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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (1583)	7/10/2001 11:13:02 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Telstra-PCCW venture values up in the air Tuesday 10 July 6:35 PM By Sonali Paul MELBOURNE, July 10 (Reuters) - Potential value revisions by Telstra Corp Ltd on its joint ventures with Pacific Century CyberWorks 0008.HK are unlikely to hurt the stock of Australia's largest telco much, analysts said on Tuesday. But analysts said the share price would be rocked further if earnings from those joint ventures were weaker than expected due to tough conditions in Hong Kong and other Asian markets. "Our concern right now is that the focus is more on writedowns, where, importantly, they should be more focused on what the earnings stream is," said Goldman Sachs analyst Jason Billings. Analysts see Telstra taking a writedown on its 50 percent stake in Regional Wireless Co, for which it paid US$1.68 billion or about $1,700 per mobile phone subscriber, to reflect the plunge in valuations for Hong Kong mobile phone companies which are now closer to $1,000 per subscriber. Analysts also expect Telstra to put a value on the books for its 60 percent stake in the Internet protocol network venture Reach at well below the US$6 billion it flagged last year as the value for its stake. "I don't think it'll rock the market, because the market's already largely factoring in writedowns," said an Australian analyst who declined to be named. Telstra's share price has plunged 21 percent to close at A$5.31 on Tuesday in the one month since it slashed in half its earnings growth forecast for 2000/01 to five percent. As one analyst said, with its shares now trading on an earnings multiple of around 14.5, down from 19, the company had more room for error on its asset valuations without being punished by the market. But poor earnings would send a harsher message when Telstra releases its 2000/01 results on August 29 and axe analysts' valuations on the company. "That's critical. As we know with the telecoms market now, earnings wasn't everything 18 months or two years ago. Earnings are everything now," said an analyst in Sydney, adding that without a profit, telcos cannot raise capital anymore. While Telstra has not commented on the potential joint venture value revisions, its partner PCCW said in a U.S. regulatory filing last week that it would conduct a valuation of Reach after the company was formed. "The results of the valuation may require an adjustment to the carrying value of the Group's investment in Reach which will be recorded in the financial statements for the year ending December 31, 2001," PCCW said.