[phormwatch]

Originally Posted by Florence

I don't subscribe to that one so cannot see anything.

That's strange... neither do I. Anyway:

BT’s blues

Published: July 31 2008 09:22 | Last updated: July 31 2008 13:11

Ian Livingston’s first set of results as BT’s chief executive received a downbeat reception. The former incumbent’s shares fell 12 per cent in what was the company’s largest daily drop since the telecommunications bubble popped in early 2000. Mr Livingston, who only took over in June, has set out some sensible-looking strategic priorities, focusing on better customer service as a path to cost savings and ways to make BT more agile. But they have yet to grab investors. BT has almost halved in value since last year’s peak, under-performing France Telecom by 41 per cent, Deutsche Telekom by 40 per cent and Telefónica by 36 per cent.

Investors were disappointed on three levels. First, margins at the earnings before interest, tax, depreciation and amortisation level within the group’s fast-growing business services division (long-term contracts to supply big companies and governments with global networks), came in at 9.5 per cent, some 170 basis points below consensus forecasts. Second, even though Mr Livingston affirmed his full-year free cash flow forecast of £1.4bn, a weak first quarter leaves room for doubt. Lastly, BT’s pension surplus, which hit £1.4bn in June 2007, swung into a £600m deficit, reversing some of the progress of the Ben Verwaayen era.

Furthermore, in the areas that BT and Vodafone have recently been weakest – in business services and Spain, respectively – others have been solid. France Telecom, for example, which released its first-half results on Thursday, turned in a strong performance at its Orange business services unit in the UK. It also did not chew dirt to the same extent as Vodafone in Spain, where its revenues rose 2.3 per cent on a comparable basis. Mr Livingston has inherited a company in much better shape than the one Mr Verwaayen took over in 2002. But the overall picture of a company straining to achieve only modest overall growth is hardly inspiring.