It'll be interesting to see how this plays out:
BCE dodges tech-stock plunge
Telecom giant reports 13% third-quarter profit rise
BERTRAND MAROTTE
Thursday, October 26, 2000
MONTREAL -- BCE Inc. managed to dodge the tech-related stock market carnage yesterday after posting robust third-quarter financial results and announcing a more tightly focused corporate structure.
The Montreal-based media and telecommunications giant said third-quarter profit rose 13 per cent to $329-million or 51 cents a share from $291-million or 45 cents in the year-earlier period.
The earnings beat analysts' estimates, which averaged 48 cents.
In a separate announcement, BCE chairman and chief executive officer Jean Monty said the company's focus on "connectivity, content and commerce" will result in four distinct operating businesses as of Dec. 1:
Domestic telephone subsidiary Bell Canada.
Overseas long-distance provider Teleglobe Inc.
An as-yet-unnamed new media company to be created from the combination of the CTV Inc. television network, The Globe and Mail and Internet portal Sympatico-Lycos.
E-commerce outfit BCE Emergis.
All other investments, including Bell Canada International, Telesat Canada, computer services provider CGI Group Inc., BCE Capital, Bimcor, long-distance retailer Excel Communications Inc., and wireless television distributor Look Communications Inc., will be folded into BCE Ventures.
Those investments are considered non-strategic and some could be shed, Mr. Monty confirmed during a conference call with analysts.
"We will be looking much more closely at asset dispositions in the short term," he said.
He singled out Look Communications as one asset "that is not on our radar screen at all for the long term."
Dallas-based Excel, which has been a drag on Teleglobe's earnings, is also said to be on BCE's "sell" list.
BCE's move came on the same day that U.S. counterpart AT&T Corp. announced a similar restructuring plan, with a split into four separately traded companies in the consumer, business, broadband and wireless niches.
Mr. Monty said there are no plans to follow AT&T's lead by taking three of the four operating units public or by creating tracking stocks.
(BCE Emergis and Teleglobe are already publicly listed, but Teleglobe will be taken private before the end of the year.)
Mr. Monty also announced several executive changes yesterday. BCE executive vice-president Michael Sabia becomes president, charged with overseeing execution of the company's strategic and operating plans. John Sheridan, vice-chairman of markets at Bell Canada, becomes president of Bell Canada, and BCE chief financial officer Bill Anderson is to become president of BCE Ventures.
"With the addition of our recent initiatives, which include the acquisition of Teleglobe and the creation of a new media company, the time is right for BCE to implement a corporate structure that will bring focus to our operations and further focus management on the execution of our Internet strategy," Mr. Monty said in a statement.
In a separate announcement concerning financial results, he said: "The third-quarter results continue to demonstrate BCE's successful transition into a data-Internet communications company."
Revenue in the three months ended Sept. 30 increased 8 per cent to $4.5-billion.
Mr. Monty said Bell Canada made "significant gains in all of its operations," with data revenue up 32 per cent from the previous year and wireless service provider Bell Mobility gaining 118,000 new subscribers, 46 per cent more than 12 months ago.
Bell's share of the high-speed Internet market in Canada jumped to about 25 per cent from approximately 10 per cent at the beginning of the year.
However, BCE Media reported a loss of $34-million, mostly from increased expenditures associated with subscriber growth at Bell ExpressVu.
BCE shares ended the day at $36.80, up 50 cents on the Toronto Stock Exchange.
For the nine-month period ended Sept. 30, profit was $910-million or $1.41 a share, compared with $830-million or $1.29 a year earlier.
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BCE shares rise on rosy outlook
Several analysts boost earnings
estimates for this year and next
CAROLYN LEITCH
INVESTMENT REPORTER
Friday, October 27, 2000
Investors bid up the shares of media conglomerate BCE Inc. yesterday after several analysts raised earnings estimates for this year and next and reiterated "buy" ratings on the stock.
A reorganization announced on Wednesday has also prompted speculation on Bay Street that some assets may soon be up for sale.
BCE shares rose $1.25 to $38.05 yesterday on the Toronto Stock Exchange. On Wednesday, the Montreal-based giant posted third-quarter earnings that surpassed analysts' expectations.
UBS Bunting Warburg Inc. analyst Stuart Isherwood said BCE's profit of 51 cents a share -- excluding gains on sales of investments, acquisition-related expenses, one-time charges and discontinued operations -- exceeded the 48 cents he had been looking for.
In a research report, Mr. Isherwood said the Bell Canada telecommunications arm posted revenue growth of 8 per cent, which was ahead of his forecast of 6.4 per cent. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 10 per cent, he said, instead of the 6.7 per cent he had been calling for.
Growth in subscribers for high-speed Internet access lines accelerated well ahead of expectations in the quarter, he said.
Mr. Isherwood said the strong results may keep investors focused more on the company's performance and less on its headline-grabbing acquisitions.
BCE acquired CTV -- Canada's biggest private television broadcaster -- earlier this year.
In September, BCE and the Thomson family announced a joint venture that plans to combine The Globe and Mail and its associated Web sites, CTV, and Internet portal Sympatico.
BCE will own 70.1 per cent of the venture, while The Globe's current owner, Thomson Corp., will own 20 per cent. The Thomson family holding company will hold the balance.
In a separate announcement on Wednesday, BCE chairman and chief executive officer Jean Monty said the company's focus on "connectivity, content and commerce" will result in four distinct operating businesses.
Other assets have been grouped into a fifth unit -- leading analysts to speculate that some may be put on the auction block.
BCE grouped together its holdings in such entities as Bell Canada International Inc., CGI Group Inc., Excel Communications Inc., Telesat Canada, Look Communications Inc., and BCE Capital under the umbrella of BCE Ventures.
"Divisions are being realigned, suggesting to us that the divestiture of non-core assets may come sooner than expected."
Mr. Isherwood believes Telesat, Excel and Look are good candidates to be divested over the coming year. BCI and CGI will likely see BCE's interest diluted through mergers and acquisitions, he said, also providing an exit opportunity.
An asset sale would help to remove the complexity of BCE and likely lessen the "holding-company discount" that investors assign to big conglomerates, Mr. Isherwood believes.
The analyst raised his share-profit estimate to $1.79 from $1.76 for 2000, and to $1.55 from $1.50 for 2001.
Mr. Isherwood rates BCE shares a "strong buy" with a 12-month target price of $47.
Analyst Richard Talbot of RBC Dominion Securities raised his rating on BCE shares to "strong buy" from "outperform." His 12-month target price is $48 a share.
Robert Hastings of Goepel McDermid Inc. in Vancouver said third-quarter results were in line with his expectations, adding that he too was encouraged by the restructuring.
Many of the businesses assembled together into a "hodge-podge" fifth unit could be candidates for sale, he believes.
"Most of the assets in that group don't need to be there." |
