Cable & Wireless signals survival
Friday 26 May 1995
Attention as usual focused on Mercury, whose well-rehearsed problems seem to be reacting more quickly than feared to new boss Duncan Lewis's radical surgery. The speed of improvement suggests that the division was run a lot less well than the market realised. Getting Mercury back on a growth tack will take time, however, and without healthy underlying demand, the fall in profits to pounds 203m could have been a lot worse.
But Mercury is only one part of C&W's federation of businesses and its importance should not be overestimated. In Hong Kong, Cable's share of profits jumped 10 per cent to pounds 810m, two thirds of the total, and the Caribbean rose by a similar margin to pounds 171m.
The market remains reluctant, however, to accept the company's view that there are tangible benefits to be had from a collection of stakes in second- line telecoms companies around the world.
It still refuses to value the company at much more than the implied value of C&W's Hongkong Telecom stake, sometimes at nothing at all.
You do not have to be a brilliant arbitrageur to realise that when the constituent parts of the company are worth maybe 500p a share, there ought to be a good chance that either a third party will take advantage of the discrepancy and launch a takeover bid or management will attempt to unlock some of that value themselves.
Unfortunately, neither option is looking that likely, despite persistent chatter in the markets about interest from all the usual suspects - AT&T, BT, Bell Canada.
Analysts now think that a recent clutch of deals may have created a sufficiently complex structure to scare off potential predators and, although prepared to trim capital expenditure to boost short-term profits, Lord Young still seems reluctant to countenance anything more radical.
That being the case, the only sensible way to value C&W is on its profits, which according to NatWest Securities should bounce to pounds 1,245m in the year to next March and pounds 1,400m the following year. On that basis, the shares stand on a p/e of 16 falling to 14.5, roughly a 25 per cent premium to the rest of the market. That is hard to justify, and a yield of under 3 per cent provides no support.
Sales of the tablet are set to fall again, say analysts
Met Police confirm there was a 'minor disturbance' and that no-one was arrested
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
Concerns raised phenomenon is threatening resort's image as a family destination
I Am Bread could actually be a challenging and nuanced title
- 1 Indian footballer Peter Biaksangzuala dies after injuring spine doing somersault celebration
- 2 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Lynda Bellingham dead: Loose Women presenter dies after battle with colon cancer
Sophia Loren: How I rejected Cary Grant and 'pulverised' Marlon Brando with my eyes
Banksy arrest hoax: Internet duped by fake report claiming that the street artist's identity has been revealed
'Russian submarine spotted' by Swedish military off coast of Stockholm
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Oscar Pistorius sentence: Athlete's wealth and notoriety provoke an overdue debate on South African prisons
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver allegedly kicks gay couple off for kissing
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...