station there was a naturalist debunking the old wives tale that goldfish can only remember for 3 seconds. A particularly pointless and totally stupid myth that anyone who has ever owned and therefore fed goldfish would know was total BS. He went on to state how goldfish have long memories along with every other sentient entity on the planet from Amoeba upwards.
I was quickly reminded that there actually were exceptions to his contention that all senient organisms have memory functions when I read Saturday's AFR in which there was a brief article that Futuris has effectively arranged for the Amcom management to buy back the Futuris 51% Amcom shareholding via a melange of new investors, debt and, presumably, some 'forgiveness' on the part of Amcom. Some announcement of what might actually be the case is tentatively scheduled for next week and perhaps that will make clear what the real future of Amcom is after applying this band aid which, to me, just seems to be postponing the inevitable fire sale of Amcom to some other entity.
What will, inevitably, happen - and sooner rather than later - is that the 'new' Amcom will have too much debt (and new and impatient shareholders) and the first thing the 'new' Amcom will do is to sell off its ill-judged investment in a 20% holding in iinet - and I would think that would happen well before Christmas. If they have to borrow money to buy their shares back from Futuris any lender will almost certainly insist on selling off the 'non core' holding in iinet.
Equally inevitably that 20% shareholding will then be bought, at a realistic (for both parties) price, by perhaps AAPT, (it's hard to think of anther entity who has either the interest or the money) who will then, assuming this happens, own a controlling interest in iinet and will then proceed to buy up the rest of the shares. This is interesting to contemplate as AAPT has no money for such acquisitions (even a relatively small one such as this) and its parent has only recently finished writing off the last $A1.8 billion it paid to acquire the original AAPT business.So while that's logical it probably won't happen and it's difficult to see another buyer.
I have no real interest in these machinations other than they cross my mind because I read the industry and financial press (which I definitely don't consider to ever be completely or even reasonably factual on many occasions). But it does occur to me that as no communications company who has ever bought out another communications company has ever made any sort of real gain from such transactions - why does it still go on? Perhaps Australian communications companies are the exception to the 'rule' that all sentient entities have memory functions? Assuming that Australian communications companies are in fact sentient I suppose?
So, if EVERY purchase of an Australian communications company by another Australian communications company produces no discernible operational or financial benefit why do they continue to occur with monotonous regularity? The triumph of hope over experience? Boredom? Egotism? Stupidity? The lack of care inherent in spending other people's money? take your pick because NONE of these transactions has ever produced a commercial return for the buyer.
I think I read recently that iinet is an agglomeration of 30 companies - the result of this accumulation is a balance sheet that carries accumulated losses which seems to be a clear indication that at no time in iinet's existence to date has it ever made enough money to afford the acquisitions it has made having funded the acquisitions via losing successive shareholder investments - at least that's what my untutored reading of their published financial results indicate.
And for what purpose?
Is anyone better off other than the iinet 'executives' who have clearly paid themselves too much remuneration while they 'p*** away' their shareholder's money?
Is a company that charges higher prices for its services than any other communications company (with the exception of Telstra) delivering any value to Australian communication service users by being in business?
Is a company with a turnover of less than a quarter of a billion dollars of any significance in an industry that turns over an estimated $A38 billion in the FY2008 reporting period?
Is a company that pays either no or miniscule dividends a sensible share market investment?
Only people who invest money in iinet can answer those questions with any conviction and, presumably, their answer is yes - obviously for reasons different to the ones listed above.
According to the naturalist on ABC radio they can't have fins, gills and be a pleasing orange/red/gold colour - so there is some other species with no memory function despite his well documented assertions.