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Velo,
I have an interesting observation and would appreciate to hear your opinion. There have been loads of occasions when BT has opened very positive and remained so all morning. Then come afternoon they start hurtling down. The only logical reason for that is that our cousins over the pond do not like BT. Maybe that is the real reason why BT withdrew its presence from the USA market.
Fleccy,
Even though I do know the difference between equity and assets I have never claimed to be an expert. Even with my very limited knowledge I do know that when debt is extremely high like BT the ROE can be very misleading. BT's credit rating at present is low this invariably effects a BT's ability to increase borrowing. I would therefore imagine that debt being 180 % of equity and £3.5 billion above capitalisation both to be factors. I know you also have holdings in Vodafone so although VOD have debts of well over 40 billion their equity is £63 billion and are capitalised at £51 billion.
This is an extract from the current published accounts
Capital & reserves:
Share Capital: 499.00
Share Premium Account: 1,051.00
Other Reserves: 4,698.00 6,995.00 7,435.00 8,992.00 1,320.00
Retained Earnings: 3,919.00 1,366.00
Shareholders Funds: 10,167.00
Minority Interests / Other Equity: n/a n/a n/a n/a n/a
Total Equity: 10,167.00
Fleccy,
"Of course a mere whiff of buybacks and the market would soon hike the price right up." If you would be remotely right then why the hell is BT not following that strategy. The reason why they aren't is because they can not. Buying back 10% of the shares would push up debt to 200% of equity.
None of our opinions have any bearing on the share price. Its just a forum where one expresses their particular view. Just because I was convinced when the share price was at 250 that BT was overpriced and a very strong sell does not mean that I believe the share price will keep on falling for ever. Yes Fleccy BT has a bottom but the million dollar question is where that bottom is. It is quite obvious it was not at 250. In regards to borrowing money for share buybacks. With BT's debt now probably around £20 billion I somehow think that the banks would be rather reluctant to provide any more money.
BluePete,
I come here to hear your words of wisdom. Be honest in hindsight should you not have listened to me and Lamtree. Are you just having a go at me because I have shown you up as being a lousy investor. Are you still convinced that BT,s profit will be above £2 billion?. WATCH THIS SPACE!!!!
BoBetts,
BT has been my worst investment by far. However I am also thinking of buying in at 140 though I got burnt by making a small investment at 174.4. Having said that I think there are much more attractive opportunities out there then BT.
Velo,
Thank you very much. I knew I was asking the right person. You have adequately clarified most of my questions. The reason I was asking you is because you are one of the very few on here who in my opinion has a real basic understanding of the workings of BT. I still have one other question. I loved your analogy "If a man on say £40k per annum buys a £300k house" Using your analogy my question is what happens if the house value falls to £150k but the mans job is safe and he can easily pay his monthly payments. However there is still a outside chance of him becoming ill or dying where the bank would not be able to recover the full amount of the loan as the house will only sell for £150k. BT 's capitalisation is now £15 billion and will have debt of circa £20 billion. It would be like having bought a house for £300 and taking a loan of £200k and the houses value falling to £150k. I could say to the bank why are you worrying I am up to date with my mortgage payments and in good health or the bank could say true but your house is only worth £150k and no way can this justify a loan of £200k to be outstanding.
TLWilliams,
Is it not important that people like myself give an opinion. Is this not just a case of shooting the messenger.
For many of the people on here I wish I had been wrong with my assessment of BT, Royal Mail and Centrica.
Is it just me being right that is so exasperating.
Hopefully there are some people on here who have considered views similar to mine which has resulted in them investing elsewhere.
BoBetts,
Do you think Gollom is secretly really a marketmaker? or maybe even worse he could be Swiss or German? (UBS, DB) or some other European.
One thing is for sure. Toff is a prime example of a bigoted little Englander.
Velo, or anyone else.
How big of a problem is BT's debt. It seems likely due to FTTP and 5G that they will need to substantially increase debt.
I know there are different ways of looking at debt. I know that their credit rating is going down the whole time. What does that mean in terms of interest. I would guess in BT's present financial position the possibility of raing new money through a right issue is probably nil.
If you just look at EBDITA then BT is in a good position even though it is likely to go higher.
However if you look at capitalisation then it is scary. BT is now capitalised at just 15 billion and seems to be going lower on a near daily basis.
Gollom,
Were you also including their investments in Centrica and Royal Mail. The average BT employee is likely to have holdings in Royal Mail and Centrica. They were also heavily invested in Carillion but that was before the market makers got involved.
Glazebrook must be Toffs dad. I guess marketmakers are not real chaps and are not worthy of being defended
[discussing a financial scandal]
Sir Desmond Glazebrook : They've broken the rules.
Sir Humphrey : What, you mean the insider trading regulations?
Sir Desmond Glazebrook : No.
Sir Humphrey : Oh. Well, that's one relief.
Sir Desmond Glazebrook : I mean of course they've broken those, but they've broken the basic, the basic rule of the City.
Sir Humphrey : I didn't know there were any.
Sir Desmond Glazebrook : Just the one. If you're incompetent you have to be honest, and if you're crooked you have to be clever. See, if you're honest, then when you make a pig's breakfast of things the chaps rally round and help you out.
Sir Humphrey : If you're crooked?
Sir Desmond Glazebrook : Well, if you're making good profits for them, chaps don't start asking questions; they're not stupid. Well, not that stupid.
Sir Humphrey : So the ideal is a firm which is honest and clever.
Sir Desmond Glazebrook : Yes. Let me know if you ever come across one, won't you.
ToffAppleton1,
Is he any relation to Humphery Appleby.
Does not Toff remind you of Sir Desmond Glazebrook.
[discussing a potential appointment]
James Hacker : Would you recommend him?
Sir Desmond Glazebrook : No.
James Hacker : Why not?
Sir Desmond Glazebrook : City's a funny place, you know, Prime Minister. If you spill the beans you open up a whole can of worms. I mean, how can you let sleeping dogs lie if you let the cat out of the bag? Bring in a new broom and if you're not very careful you find you've thrown the baby out with the bathwater. If you change horses in the middle of the stream, next thing you know you're up the creek without a paddle.
James Hacker : And then the balloon goes up.
Sir Desmond Glazebrook : Obviously. They hit you for six. An own goal in fact.
Does not Toffs defense of BT management remind you of Glazebrooks drivel.