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" I think it's safe to use the term "Highly Unlikely" in BT's case, ..."

If time I'll do some digging in an attempt to give the all clear on that. But can't agree to including "Highly" at this juncture (IMO) until all clear. I have evidence; but what's the use if no one can understand it? The destruction of the once ample Free Cash Flow shows cash is hemorrhaging, whilst it's needed more than ever with 5G, Full fibre carry-on etc., etc., Unhealthy situation building.

"Profit is vanity, cash is sanity" an infamous and pertinent quote that is timely for this situation, as someone re-directed back at me elsewhere, the other month - and applies here, as that's how these things creep on companies. Bit by bit, over years.

Away up north next week from Tuesday, so might not get the chance, but I've seen enough and been concerned as an early stage 'caution needed' only. No need for I or anyone else to hyper ventilate on it. I have discovered a method to determine if I can rule out those concerns now building up against BT, so will try and examine that avenue when time. Concerned but relaxed might be a better fit.

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Completely separately, Yes, you must include high yield, it forms part of a little uplifting post I was forming in the back of my mind on David Dreman (US contrarian) [I have his book] who exemplifies the exact situation investors find themselves when faced with your list, and his travails in overcoming them, which are now the stuff of legend and folklore. His answer, I feel sure, will result in you saying that is already your default answer. And that answer is part contained in my second terms of acceptance 'unloved' :)

Just as I catch up, today leaves time left only for posting after midnight.

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Monday? I go into Monday like a triple schizophrenic in three frames of mind on the direction of the SP tomorrow.

1)
Based on past experience of using candlesticks for short range forecasting I'm expecting the SP to behave bearishly tomorrow. In fact, it's a nasty bearish candlestick with well above average volume that showed the big houses were selling, as it fell 4% all on one day, as the company's stock was tossed aside, unwanted, on Friday. Bad omen or what?

I'd even go as far to say, I regard it as a signal calling out to shorters with such a mighty one day fall on Friday.

2)
On the other hand I also have high hopes that the last major (long range) Fibonacci retracement level wakes up and exerts it's repulsion mode and sends the SP away to the north. The SP has been strangely reluctant to wander far south
from the lower 190's.
It would cheer me no end to see that low 190's give off that retracement call to arms, as it would mean believing in the unexplainable can cheer in dark hours.

The Fibonacci 61.8% 'golden ratio' Retracement Level - (Party trick. Get someone to measure your forearm - or you measure someone else's. Multiply that result by the golden ratio of 1.618 and you'll discover the resulting answer is the
same measurement as the full length of their arm). That's the golden ratio at work.
Now wouldn't you prefer something so wonderful to overcome a dirty rotten red bearish shorting candlestick?
- And the golden ratio is attributed to being discovered by a 12th century Italian mathematician monk. Obviously, his work comes with connections direct to the man upstairs. Whereas the Candlesticks despite surviving 300 years, are the work of Japanese rice traders.

2a) Technically the SP has already closed well clear below the lower 190's. Is it too late? I'm pushing my luck aren't I? Also if it's true that it's been breeched, then getting above the lower 190's will now prove a Herculean task as the SP lying beneath that retracement level is bad news.

So, who will take the day tomorrow - the Japanese rice traders or the Italian monk?

Oh I said a triple schizophrenic.
So,
3) What if all guesses are fruitless as both 'powers' react by balancing the power evenly and the day is inconclusive ending range bound, more or less where it started out from?

So you could ask, am I advocating Down. Up. Or same condition by day's end? Errr, Is there a delete button for posts?

Thanks Bertram; you're welcome.
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Longish - Yes, saw your earlier mention and was trying to re-find a similar news item that had flashed across my phone screen upon switching on first thing Sat morning , saying something along the lines of:

"BT boss harangues prime minister to allow him to fully deliver fibre b/band to the entire country" or somesuch.

It was quite a strong word like harangue or pleads/implores. Don't think it was "begs" though. Even if it read a little bit like that :)
Went back later in the day but couldn't find it. Googled last night, and still couldn't find it.

