Around the Traps ... with THE FERRET 08:08, Wednesday, 15 June 2005
Sydney - Wednesday - June 15: (RWE Australian Business News) - *****************************
Investors must have liked what they saw in the weekend beauty parade of new TELSTRA (TLS) boss Solomon Trujillo.
The shares rose a further 9c to to $5.17 yesterday, making a total 10c since the announcement.
That makes him a $1.2 billion-dollar man.
The headline writers, meanwhile, are having the customary pun-fest.
We've already had "Heir to the phone", "Sol searching" and "Sol mate".
It's only a matter of time before we see "Wisdom of Solomon".
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We like reading companies' complaints about share price because of the creative writing.
AAV (AVV) had its annual meeting yesterday and chairman Bob Mansfield recounted to shareholders how directors became aware during the second half of the 2004 year that the expected results were not going to be up to "our expectations, nor to market expectations".
"On 26 October 2004, we announced the first of two profit warnings to the market that the results for 2004 would be lower than market expectations," he said.
"The market reaction to the first profit warning went well beyond the expectations of your directors as to its effects on the share price.
"We saw our share price drop some 28 per cent, from around the mid $2 mark to $1.74 the very next day.
"Since that date the share price has crept lower to around $1.40 just prior to Christmas, when the second profit warning was announced.
"Since that period and consistent with the decline in the overall ASX Small Cap index, our share price has drifted lower to around $1.18 per share.
"Your directors are very concerned at the fall in the AAV share price following these announcements and have commenced a process designed to restore market confidence in the company and to increase earnings in the future."
The chairman should have quit while he was, er, ahead.
AAV plunged a further 23c to as low as 95c yesterday before closing at $1.07.
The company also announced at the annual meeting that the one-off charges from the sale or closure of underperforming assets would cause a loss of around $30 million in the June half.
Yup, two profit warnings followed by a loss warning, all within eight months, is not good for a share price.
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Now here's something we haven't heard for a while from an Australian exploration company.
BEACH PETROLEUM (BPT), as operator of PEL110, yesterday advised the ASX that the spudding of Yanerbie-1 well had been delayed ... due to rain!
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TAWANA RESOURCES (TAW), which yesterday announced the discovery of a 4.66 carat diamond, had some useful advice for other explorers.
Explaining the discovery, the company pointed out it had previously advised that statistical analysis of the diamonds recovered from the alluvials strongly indicated that larger diamonds would be recovered once larger volumes of samples had been processed.
This is due to the "nugget effect" which requires larger samples to recover the larger and more valuable diamonds.
The formula, according to Tawana, is:
Small samples = smaller diamonds;
larger samples = larger diamonds.
Now everybody got that?
Tawana shares rose 2c to 85c.
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We often complain how companies tend to muddy their profit warnings.
However, QUEENSLAND COTTON (QCH) is a good example of a company telling it how it is.
It said unfavourable weather had resulted in a reduced outlook for full-year net profit of $10 million, based upon last year's accounting standards.
"While this outlook is 60 per cent above the company's result for the 2005 year ($6.3 million), it is below early expectations of an operating profit after tax in excess of $15 million, on an equivalent accounting basis," it said.
The shares fell 25c to $4.12.
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The interest rate reared its ugly head again yesterday after RBA Governor Ian Macfarlane's speech, "Global Influences on the Australian Economy".
As a result JP Morgan advised clients the RBA was "unlikely to move the cash rate in either direction any time soon".
Maybe even hold them steady in an unchanged position as well, eh?
Meanwhile, NAB's Quarterly Business Survey said that provided the May Survey results didn't prove the start of a new upward trend in domestic demand, "we continue to see the RBA's next move as downwards, a cut of 25 points in early 2006.
"The onset of a more serious drought does, however, provide the possibility of the timing of that cut being brought forward to late 2005."
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Fat-drug developer METABOLIC PHARMACEUTICALS (MBP) paid the price of a $10 million placement to institutional and professional investors at 61c a share.
The shares promptly fell 6.5c to 63c before closing at 64c.
Shareholders will also participate, via a $10 million share purchase plan at 61c.
Metabolic rose from 61c to 91c last month (and was queried halfway at 77c), but has been spiralling downwards again since.
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