Forum Archive Index - November 2000

["Peter Maiden" <pmaiden@today.com.au>]

Graham - I too have taken an interest in SKY lately.

A DCF valuation of SKY I did six months or so ago come to about 420-440 range.

Since then I have reduced it to 350 taking into account factors as the delay in 
getting their interactive whatevers up and running and the low dollar.

They put a telephone jack in next to the TV when the digital decoder was 
installed at home a year ago but still no sign of any developments since. 
Suggests they are having problems getting something to work. Low dollar 
factored in because all programs are purchased in $US.

Pay TV has almost become the norm these days. No doubt SKY have set themselves 
up for a good income stream over the next few years and will turn profit from 
their decoders in due course. An extension outside of TV into interactive 
things is all speculative - but is the way the world will look one day. What 
real returns will come from such activities is anybody's guess but they add 
something to the core business of TV programing.

I am not much into charting but SKY is one stock that has showed a classic 
price channel. 

So I asked aometime who seemed to know about such things to enhance my 
knowledge. The outcome of this enhanced knowledge -

Have a look at the SKY chart and note the bottom of the cyclical troughs of 230 
on 16/12/98, 285 on 10/11/99, 290 on 7/1/00.  

Corresponding peaks have been (excluding the craxy times in early 2000) 350 on 
11/2/99, 370 on 20/7/99 and 421 on 31/700.

The stock has over the past few years (except the crazy times) traded within a 
channel limit of 115. The distance between the lines when the above upper and 
limits are joined together.

When SKY got done to 325 on 12/10 it reached its 'return line' and should have 
headed up to about 460 odd in the next 100 days or so. Great I thought as it 
fitted in with my DCF valuation. 

I waited a few days to see what would happen.

A 'channel breakout' occurred. Theory says that when this happens the price 
generally travels a distance equivalent to the distance of the channel. 

We would expect the price to fall to 230 odd before turning up.

Interesting stuff - but the person who explained this to me has me convinced 
and I am waiting until near the 230 before buying. Maybe sticking with INL is a 
better and safer bet.

Only time will tell

Good luck with your decision. 

Peter


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