So yes, that fits, but it wouldn't impact this year's revenue and profit. But it could impact the SP just as VOD's has, on release of news in their "poor" Q1 update the other week when they offered that they were "thinking"of hiving off all 61,000+ towers as a separate listed company - and the SP ran up a 10% gain the same day - and has held it.

That puts VOD back on a premium rating above the industry average P/E.

BT is well, well, under even half that same industry P/E average so without a single penny (seriously without a single penny increase) improvement to the accounts in revenue or profit, the SP could theoretically travel quite a distance on "new" news that impresses the market - without a penny proof in the accounts!
(In other words the SP could double from here and would still be seriously well below the boring and mundane average PE average for the industry - and yet still be regarded, at that new higher level, as well cheap & still "under valued" !

Just need Jansen to deliver some of it for substantial re-rating. Can be done. Market sentiment towards VOD changed 100% from bearish to bullish in one day flat!
- That was one for the record books :)

And all that comes under market sentiment. BT'S lousy sink estate forward earnings ratio of P/E 7.point-odd is proof the market has nil warm sentiment towads BT. Accounts as they are this weekend in £££'s and pence, fiscally warrant more than double the current PE ratio. But with a total lack of any market bullish sentiment towards BT, good news alone could have a dramatic effect.

However with this weekend's Q1 indicating the full year is on track to come in with the first decline in net profits after a year or two of increases, it's making hard work of getting that market sentiment needle to swing over from bearish to bullish.

Jansen better got on with that persuading then :)

(In fact we're approaching halfway through Q2 already!)

Musing this weekend on the final, final, takeaway from the Q1 update. And want to step back from the nitty gritty and take the macro look.

When a stock is generally rising as we all hope will be the default position of our portfolios, it's easy to succumb to the temptation of glancing at trading updates, see the tag: "in line with guidance and forecasts" and quickly move on giving oneself a metaphorical high five.

BT's Q1 trading update has indeed come in as: in line with company guidance and analysts forecasts. So was that a good thing?

Step back and survey the macro picture and compare with the trading update:

For well over 3 years the SP has declined each and every year on concerns over issues with BT. Everyone and his dog can see the SP has done nothing but decline from the very beginning of 2016 right up to the present day. So too, do the analysts. Therefore the broker's analysts are unlikely to issue a bumper growth notice as the evidence points to continuing decline.

And that's what they've estimated for, in their forecasts. And exactly what the Q1 update revealed - revenue and net profit in line with analysts estimates.

And confirms yet more decline is upheld, as that's what the forecasts are showing - forecasting continuing decline, because after Q1 actuals, both revenue and net profit look as if they're going to complete this current year at a much less level than they actually achieved last year, ie., yet another brand new financial year that's due to get worse.

So when the H1 results are published (in Nov I think) coming in-line with forecasts simply won't do anymore - unless of course those new analyst updates (due to come out in the next few weeks) show a same condition or even an increase in Revenue and N/Profit estimates. If they don't, then the only way the SP can attempt some sort of recovery IMO, is by something new being announced that changes the landscape very dramatically and is accepted by the wider market.

On BT's website the consensus page promises to update every fortnight. The only thing to look for on that page, is seeing either same condition or higher forecast levels than have previously been the case - Repeat: same or higher!
And they must be achieved too - as declining forecasts, and simply being in line with those declining forecasts, won't do anymore.

Start with what the future forecasts are foretelling.

I await the first of the new forecasts (with a date-stamp in August hopefully) with some interest. As a minimum, I'm on the optimistic lookout for one of these interim forecasts to be similar too, and certainly not worse than, previously. Is that asking too much, for starters?

Fleccy, you and Longish topping up in the mid 180's could yet have the last laugh. Are you up for one of my 'daft' late night TA stories?

Sitting comfortably?

Then, I'll begin.

Some weeks back (for BT) I took a long range Fibonacci reading from deep, deep, in the bowels of the last market crash in 2009 and drew the corresponding line of 0% up to the all time highs since 2009, and was hoping that the SP had not gone swanning past the most reliable, the most powerful, of all the Fibbo retracement levels, the greatest of them all - the Golden ratio retracement level of 61.8% (Google: golden ratio - it exists).

