RE: RE: Good, about timeYa right,
Doing the math on a couple of ratio's is Due Diligence...now I know your inteligence level.
No kidding 0.6x Rev is not the right price for a growth company...thats why TELUS is a buy. Either you believe TELUS has the ability, will and market to grow or you dont....I DO.
I am likely a bit closer to this action than you, unless you happen to work in strategic planning at TELUS. The issue on growth here is related to the timing of economic conditions, I just hope TELUS sticks to its plans and is not sucked into the short sightedness you seem to have (but dont think yourself a total fool, you're not alone)
TELUS is way ahead of BCE strategically, BCE doesnt know what it wants to be...
ps. TELUS is not the only telco to make poorly timed investments
The pieces don’t fit
That's the obvious conclusion in the wake of BCE's shakeup and Jean Monty's departure as boss of Canada's biggest multimedia conglomerate.
In recent times, the parent company of Bell Canada, the country's biggest telecom, has become somewhat less than the sum of its parts. Under Monty's tenure, BCE spent $13 billion since 1998 gobbling up media properties.
The company's acquisitions ranged from the CTV network, to the Globe and Mail, to software and Internet company BCE Emergis, which hasn't had a profit in nearly four years, to the massive misstep of acquiring International network company Teleglobe at an inflated $7.4 billion. Teleglobe is taking an $8.5 billion writedown this year.
Compare this with the approximately $8 billion TELUS has spent since 1999, as Bell's biggest competitor and Western Canada's prime telecom company. TELUS picked up ClearNet wireless to give it a national presence, QuebecTel to establish a central Canadian beachhead, and numerous small Internet and communications companies, again to solidify its core business outside of the West.
Whenever TELUS CEO Darren Entwistle's nose was rubbed into BCE's acquisition strategy, he calmly recited the same mantra: "We're sticking to our knitting to become the best telecom company." Give customers what they want, said Entwistle, do acquisitions that make sense in relation to your core business, and pick off the other guy's customers by making them believe they're getting better products and service.
Analysts agree that Monty's diversification strategy sunk him and that Entwistle's game plan, while far less glamorous, will better serve TELUS shareholders and customers in the long run.
"I personally think that sticking to your knitting is the best strategy," said Ian Angus, president of Angus Telemanagement in Ajax, Ont. "One of BCE's problems is that it's trying to do too much at once."
And while there are schools of thought suggesting that doing something is better than standing still, critics suggest that BCE had become a huge, fuzzy holding company with no clear vision.
If anything, BCE's troubles show that for at least one company, diversifying into media is a bust.
"Convergence is a failure, period. ... It was sheer nonsense. It was a lack of understanding of the communications business," said Eamon Hoey of Hoey and Associates in Toronto.
Now it will take new BCE honcho Michael Sabia five years to undo the damage, Hoey estimates. Observers say that such a lengthy, painful restructuring period will take BCE's eye off the ball.
After building up a costly media empire, analysts say BCE will need to unwind it, possibly with fire sales of the CTV network and the Globe and Mail, after ditching Emergis and getting out from under Teleglobe's enormous debt load.
Bell Canada, which accounts for more than 90 per cent of BCE's earnings, will become the company's main play once again, the analysts say. That flies in the face of Sabia's promise to continue Monty's strategy.
However, while BCE wrestles with whatever form of re-engineering it needs to do, the door will likely open more than just a crack for TELUS to make significant market gains at Bell's expense.
"I've always said that Entwistle has the right strategy and Jean Monty didn't," Hoey said.
Faulty strategy or not, one thing analysts agree on is that the timing of Monty's departure was not his first choice.
Which brings up the issues of accountability and governance. When Entwistle outlined TELUS's strategy, the board stood firmly behind him, in contrast to its rejection of former TELUS president George Petty's vision three years ago.
When Monty put together BCE's flawed blueprint, the board was in full nodding agreement. But who got tossed overboard when the good ship Bell hit the shoals?
There are more than just corporate directors hiding below decks in a storm. The governance issue bothers the analysts more than the more overt fallout from BCE's shakeup.
BCE can say it's going to get rid of Teleglobe or come up with any number of scenarios to stop the bloodletting. Yet it will only take a single U.S. shareholder to file a legal claim over the question of due diligence in the Teleglobe acquisition to set a costly process in motion that takes matters out of BCE's hands. "There are going to be lawsuits, and this is just the beginning," predicts Hoey.