RE: BT & Sky To Lose Hundreds Of Millions27 Mar 2020 08:33
“ I suspect if this goes on for more than 3 months many of the changes will be permanent”
Yes, but permanent insomuch as some people may no longer have jobs. This is possibly only the beginning of a long rocky road which will eventually have to be unwound, so anyone investing now should not be surprised at the share price movements in the short term.
Notakin Yes, we’ve already seen a note put out by BT saying exactly the same thing , so, theoretically, the only impact on BT will be in short term rising costs in maintaining its services e.g manpower, overtime, etc. It’s revenue streams from users, being subscription based, is presumably factored in for the time being.
I’m not a techy but surely all working from home does is shift the burden of data usage across a wider area, which could cause problems in itself, although apparently BT have ample network capacity. Since BT is basically a contract based service then surely it has to do either of two thing: either increase the number of its subscribers, or reduce its fixed costs, or preferably a mix of both. In the short term during this crisis, its revenues should, theoretically, continue as before, but its costs may rise temporarily affecting profits. Perhaps someone’s who has more knowledge of BT and it’s structure could answer those questions.
BT seems to be holding its own at the moment. However, we have just had two major announcements re: fiscal stimulus and rate cuts so it may just be giving the markets a breather in order to digest the news, plus markets may be wary of holding over the weekend in case of any further bad news, so may fall off later. Early days yet for ploughing in with too much enthusiasm, but at least things are positive at the moment for BT.
Fleccy All the market is considering at times like this is whether a company can survive during the current crisis, so it will attempt to sift the wheat from he chaff. It cannot make any long term predictions as to future profitability as that depends on so many other factors going forward. If the UK economy gets in a really bad way then profits will be impacted, but it should still be able to meet its liabilities, unlike say the airlines who are affected by passenger numbers, oil and currency variations which have been hedged forward previously.
Bobetts lol. If people had read the market correctly they would have been either short of TLW or out of it completely well before the big drop. The problem is people look at a share price in comparison to its previous prices and think it is somehow cheap without understanding why it has reached the level that it has. Same with BT over the last few years, but people always assume that they know best so fail to question why a share is behaving in the way it does.
... as Benjamin Franklin wrote, are death and taxes. lol This week the market is pricing in confined to barracks. Next week it may be run for the hills.
The £ is falling, which is both good and bad; some companies are staring into the abyss; governments are figuring out how they are going to get their money back from the taxpayer after the crisis is over, whilst maintaining the facade of fiscal competence; etc Everyone is currently panicking as there are just too many variables upon which to make educated guesses as to what is going to happen next.
My view on BT is that it is acting exactly as one would expect it to under the circumstances- just continuing to plod along minding its own business knowing that in the end it will just end up, as now, in some position that the market has determined for it- good or bad. No-one in their right mind is currently going to look at it and say”this share is going to fly” if the rest of the market upon which it depends collapses. So don’t count your chickens, nor worry about short term factors moving the share price. The share has been falling for years in its sector of the market and will be re-assessed on potential revenues going forward in a marketplace that will undoubtably change due to the impact of the virus. BT may end up a long term winner if the market learns some lessons from the mistakes of the last 10 years. Sometimes, the tortoise beats the hare.
What you are seeing is the market pricing in a recession and looking at domestic earners who will be affected by, but will not go under, due to falling revenues affecting their ability to service their day to day running costs. A lot of companies will collapse once revenues decline due to their high debt burdens. BT are well placed in this respect but there is a long rocky road ahead so don’t just expect to see things going one way. Nice to see a lot of smiling faces though including ours.
I would advise against getting sucked into reading too much into the futures markets in times like this unless you can see sound data that appears to back up any moves. The markets are so volatile that any rumour can swing them either way. The two real factors now will be firm moves by governments, and accurate data re: the increase/ decrease in the spread of the virus. Ass it stands everyone is currently impotent regardless of the noises being made in the press.
Possibly partly £/$ as currencies are being stabilised. Markets now looking at what governments actually do as opposed to what they say. Also tracking virus numbers for signs of change +/- Nothing is ruled in or out at present as it is early days.
It looks like the bad news will continue to roll over into Asian markets overnight. The only good thing is that the Chinese etc are inveterate gamblers so anything could happen. Wouldn’t place money on it though.
Fleccy I am currently typing this on an iPad and it keeps wanting to change your name to fleecy for some reason. Just ignore it- don’t take offence, it isn’t deliberate. I am extremely busy, having been up half the night, so can’t be bothered to alter posts.
Fleecy Yes, agreed. But people will start looking at the books a lot closer as there has been a lot of creative accounting going on, believe me. The market is currently confused as the central banks are effectively now out of ammunition, so only co-ordinated government action, globally, can stop things turning into a real longer term slump. However, the markets appreciate that people will still attempt to carry on as normal, as long as their pockets are not affected too much. BT? It won’t go bust.