At that time it was coming up with the very low 190's and I think the SP was closing at 188/189's. So I idly thought ooh too late it's gone past. It's not working on this occasion. But hear this. Some time before that I had done similar with IMB as I'd held that high yielding stock for years and was hung up in the high £30's (it was roundabout £19 or so at this point. I noticed the previous week it had got as low as £18.60 and bounced straight back up.

So, did the same time span retracement on IMB and made a mistake, I thought it had gone past the almighty 61.8% retracement level; the golden ratio. For some reason I was re-running it (yes had originally attempted it on my tablet - desktop is better for this kind of work) And on the desk top discovered the last retracement level was close by but had not been breeched - it was coming up as £18.30. In the ensuing days (and posted elsewhere) that 1830's would be "it" (for fun).

One morning was on the sofa with the tablet as had workmen in on the electrics so no electric and they were taking ages so I was late checking and was shocked to see IMB was currently on 1822 or so! I froze. How could I be so wrong? 1830's was it - my rrs! Wanted to average down but sat frozen at 1820's and failure. Some 10 minutes or so passed and I thought well just take a smaller tranche than planned instead, as once the golden ratio is breeched, truly the gates of hell open up for SP's. Abandon all hope etc., Anyway flicked back to my broker's page for a look-see at the true buying prices just to see - and 1830 was sat staring back at me!!! Instantaneously I took it. It came out at 1830.point odd.

Laugh! - 1820's scared the hell out of me. 1830 on the nose and I bought as a happy man. Nuts or what? The price soared within seconds and ended well up on the day. About £21.36 as of tonight. I intend selling off the top-up which will bring me back to my preferred holding with the bonus of a lowered buying-in price for a rinse and repeat at whatever level should fate oblige, or not. The point is the SP flew past the golden ratio retracement level, intraday, but the 1830 exerted it's mysterious cycle retracement, and I profited from it (so far).

Now the point about you and Longish. The golden ratio I've just remeasured carefully for BT and it still confirms that low 190's as "it". Continues >>>>

Revenue - Still falling y-o-y. Okay can live with it for a bit,
Net Profit - Looking like terminating the commendable increase y-o-y. Okay can live with it for a bit.

Free Cash Flow looks like getting worse. That terrifies me! That's what concerns me most.

BT is an ex-growth co. So I can live with a bit of revenue decline and a "little" bit of net profit decline (for the first time). Ex growth co's compensate by offering good divis in exchange for low SP growth. What no company can live with, is a fast deteriorating FCFlow! Impossible to pay debt down without a healthy FCF.

I noticed the declining FCF earlier this year but had no answer to it and thought; must look into that.
But honestly, it was beyond me. And no media analysis reports would tell me why. Just that FCF was diabolical all of a sudden. Why all of a sudden? No one would say. Then I found out the primary cause - and then I remembered!

The grand pension deficit payment plan of £10.3bn kicks in next year - with a £1.3bn down payment, then the next 2 years at £900m each, followed by 8 years each of £907m making 11 years of payments totalling £10.3bn++ all in, from 2020 to 2030. And that hits the FCF for six!

You won't find a single UK analyst mentioning it. Had to find out from US analysts. Although we were all told, back in the day, by ol' Gavpants just days before he got the heave-ho.

'You won't find out from UK analysts'??? Just look at this, from that 'The SP is going to a £1' guy. (M/Fool). He's updated that review since then and now says:

" Why I said I think the BT share price could go to £1 . . . . So it’s getting there, and I reckon shareholders need just a little more patience before it touches £1! . . . . On top of that, BT is up to its metaphorical eyeballs in debt. . . . Then there’s a big pension deficit to fret about too ."

It's that pension deficit jibe that rankles. He just leaves it hanging there, like it's going to kill BT or something. He doesn't mention (even in passing) that the big deficit payment plan kicks in next year to address the very issue he's telling readers to fret about. Why fret at all? It commences getting dealt with, permanently, once and for all, from next year 2020, and will become history by 2030. What's to fret about? Only the poor FCF - certainly not the pension deficit.

