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Telecom NZ tumbles on profit warning
By Geoff Hiscock
WELLINGTON, New Zealand (CNN) -- Telecom New Zealand tumbled 9 percent on stock markets in Australia and New Zealand Tuesday after its first-quarter profit outlook surprised investors. It closed in New Zealand at NZ$4.72, off 9.6 percent, helping push the NZSE Top 40 down 3 percent. That was the market's biggest one-day loss in more than a year. In Australia the stock finished down 8.7 percent to A$4.19. Telecom, which is New Zealand's largest listed company, warned that its net earnings for the three months to the end of September were likely to be in the range of NZ$145 million to NZ$150 million ($72 million-$75 million). The market had been expecting a figure of about NZ$165 million ($82 million). Telecom will release its results next Tuesday. In a statement to the New Zealand Stock Exchange released Tuesday morning, Telecom said it expected its full year result to be within the range of analysts' estimates of NZ$676 million to NZ$760 million. Despite the guidance, Salomon Smith Barney said it was maintaining its outperform rating on Telecom, citing its strong position in the New Zealand market. Telecom also has operations in Australia, after buying AAPT in 1999 for $1 billion, just before the global downturn in the IT industry. Chief executive Theresa Gattung has been leading a drive to lift the company's Australian performance since then. Telstra chief rivalTelecom's chief rival in fixed-line, mobile and Internet services in New Zealand is TelstraClear, 58 per cent-owned by Australia's biggest telco, Telstra. TelstraClear revealed on Monday that it lost NZ$106.7 million ($53 million) in the six months to June 30. Separately, Moody's Investors Service on Tuesday cut its ratings outlook for Telstra to negative from stable. The ratings agency said it had concerns about diminished prospects for growth, especially for Reach, the 50-50 joint venture Telstra has with Hong Kong-based PCCW covering wholesale data communications business in Asia. It also said the Australian government's 50.1 percent ownership of Telstra remained a limiting factor. In August, Telstra reported full-year earnings to June 30 of A$3.66 billion ($2 billion), a fall of nearly 10 percent. (Full story) Shares in Telstra closed 0.21 percent lower at A$4.78. The broader market, measured by the S&P/ASX200, lost 0.15 percent to finish at 3050.2.
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