NZ stocks: Telecom result no shot in the arm for market

12.00pm

A forecast-beating third quarter profit from market leader Telecom failed to give the New Zealand sharemarket a boost today.

This morning Telecom announced a March quarter net profit of $197 million, beating the range of $182 million to $196 million forecast by analysts.

Telecom shares opened up 11c at 484 before settling back to 478 by late morning.

ABN Amro Craigs retail equities advisor Nigel Scott said Telecom's result looked very good, with lower than expected capital expenditure and good revenue growth.

"The market's been rewarded on it ... the headline number looks better than the market was expecting, which is good for the market," Mr Scott said.

By late morning the benchmark NZ50 gross index was almost flat, up just 0.67 of a point or 0.03 per cent at 1978.53, while the top-10 index was up 0.04 per cent at 891.82.

Turnover was light at 10.94 million stocks, valued at $24.08 million, topped by Telecom's 2.53 million stocks worth $12.03 million.

Tranz Rail was up 2c at 47. "That's a bit of a confidence signal because that institution (AMP) bought back in," Mr Scott said.

AMP boosted its stake in the struggling rail operator from 4.98 to 6.53 per cent on Wednesday.

Tranz Rail said last week its year-to-date operating profit from nine months of trading was $30.3 million, 18 per cent below initial expectations but in line with a revised forecast.

AMP shares were down 17c at 567 by late morning having hit a fresh record low of 560 earlier today.

AMP announced last week it was demerging its struggling UK-based business from its Australasian business, a capital raising and further writedowns.

"People are wary because it's six months before you get a demerger situation, the retail side has to be priced up yet and you've got (Royal & Sun Alliance's float of) Promina under way," Mr Scott said.

"It seems the interest in Promina has gone up in Australia since the AMP (capital raising), not down -- people looking for maybe just a little more certainty at this point in time," Mr Scott said.

"There's a lot of water to go under the bridge with AMP yet -- through mergers and acquisitions there's always higher costs ..."

Elsewhere on the market, Carter Holt Harvey lost 2c to 157, Briscoe Group was down 2c at 198, Baycorp Advantage lost 2c to 168, Contact Energy was down 5c at 445, casino operator Sky City was down 4c at 790, and Fisher & Paykel Appliances lost 10c to 1065.

Discount retailer The Warehouse rose 1c to 471, Fletcher Forests was up 1c at 101, Air New Zealand rose 1c to 43, and DB Breweries was up 21c at 651 after announcing yesterday it had lifted its half-year net profit by 25 per cent to $16.8 million.

There were 35 falls and 34 rises on the 111 stocks.

On Wall St, the blue-chip Dow Jones industrial average lost 69 points, or 0.81 per cent, to 8491; the Standard & Poor's 500 Index fell 9 points, or 1 per cent, to 920; and the Nasdaq Composite Index dropped 17 points, or 1 per cent, to 1,490.

- NZPA