(I intend less blogging on forums and emailing some of these media analysts). They do respond nicely, if you stay polite - remember last year when I emailed one who fessed up, put his hand up, and he wrote a fresh article owning up, to the errors, sorry "oversights" pointed out to him? Going to keep any replies permanently this time; like a sort of CV :)
It was Aus I believe, who first pointed out his oversights. We all make oversights :)

Running out of space. Anyway FCF is running at a ratio of 33 whilst it's industry competitors are running at 13.7 (High = bad . Low = good). It's also worse than the whole FTSE market > More follows >>>>>

QI actual NET PROFIT is stated this morning as £505m.

Forecasts posted from yesterday -
". . . Q1 estimated Net Profit: From a lowest of £337m up to £483m is the acceptable range. Mean and median are given as £417m / £424m so shall we agree, expected net profit to be in the region of £420m? . . . "

So, net profit estimates of - - - £424m
BT reports actual net profit of- £505m

To me that's not only achieving analysts forecasts for net profit - it's beating them out of the park! As the high end Q1 forecast petered out at £483m. Great!

Only thing is, the downgraded net profit is much less than last year's achieved, and I had previous estimates for much higher, which today's net profit of £505m goes some way to support - (The late June downgrades in the media had me bleating no-way, quite a bit back in early July as they waffled on about declining profits (to be fair some did say 'pre-tax' profits) - but I do now feel vindicated somewhat) but even that £424m estimate, is much less than the previous estimates which got downgraded at the end of June.

So, let's re-run the past couple of years (increasing y-o-y) net profits to compare (which have done BT proud in a declining revenue market by consistently increasing year after year!)

2017 Net Profit= £1.908bn
2018 Net Profit= £2.032bn
2019 Net Profit= £2.159bn

Notice there's no holding back net profits as they kept on increasing y-o-y probably due to cost savings/redundancies.
(Vodafone on the other hand reveals 3 out of the last 4 years net profits as huge losses!)

Now the current forecast for this full year net profit is a mean of £2.005bn and a median of £1.971bn giving an average say of = £1.988bn.

It's that low downgrade that I've been bellowing out against since early July.

Look at the steady increase in net profit, then out of the blue analysts downgrade that increase as coming to a dead halt and this year they've pencilled in £1.988bn well down on last year - well down.

No wonder the media in late June ran 'wild' braying that BT's profit is going down the pan.
Let's have a go at what this year really holds from the Q1 actual.
It's £505m - so x by 4 = £2.020bn !!!!

Personally I'm sticking to my guns and settle for saying analysts are too pessimistic on this year's likely net profit - or have they been told net profits will soon run out of cost cutting savings?
Dunno, but it's a helluva a miscalculation by the analysts. In their defence the more bullish estimates top out at £3.624bn as the maximum, so they've got it rigged that they can never look wrong.

So let's say net profit for the full year comes in at £2.02bn as I allude to. Analysts can easily say that's within our range of acceptability; it's still in-line that's all.

But the bad news is, that this year's net profit for the very first time since the SP started this long decline is looking like coming in at less than last year's net profit coontinues>>>

Q1 ACTUAL Revenue this morning is stated as £5.633bn (or £5,633m as they put it)

How does that compare to expectations? Yesterday I posted -

"... So they're expecting round about £5.5/£5.6bn in revenue.... (average of £5.589bn).... And therefore no one need have kittens so long as revenue doesn't come in any lower than £5.204bn..."

So,Q1 estimates of - £5.589bn
BT Q1 reports actual of £5.633bn.

Against last year the CEO said it was 1% down. Against latest analysts estimates it was just 0.78% down.

So I think we can agree that revenue came in just a smidgen below both forecasts and last year's actual. Only a smidgen. Which shows the forecast on BT's site wasn't half bad at estimating, at all!

