Forum Archive Index - February 2002

["Viewpoint ." <viewpoint_@hotmail.com>]

Gaynor's article in The Herald yesterday about Telecom's accounting was 
interesting in that it was hard to make out whether Gaynor was critical or 
supportative of their practices.

Whatever, he did raise some issues that should concern us. Particularly when 
Telecom is trying to demonstrate earnings growth to prove that it's growth 
strategy is still on track.

Working through the myriad of numbers that Telecom produce to get a clearer 
picture of trends was always going to be difficult as the AAPT figures were 
added into the traditional Telecom accounts. Now that has happened for more 
than five quarters reasonable comparisons to the past can now be made. The 
current picture is not all that bright and that is possibly why Telecom has 
shown inconsistencies in some matters to ensure it does meet forecasts.

Back to Gaynor's article. The main issues (without getting into the details) 
raised were:

- even though Telecom has complied with New Zealand accounting standards the 
treatment of the cable capacity sales is inconsistent with how they treat 
prepaid mobile/ internet acess revenue.
- the significant difference (lower) between profits calculated under US 
standards compared to NZ standards.
- talk about borrowing off balance sheet and not reporting losses from 
investments which do not need to be equity accounted (eg Telecom's 
investment in Hutchison) is not good. A cynic would point out that off 
balance sheet transactions had a lot to do with the demise of Enron.

These are issues that are making headlines. Headlines that don't put Telecom 
in good light.

As Telecom makes up such a large part of the NZSE40 what happens to them 
affects the whole market.

Doubts will remain in peoples minds unless Telecom addresses these issues in 
a sensible and down to earth honest way. Letting Marco what's his name 
stringently defend the position is not the way to go - this requires real 
leadership.

I hope it comes. Miracles may happen




_________________________________________________________________
Chat with friends online, try MSN Messenger: http://messenger.msn.com


----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/