NZ stocks: Telecom tipped to hold steady in result report

By PAUL PANCKHURST

In a short business week, the newsmakers will include the country's largest listed company and two market regulators, the New Zealand Stock Exchange and the Commerce Commission.

Telecom reports its second-quarter result tomorrow, and market watchers expect a performance very close to that of the first quarter.

A Bloomberg survey of 10 analysts showed predictions for bottom-line profit ranging from $144 million to $152 million.

That would be between 5.6 per cent and 10.6 per cent down on the same period last year, but analysts point out that the earlier figure was swelled by one-off gains.

Telecom's profit for the first quarter of this financial year was $146 million.

Forsyth Barr senior analyst Jeremy Simpson said revenue for the second quarter was constrained by the company's shift away from chasing low-margin business in Australia.

But this would be offset by a continued focus on cost-cutting - "tight labour costs and lower costs of sales".

The Stock Exchange is due to reveal tomorrow the final shape of a revamp of market indices that includes moves towards a "free float" approach with stocks weighted according to liquidity.

A new NZSE50 gross index - factoring in dividend payments - is intended to become the new benchmark, replacing the NZSE40 capital index.

One certainty: the exchange will not please everyone.

Many of the arguments have been over the detail of how the new indices should be calculated.

Those most interested include fund managers such as AMP Henderson Global Investors, which has more than $1 billion in New Zealand shares.

In a submission to the exchange last year, AMP Henderson said dissatisfaction with existing NZSE indices had led the fund manager to look elsewhere for performance measures.

The news from the Commerce Commission: a decision on Friday on an application by Graeme Hart's yeast, herb and spice company Burns Philp for clearance on a $2.4 billion bid to acquire Goodman Fielder.

Although Burns Philp is Australia-based, the deal would also affect the New Zealand market.