So what was the big news at Telstra yesterday?
The first half-year profit fall in two years or the departure of CEO, Sol Trujillo in June?
Judging by the media reaction, it was the departure of Sol.
Ending months of mounting speculation about his tenure, Mr Trujillo bowed out after less than four years as Telstra’s CEO, a period which saw some controversial bust ups with governments and regulators.
Mr Trujillo will leave on June 30 to return home to the United States.
Telstra’s board said yesterday it expected to make an appointment by June 30.
The company’s chairman, Donald McGauchie, said now was a ”suitable time for a transition to a new CEO” and the board was well-prepared for succession planning.
(The chairman’s position should now also be considered to be up in the air.)
Despite his run ins with governments and regulators, Mr McGauchie said Mr Trujillo’s leadership at Telstra would be ”considered a pivotal and critical period” in the company’s history.
Sol leaves a year before the completion of his five-year ”transformation” plan. He was hired by Telstra four years ago to replace Ziggy Switkowski.
Mr Trujillo was brought in as a change agent for the slow, half-privatised business trying to find its way in the internet/wireless revolutions.
The appointment of a replacement for Mr Trujillo, who began at Telstra in July 2005, could offer the company its only chance of re-entering the tender to build a $10 billion-plus national high-speed broadband network in Australia.
The Rudd Government excluded Telstra from the bidding process in December after its proposal failed to meet basic requirements: a decision which enraged the company.
There were stories, radio and TV reports, blog comments and more yesterday on the American’s long awaited exit from the company he helped turn into an active, up to date telco, not one driven by legacy issues of old technology, government interference and union domination.
Net income dropped 0.5% to $1.92 billion in the December half year from $1.93 billion a year earlier.
Bloomberg said the result beat the $1.77 billion median estimate of seven analysts surveyed by Bloomberg.
Sales rose 3% to $12.7 billion.
Oh, and interim dividend is an unchanged 14c a share.
The company downwardly revised its guidance for growth in full year earnings before interest and tax to 3.0%-5.0% from previous guidance of 6.0%-8.0%. There is a slowdown on.
Reported EBITDA rose 3.1% to $5,334 million. Reported EBIT fell 1.3% to $3,079 million, in line with expectations. Underlying EBITDA and EBIT grew 4.8%, adjusting for one-off factors.
Retail business units grew revenue 4.1% or 5.1% excluding handset sales.
Mobile services revenue grew 12.4%, with 284,000 postpaid SIOs added. Retail broadband revenue grew 31.3%, with fixed broadband SIO growth three times its nearest competitor; IP Access data revenue grew 28%; Foxtel revenues grew 13%; Sensis grew sales revenue 8.4%; FTE reduced by 1,300, bringing the total reduction to more than 10,000 since 2005.
The shares fell 9 cents to $3.68.
Is Origin Energy a bit of an ‘Indian giver" in that it has taken back what it promised, despite rolling in cash?
The question arises after the company abandoned a buyback after promising one in the wake of the big dollar sales of its Queensland coal seam gas assets to an American oil major.
Origin revealed a solid rise in interim earnings yesterday at an underlying basis (ignoring the cash raised from selling its coal seam gas assets in Queensland to ConocoPhillips), but issued a downgrade for full year earnings, blaming the slump in energy prices, and scrapped a planned share buyback program.
That’s despite having $6.4 billion in cash and undrawn facilities at its disposal, most of it from the Conoco deal.
The company revealed a bottom line profit of $6.66 billion for the six months to December 31 from $335 million a year earlier, after it received a positive net impact of $US6.70 billion from the sale of 50% of its coal seam gas assets to ConocoPhillips.
Excluding that one-off deal, first half operating profit rose 38% to $277 million from $200 million last year.
The company said that based on the strength of Origin’s first half result and strong Balance Sheet, and consistent with the new dividend policy announced by the Board in October 2008, Directors had declared a fully franked interim dividend of 25c per share, more than double the 12c interim from the previous year.
Chairman Kevin McCann said "The Board also reaffirms its intention to pay a final dividend of at least 25 cents per share in September, taking total dividends to at least 50 cents per share for the full year".
Origin forecast full year underlying profit to rise 20%-25%, down from its previous guidance of 30%-40% growth.
It noted that margins in its retail business are expected to be substantially lower in the second half due to increased wholesale electricity costs, while earnings from oil and condensate production will be lower due to a sharp fall in the oil price.
As a result, it’s gone all prudent, like less financially secure companies have done this reporting season.
The cash will be retained and reinvested in the business, with a slate of new and existing projects to finance.
"In the second half of the financial year, a number of development projects and acquisitions are expected to make initial, or significantly increased, contributions to Origin’s financial performance compared to the first half of the year,"
