Eircom stock could sink as low as €1.13, analyst warns

dahamsta

This is more of a B/E/F story, but I like to kick Eircom in the balls when they're down. Although it doesn't matter as much as it should any more, since "Sir" Tone and George Cantstandya have dumped most of their crud on the moronic pension managers. How stupid are those guys? I mean seriously: Duh.

adam

Eircom stock could sink as low as €1.13, analyst warns
23/05/04 00:00
By Eamon Quinn, Business Editor

Eircom shares, which have failed to trade above their offer price of €1.55 for a single day since Tony O'Reilly and George Soros offloaded most of their stakes to Irish pension funds, could slump to only €1.13, a leading stockbroker has warned.

The fixed line operator would need to produce something "spectacular" on June 1 when it unveiled its first earnings report since returning to the stock market in March if the shares were to climb back anywhere close to their sale price, said NCB Stockbrokers analyst Tricia McEvoy.

Fears are also growing that increased competition and the cost of re-entering the mobile phone market will put pressure on the company's ability to sustain dividend payments in future years.

[...]

Cabaal

Originally posted by dahamsta
This is more of a B/E/F story, but I like to kick Eircom in the balls when they're down. Although it doesn't matter as much as it should any more, since "Sir" Tone and George Cantstandya have dumped most of their crud on the moronic pension managers. How stupid are those guys? I mean seriously: Duh.

adam

What gets me about the last time they sold stock is the amount of people that bitched and moaning when it did'ent return, at the time I was in 4/5th year and even i knew it can go up and down and its NOT a sure thing!

Its the frickin stock market for christ sake!

I wounder this time will people have learned there lesson?

Ripwave

Originally posted by Cabaal
What gets me about the last time they sold stock is the amount of people that bitched and moaning when it did'ent return, at the time I was in 4/5th year and even i knew it can go up and down and its NOT a sure thing!

Its the frickin stock market for christ sake!

I wounder this time will people have learned there lesson?

Maybe you've learned to read the newspapers since then?

The people who were screwed over eircom shares weren't complaining that the share price had gone down - they were complaining that the shares were compulsorily acquired at the bottom of the market. People who bought the shares as a long term investment and who didn't take speculative profits in the first 6 months had their shares taken off them. They didn't have any choice in the matter. They were aware that shares could go down as well as up, and were prepared to ride it out over the long term, but they weren't given that option.

Aside from the damage that the decision to allow the valentia deal to go ahead has done to the telecommunications infrastructure in Ireland, it also has long term public policy implications, as any future privatisations (like Seamus "Leprechaun" Brennans current obsession with privatising Aer Rianta) will be directed at institutional investors, rather than the public at large.

dahamsta

I think the other source of complaints was that the initial price was plainly too high, and Gov.ie played the shares up as a good investment for Johnny & Jane Normal.

adam

spongebob

Part of the logic behind the Eircom refloat was that it would be so big in terms of the Irish Index that the Institutions would have to buy it both for its index weighting and/or its sectoral dominance in order that they spread their weightings about .

That would have Guaranteed a large institutional market for Eircom shares in the past but it seems from anecdotal evidence that some institutions passed on that opportunity (or that technical compulsion to buy) when the the float went off in March . Some will bottom feed the shares in the future using index/sector criteria .

Lest anyone think that Trish McEvoy , the analyst quoted on the SB Post article) has been consistent on this I would point you to page 3 of This PDF where she is urging people to HOLD ONTO Eircom shares at a level of €1.49 each and with no explanation of how the share jumped 7% from about €1.39 to €1.49 on friday last either.

The underwriters (Goldman Sachs and others) ended up handing a certain portion of their stakes BACK to O'Reily and Soros about a month back . O'Reilly and Soros may not attempt to offload these until c. October or November 2004. The unsold but meant to be sold stakes are known as overhang and will affect prices until they are removed from the market by sale because the institutions have seen an attempt to sell them in the past.

Many of the institutions that did take the stakes in March did so as a favour to the underwiters and also because the fund managers dont give a sh1te anyway but need to keep in with Goldman Sachs in future just in case. There is some € against $ hedge in their positions too .

I believe that 2 large fund managers will dump Eircom during the summer using the index underperformance criterium. The figure I heard punted privately for the share price was €1.20 by September, this €1.13 is lower than that .

The ESOP will have some financial difficulties (not Scanlan who is milking it , the rest of them ) if the share price approaches €1 or less.

Comreg are in a closed period re: Eircom until the annual meeting is over, they do not want to be blamed for causing "Regulatory Uncertainty" at this very moment . End June could be different but they are such poodles in there .

M