And as the lowest estimate (bet that was DB :) was for £5.204bn then BT was comfortably half a billion above the lowest estimate. In other words, revenue was entirely within the parameters of analysts acceptable revenue expectations.
=================

So, as the SP had fallen back below 200p due to analysts downgrades, why is the SP falling further this morning you might ask, if it met within acceptable forecasts? Well one consideration for that, I think you have to look at the last 3 years revenue decline and consider that the Q1 result confirms that revenue shows no sign of reversing this 3 year decline. So, the continued fall in revenue was as mostly expected - so all good there. But - but, it only confirms the plainly visible over the last 3 years - and that is revenue has not yet bottomed. It still has yet to find a floor before it can commence reversing out of this decline.

So, revenue didn't disappoint, but neither did it inspire. Now a quick look at the full year and the analysts estimates.

2017 Revenue= £24.082bn
2018 Revenue= £23.476bn
2019 Revenue= £23.456bn

Analysts estimates via BT's own site has 2020 Revenue estimate = £22.902bn (avg of mean and median combined)

The first thing to note, is see how the falling revenue has been ceaseless this past 3 years. I was expecting this current year to actually only fall in a similar condition say just a few hundred million down - but look at the estimates for the full year - that's well over a £1bn down against last year!

But that was the estimate before this mornings update showing revenue currently running at 1% down against last year at £5.633bn.

So using that, is it fair to say that 4 x £5.633bn = £22.532bn as the new black for 2020 annual revenue?

Because if so, that makes the new revenue approx £400m less than the current analysts estimate for the full year. No doubt replacement revenue estimates reflecting this mornings actual Q1 revenue will appear in coming weeks - and I'd expect approx £22.532bn to be the new target for this full year.

So no nasty surprises in the Q1 revenue. In line. Entirely acceptable to what analysts had been led to believe. But it only served to confirm that BT still has not got a grip on falling reveue.

Next up, later tod

Avro - No, no, no, that £642m is PRE-TAX PROFIT. I did say do not look at pre tax profit. Investors should only be concerned with net profit. It's like asking for a quote on a service for your car - do you ask the garage how much will charge me PRE-VAT?
===============

Bit behind the curve this morning. Have a couple of observations I'd like to offer on publication of the actual Q1 trading update.

Rather than try and cram too much in, and just confuse, I think I might post a couple of posts spread over today, on the same subject (Q1 update) but with no time limit then won't suffer falling behind elsewhere with other duties.

The first and most revealing thing is (and I make no apologies for repeating this) - is the marvellous resource on BT's website entitled "CONSENSUS". It has proven itself to be on the ball and very up to date with analysts estimates.

Here's the page again. Investors should bookmark it or download to your desktop as a permanent reference. It'll keep you ahead of freelance media analyst's reviews on BT, and help you have a more rounded view if reading a media analysis of BT.

First link is the BT page with the Investors link second along the top (save this as difficult to find if, you just Google BT as you'll be locked into the retail/customer side of things, with no escape - this is your page, here:

https://www.btplc.com/Sharesandperformance/

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If you can't find the consensus page link from delving into the above then here's a direct link to it (bookmark it or save to your desktop) once on this page, scroll all the way right down to the bottom
- all you need is under "Historic Consensus Files":

https://www.btplc.com/Sharesandperformance/Financialreportingandnews/Latestconsensus/index.htm

You NEED that last link, otherwise you'll be buffeted by every financial media report that comes out with a differing opinion. Once you know what is being forecast you can discount any figures that are wildly different to them - unless you're reading something that claims to hold inside information :)

-----------------------------

I want to start with revenue and draw the actual from previous years to compare and contrast and what the likely full year outcome is likely to be, now that Q1 is out and written in stone - all projections must be multiplied up from this morning's Q1 actual.

BT will have updated analyst new targets/estimates over the next few weeks and BT have promised to update fortnightly. BT is providing you free-of-charge with pure gold-dust info. I know of no other company on the LSExch that is providing this kind of info on their websites.

Going to start with revenue, then come back later in the day with net profit and then finish on Free Cash Flow, after that might need a summary, might not.

Anyway, onwards. Here we go: Revenue! >>>>>

PS. I'm off for a cuppa first

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