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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (31666)	1/24/2003 9:54:20 AM
From: foundation	Read Replies (1) \| Respond to of 197054

SKT backpedals on investment plan January 24, 2003 Reuters Alarmed by the steepest fall in its stock price in almost three years, South Korea's top mobile carrier SK Telecom announced on Friday a share buy-back plan and said it may scale back a controversial investment program. Signs of a possible flip-flop in its business strategy, just a day after South Korea's second-biggest issue fell by the daily low limit of 15%, helped stabilize the shares, but did not impress analysts. "SK is saying it will review its investment plan just a day after it announced an aggressive stance on capital spending," said Yang Seong- ho, chief equities fund manager at Samsung Investment Trust Management. "That makes many investors feel confused." Yang and other analysts said the firm's actions over the last few days hurt its credibility and added to regulatory risks that would likely weigh on SK's shares for the time being. SK said in a notice to the Korea Stock Exchange it would buy back 3% of its outstanding shares to boost shareholder value. A 3% buyback, based on its closing price on Thursday, would cost it some 471 billion won ($404.1 million). SK shares dived 15% to 185,500 won on Thursday, the biggest one-day drop since April 2000, on disappointing quarterly results and concerns over its investment plans. The company said on Wednesday it had raised its 2003 capital expenditure by 27 percent from a year ago to 2.49 trillion won. "Some investors may be concerned that our announced capex plan may result in a reduction of our commitment to return cash flow to our shareholders," company CEO Pyo Moon-soo said in a letter hurriedly sent to shareholders overnight. "We intend to review our entire capex program." But company officials said any review would not necessarily lead to a cut in capital sending. "It's still too early to say there would be a change in the amount," said Park Tae-jin, an official at SK's investor relations team. “Inconsistent business plans” Many brokerage firms have downgraded SK's share target price after the firm, which controls more than half of Asia's third-largest mobile market, reported its fourth-quarter net profit fell 25% year-on-year to 164 billion won. Investors and analysts said they were not optimistic about the share's medium and long-term outlook at the moment. "Any positive impact that the steps may have on SK shares will be short- lived, because investor confidence has been sharply undermined by inconsistent business plans," said Suh Yong-won, an analyst at Hyundai Securities. SK said it was hiking capital expenditure to accelerate the rollout of third- generation mobile service equipment. But analysts questioned whether the faster deployment of cash would bring in profits in the near future. But CEO Pyo defended the move. "While strong capex activity is currently contrary to the industry globally, we believe that the outlook in Korea for cellular and wireless data services is clearly positive contrary to that in many markets," Pyo said. South Korea's mobile industry is a global frontrunner in wireless services and some 30% of SK's 17.2 million subscribers carry fancy color-screen mobile phones capable of downloading video and CD-quality audio files. Analysts said SK's stock price would also be pressured by concerns that new regulations would hit long-term profit growth. SK was ordered last year to slash its tariff by 7.3% from January to help smaller mobile carriers to compete. In another move to help weaker players, the Information Ministry said last week it planned to introduce number portability, which initially allows SK customers to shift to rival carriers. "As long as regulatory risks exist, you cannot be so sure of its long-term share price outlook," said Suh at Hyundai Securities. telecomasia.net