Stock takes: Noticeable by his absence

Where's Rod?

It was interesting to see Telecom chairman Rod Deane so happy to front up for the celebratory affair which was the changing of the guard at Fletcher Building this week - he's a director there too.

But where was he last week during Telecom's darkest hours? As one of the founding fathers of the telco giant you'd think he could have at least tried to offer a few public words of reassurance and take some of the heat off Theresa Gattung - she is his protege after all.

When it comes to judging a company's performance it is the chairman with whom the buck must ultimately stop. And when that chairman has also been a chief executive it is reasonable to assume that he played a key role in the strategic direction taken by the company.

Building a solid future

Good luck to new Fletcher Building boss Jonathan Ling who faces the unenviable task of following Ralph Waters, one of the best management acts in New Zealand corporate history.

"No pressure mate, but you can only cock it up from here." Oops, who said that? It's a horribly unfair thought but one that must have crossed the minds of a few Fletcher shareholders. The company has had a stellar run under Waters, aided by great economic conditions that may not last too much longer. The takeover vultures across the Tasman are circling and any sign of weakness in the company's share price could be a trigger for one of them to swoop.

At least Ling will still have Waters for spiritual guidance as a director on the Fletcher Building board.

Waters admitted to the Herald that it wasn't his preferred option to stay on the board. But he's been persuaded by his fellow directors "only on the proviso that [the new chief] must be given the opportunity of saying if he's uncomfortable with it and without any pressure," he said.

Ling - unsurprisingly really - is understood to be happy with the arrangement.

The role as an independent director is "dramatically different" to that of a chief executive and Ling would get "all the space in the world to run it his way," Waters said. "I already play that other role at Fisher & Paykel. I don't tell John Bongard how to run his business."

Well done, Fletcher Building on a handover that has been handled in typically first-rate style.

Brokerage sale

Discount brokerage Direct Broking is understood to be for sale. A few of the bigger broking houses are believed have looked at the company - which is owned by Dorchester Pacific - and prices around the $5 million mark have been mentioned. As of last night a sale announcement was imminent ... but to who is not yet clear.

Managing director Nigel Wynn declined to comment yesterday. Direct Broking is one of the pioneers of online trading in New Zealand. It has about 30 staff, a client base of about 40,000 and offices in Wellington and Auckland.

Asking the question

Postie Plus copped a share price inquiry from the NZX this week. As did electronic payment systems company Provenco. Both had price spikes which don't appear to link to any market announcements. Both offered responses which suggested they were just as bemused as the NZX about the buying interest. Provenco could only point to the fact that they it has had some positive press in recent weeks. The company was tipped here three weeks ago.

Postie Plus responded to the question with a profit warning which well and truly put paid to any suggestions of anyone buying on insider knowledge.

What is interesting is that the NZX actually asked the question twice in one week. It's usually a rarity. But presumably it doesn't represent any kind of increased vigilance on the part of the NZX, which uses a computer system and set criteria for determining when a share has moved more than it should have.

However, Oceana Gold must have been feeling wary. After some positive share price action they pre-empted any NZX questions with an intriguing release about rumours of an impending transaction which - they were at pains to point out - may or may not become a reality. Market gossip is that the rumour relates to majority owner GRD's plans to sell its stake.

Biotech lifeline

Such is the minnow-like status of biotech company Genesis Research that news of its biggest cash windfall for years failed to make much of a splash.

However the $8.5 million it will receive from Arborgen as a final settlement for its stake wasn't missed by investors. The small but hardy bunch that still believe Genesis has good science and real potential pushed the thinly-traded stock up4c to 30c.

That cash payment is no small bickies for the company which is basically struggling to survive long enough to develop a breakthrough product. In fact it looks like a lifeline.

The money will substantially increase the cash reserves of the company to about 2 1/2 years of cash burn at the current rate. Net tangible assets of Genesis after completion of the settlement will triple to about 49c.

How long is a piece of copper wire?

There's a lot a of people you could feel sorry for in the wake of the Telecom unbundling debacle. The shareholders who lost money, Theresa Gattung who lost credibility, the Government which lost some important files and Telecom sales staff who are still stuck trying to sell the whole "Faster, Cheaper" deal. But spare a thought for the financial analysts who have had to stick their neck out in the last week and put a value on the stock. After all, no one really knows how this thing is going to play out - the great unknown being those Beehive loose canons.

So some analysts say buy, some say sell and some say hold. Twelve-month price targets are now from $4.20 to more than $5.90.

Normally there is just enough market consensus to get a feel for a company's prospects following a big news event.

About the only thing most of the research reports agree on this time is that the stock will be volatile for some time.

"In our view the Cabinet paper was remarkably strong against TEL", wrote Forsyth Barr - which downgraded to hold. "However, there are many significant pricing issues to be worked through and TEL will still be the major player up against a relatively small number of competitors."

Goldman Sachs added a warning: "When is TEL a buy? Not yet." There were two key unknowns it noted: 1. Will the Government require operational separation? 2. What will be the outcome of the Telecommunications Commission's review of mobile regulation? On that front, Goldman warns that the arrival of a third mobile player (with regulatory assistance) would knock another $1 off the share price.

Citigroup has taken the most positive view - maintaining a buy recommendation and setting a target price of $5.90.

Head of Research Kar Yue Yeo said the Cabinet paper lacked the kind of detail which made it clear that there would be sufficient return on investment to entice a new entrant to invest heavily into the market. "A new entrant is not going to invest just to help the Government with its social agenda," he said.

For a lot of long-term holders none of this will matter too much as long as Telecom continues to deliver strong dividends. But, like it or not, being an investor in New Zealand's biggest listed company is now a lot more interesting. May you live in interesting times. Telecom closed down 5c at $4.63 yesterday.

Must be global warming ...

Listening to retailers grumbling about the weather is starting to get a little tiring. Yes, it is a factor. Yes, it is important to know when to wheel the winter woollies and heaters on to the shop floor. But isn't the variability of the weather just a normal ongoing fact of life - for all of us? This week The Warehouse actually complained that in the period to April 30 it had been negatively affected by the lack of "winter temperatures".

Surely that's because it wasn't winter. It is late autumn now and it has just started to get cold and rainy. I'm no Augie Auer but what's so unseasonal about that? But Postie Plus backed The Warehouse with a profit warning and said it would have had a superb quarter if only April had been colder.

To its credit Briscoe Group - which had the luxury of good sales figures - didn't actually mention the weather until asked. It also said it would have done even better if it had been colder.

The retailers need to take a lead from New Zealand's perennially pessimistic farmers. Assume the worst and you won't be disappointed. The Warehouse shares closed up 1c yesterday at $3.86.