BT shares plummet on margin pressure BT hit targets for the first quarter ended 30 June 2008 bringing in revenues of £5.1bn, up three per cent on last year. But the market is distinctly underwhelmed, marking shares down 10 per cent in early trading. The telco made earnings before interest, taxation, depreciation and amortization (EBITDA) of £1.433bn, up one per …
You make the mistake people have always done. That figure is EBITDA.
Most of that money will go in tax, and investment to keep the network running.
It's like expecting a taxi driver to set his fares according to his operating (petrol, servicing) costs alone. It'll work for a while, until his car wears out and he can't replace it.
BT have thousands of exchanges, which like any modern electronics have a life of 15-20 years before they are dead or obsolete (unlike old mechanical stuff that could last 30+). It's been a while since I was close to that industry, but assume 5000 exchanges. 20 years life, so that means replacing 250/year. That's one per working day. At several £m a time you'll burn £5bn very quickly.
It's a huge company, it has huge income and huge bills. By most measures they made very little money for their size, hence the hammering the shares took.
Sure, you can do phone networks on the cheap. Like my ISP, which is averaging 50+ hours of outage per month at the moment. Doing it right costs money.
Maybe a third option was that they were launched at too high a price given their potential for the next 2 decades.
I never feel I have a good understanding as to whether profit is excessive until I can divide the profit by the amount invested, and multiply by 100%. Am I the only one who feel they need to do this in order to compare the large numbers quoted, with the rates available to me at my local building societies and banks?
Too lenient...
Cancel the shares that were issued and present a squarely placed central digit to everyone who "invested" in making a profit out of an essential utility; ditto for all the other vital infrastructure services (trains/power the lot). The sort of people who cannot see a problem with making a profit from supplying a vital resource are not the sort of people I wish to associate with or reward.
While we're at it... jail (gaol) for everyone at middle/upper management and above for consistent mismanagement, failure to comply with data protection, lying to investigators and trying to deceive the general public. (Shame the death sentence isn't still valid, these actions amounted to nothing short of treason - a crime against the state, perhaps a public flogging would be in order).
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I happen to work for openreach and from my point of view the way they are managing all their assests seems to be by cutting back on everything when they should be investing in network and staff. They are saving money in the short term but just shifting staff to firefight their biggest backlogs at the expense of others.
Either openreach should be state owned so bt has to compete like everyone else and suffer the consequences of mis-management or the network should have proper competition. Openreach is very much still bt and not truly independent.
Steve (and others) might want to read about BT's much over-hyped 21CN. Underneath all the hype you'll find that all the exchanges are already lined up to be replaced, the main reason behind replacing them is to reduce costs. The things we currently refer to as exchanges become smaller simpler cheaper greener places where phone lines connect to multi-function IP-based access devices which offer both phone and broadband (DSL) connectivity from the same box (much as TalkTalk and others already do on their LLU services). The core business of call switching and interconnection with other phone provider networks is then centralised in a very much smaller number of 21CN datacentres whose 21CN names I forget.
"ISP provider business"
It's an odd definition of "BT Openreach" that calls it an "ISP provider business". The main business at Openreach is installing and fixing the wires between the exchange and the punter, and the same for the infrastructure associated with them (poles, holes, etc).
A more obvious "ISP provider business" would be BTwholesale, who are supposed to provide the connectivity between the end customer premises and the retail ISP's own network, for ISPs ranging from AAISP to Zen (and a few other ISPs, including BT Retail, in between). Sometimes they even get it right.
A company is big as BT with a solid reputation over the years decides in 2006 to get involved with an spyware company by the name of 121Media (Now Phorm) shows to me that something is seriously lacking in judgement at the top.
The investors should be furious. WebWise is a disgrace and BT has been shown far too much rope with this illegal invasion of privacy. Time to stiffen the rope and get rid of these people who show such lack of judgement.
Many people took shares as partof their retirment packages as for shareholders making a profit trust me they get less in dividands from Bt than Lloyds/TSB or other share fro other comapnies.
Many hold BT shares still because they are worth less than they paid for them..
Part of BT's problem is the managment.
Ian Livingston gets a £50,000 pay rise to move to CEO andf it is that amount more than the leaving CEO. Another employee not sure on his name but can find it in the BT AGM notes gets a pay rise of over £160,000 this year. Patricia Hewit to join BT board of directors shew wil br paid £60,000 to attend 9 meetings she also has a none voting role. These are the same people who secretly trialed Phorm's program WEBWISE vertually stalking customers intercepting their connections and forging cookies.
That is where the money goes not the share holders
The shareholders knew nothing about Webwise or phorm until the AGM when one shareholder placed dephormation as proxy to be sure this information reached shareholders. In an email to Emma and Ian asking why shareholders were not inphormed the reply was BT test thousends of new technolical things and we cannot tell shareholders all of them.
MPO is this was so distasteful to the public and respectable people who usae the internet they were unable to show just how low the managment had snooped.
Yes I do hold shares in the company they were part of my mother retirment payment. It was a way BT saved money by using shares instead of paying cash.
You can still get quite a lot of money for BT shares, the entire market is changing and I happen to think that BT's overvalued its copper infrastructure. With mesh/matrix technology on the horizon, this will take away the monopoly on individual lines, as multiple different routes over different infrastructure types deliver broadband to end users. A friend of mine who's very good at timing (eg., sold all her tech shares before dotcom crash), has sold all her BT shares recently because she thinks they are more or less at their peak, overpriced at that. If I had any left I certainly wouldn't be holding on to them, and if part of a pension plan, I'd investigate what I could do to sell them quickly, or swap them with other shares.
Greg, Oxford
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