NZ stocks: Shares reveal the good, the bad and the very ugly

It was a case of the good, the bad and the very, very, ugly on the New Zealand sharemarket today as the leading indices closed narrowly in the black on a mixed bag of news.

The NZ50 gross index ended up 3.61 points at 2013.23 and the NZSE-40 capital index was 4.18 points higher at 1986.33 on shares worth $84 million.

Top stock Telecom was responsible for much of that movement, closing above $5 - up 14c at $5.04 - for the first time since November.

Forsyth Barr Frater Williams broker Alan Wills said the stock was benefitting from a more predictable earnings profile and reduced debt levels, which made it more attractive to offshore investors.

Another to make it into the "good" category today was pay-TV operator Sky Network TV, which bounced 10c to 410 after upping its current year earnings guidance to between a net loss of $2.5 million and breakeven, from a previous forecast for a net loss of $8.5 million to $11 million.

Subscriber numbers stood at 537,217 as at May 20, and Sky's churn rate - or the number of disconnections - was heading towards an all time low, the company said.

On the "bad" side of the ledger, Tranz Rail closed lower for the first time in recent days as the dust settled on a potential bidding war for the troubled rail operator between Australia's Toll Holdings and Florida's RailAmerica.

It closed down 7c at 87, compared with a pre bid-talk level of 52c.

Mr Wills said the stock would need some fresh news for it to go any higher and today's revision was a sign investors were booking profits on the recent gains.

As for the very, very, ugly - financial services group Tower Ltd announced a clean out of its books that resulted in a 37 per cent fall in its share price.

Tower shares shed 83 cents to a record low of $1.38 after the company announced a fresh profit warning and a major capital raising.

It said it would report a half year loss of more than $180 million although it would have an operating profit of $3-6 million.

Tower also said it planned to raise new capital of $200 million which would be used to cut debt. Assuming a discounted rights issue, that will almost double the number of shares on issue.

Stocks are being severely punished for failing to deliver on expectations and cash issues are a risky business in the current uncertain investment climate, Mr Wills said.

In the broader market, falls outnumbered rises by 56 to 44 among the 135 stocks traded.

Stocks to gain included: AMP, up 2c at 573; Fletcher Building, up a cent at 333; Fisher and Paykel Healthcare, up 20c at 1070 ahead of its full year result tomorrow; and Fisher and Paykel Appliances, up 15c to 1080.

On the flipside, The Warehouse lost 6c to 443; Carter Holt Harvey eased 3c to 158; Guinness Peat Group was 3c lower at 159; and Air New Zealand slipped a cent to 44c.

- NZPA