(BT-A.L) BT Group PLC Buy/Sell

go to the summary page for BT, look at the bar chart for operating profit. rethink, then retract that statement. yours boom time.

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what is more relevant is that its boom time for telcos. BVideo usage going through the roof and everyone on variable tarriffs now

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maybe, but those discussions are surely not mutually exlusive ?

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ginger - stating the obvious is not particularly useful or interesting. I can work out the historic range of yields for holders by looking at the price chart which ranges from 80p this year to £16 10 years ago. A discussion on current yield and risk versus other investments is more relevant don't you think?

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geffers - why the red ticks ? I cant see anything to disagree with here - we are just stating FACTS!

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Ginger

Lucky you!!!! getting 8% maybe thats why sum1 has red flagged you

Even a long term holder like me who bought several years ago and enjoyed the good divis is still getting nearly 3% which if held in an ISA is better than just ssimple deposit

If I could be bothered (which I am not) I could of course deduct the divis received over the years from the original cost or capital investment and I too would probably be enjoying a decent % divi

In fact I think I remember receiving a special divi from BT a few years back that would cheapen it all the more

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dongo - why the red flag ?

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"it seems a long way ahead to be making half promises as to what it will be"
Another reason of the 1/3 vs 2/3 - can easily not pay 2/3 (or reduce it) later in the year. You lose flexibility if you do it the other way round!

I bought sub £1, so the estimated divi by "in the dark..." will give me around 8% in my ISA - pretty good compared to high street savings rates.

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Many thanks for the explanation 'In the Dark...' - I wasn't expecting 5.4p or anything like, just trying to work out where the dividend would settle. As far as I recollect the final divi is declared in May, in view of what has happened over the last 12 months, it seems a long way ahead to be making half promises as to what it will be!

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The dividend was rebased last year - rebased significantly downward.

Last year's interim was 5.4p - then they owned up to just what an enormous black hole Global Services was which, coupled with new rules regarding how pension assets and liabilities were counted, meant they couldn't maintain the dividend. With hindsight it looks like they'd been paying out much more than they could really afford for quite a while.

Anyway, they declared a final dividend of 1.1p making the year total 6.5p along with a "promise" that they would produced some, albeit limited, growth going forward.

A fairly standard split of an annual dividend between interim and final is 1/3rd and 2/3rds - no hard and fast rules about such things but is is very common and in line with traditional BT policy. On a 6.5p total, that would suggest 2.2p interim and a 4.3p final (approx).

It is a bit hard to do but you have to try to forget about the past whenever a dividend is rebased - as far as BT is concerned 6.5p was the new base so 2.3p interim is up 5% (ish). It would suggest a final dividend of 4.525p later in the year.

Whether you agree with the way they want to count it or not is up to you - won't make much difference whether you do or don't. The point is that we all knew the dividend had been chopped from the 15.8p they paid for 2007 to 6.5p for last year. Off the new 6.5p base, this is indeed limited growth as promised.

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It's a future increase of 5%.

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The declared dividend in the recent results were 2.3p described as an increase of 5%. The equivalent dividend last year was 5.5p - Surely this is a REDUCTION of 60%. What am I missing?

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.. Target 160p - From ADVFN:

"Telecoms group BT has doubled in value since its shares plunged to nearly 70p in March, but Nomura thinks they may have a little further to go.

It has kept its ‘neutral’ rating on the stock, but raised its price target to 160p from 120p previously.

“We expect the shares will continue to be well supported by the operational momentum, balanced by BT's need to invest in the business, reduce debt and support the pension scheme,” it said.

The broker still prefers BT over Vodafone, on which it has a ‘reduce’ rating.

Yesterday, BT reported second quarter revenue in line with expectations and said it wants to cut costs by at least £1.5bn this year versus its old target of over £1bn."

nk

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I'd avoid both.

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Graham's Net Net approach doesn't really work with BT but it is still a valid way of making money, it's just rare that net net opportunities come along. Graphite Enterprises was a recent one (last year), I was buying the stock at 160p when there was 190p in net cash on the balance sheet with a total NAV of 400p.

Most of the time I use Buffett's owner earnings model to make an educated guess at where the business is likely to be further down the road.

As you say, it's not perfect, but I'd rather have some idea of what's likely to happen than no idea. Buying stock without any idea of where the business is likely to be 5-10 years down the road is gambling.

The most important thing I've learned from Graham's intelligent investor was the margin of safety. At the end of the day, if I'm out on the estimate of intrinsic value then buying the stock at 50% off increases my odds massively of not losing any money.

Back to BT - The thing about estimates is that you don't have to be precise. As Buffett once remarked " if you need a calculator to work it out, it's too close to call". Unless there is an obvious difference between price and value it's just not worth taking seriously.

With BT at 70p-100p the difference between price and value was obvious.

With BT at 150p is it becoming increasingly difficult to buy with certainty that you'll make money. Still, I'd rather have my money in BT for ten years than tied up in a Gilt.

Regards,

Wrex

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Wrexham is my birth town and where I grew up but I must admit I do like living in Chester, although I'll never support their football team!

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I'll post my reply on the LMR board for you Chris.

Regards,

Wrex

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Livingston starts long road to recovery but BT should eventually motor
Ian Livingston was never going to turn BT Group around quickly, especially given the rusting hulk he inherited. But since April he has managed to at least change tack and yesterday's half-year results reveal a company sailing with a fair wind at last.

By Damian Reece
Published: 8:58PM GMT 12 Nov 2009
Helped by a £226m tax rebate he's boosted free cash flow by £336m in the second quarter and freed up £932m through cost cuts that can be reinvested in impressing customers with faster broadband speeds, for instance.
He's a retailer by background and has embarked on getting all parts of BT focused on the same mantra: cost improvement and service improvement.
This won't be easy with a famously recalcitrant workforce but even here he's struck a deal for more evening and weekend working – the times when BT customers want service – with the Communications Workers Union. No mean feat given the CWU is currently helping to make your letters late through strike action at the Royal Mail.
They say retail is detail and detail is what his predecessor, Ben Verwaayen, was not good at, hence the credibility-sapping profit warning last year from BT Global Services. Even there, however, costs were down in quarter two for the first time.
But to change the culture of the organisation he has to start at the top. He's already cleared out 14 of the top 16 managers in Global Services and all divisional teams now tell him how they are going to improve their businesses. He then tells them how well they're doing – not the other way around, as used to be the case.
Verwaayen was fond of citing Microsoft and Google when talking about BT's future. Livingston talks about Toyota as a benchmark for improving quality while reducing costs. Shareholders should expect to drive away with the results

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Wrexhamite, I like your posts which are always backed up with pertinent facts.

One thing you mentioned confused me though - why are you watching Luminar? For the life of me I can't see how the same/similar arguments work for them. Clearly the businesses are completely different but they are so different in terms of how the BS looks, CF statement looks, debt picture looks etc. I think I'm missing the point somewhere.

This isn't a crticism at all. I'm just curious

Happy to continue the discussion on the Luminar BB

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Lol, I'd like to see cash with any chance of material income, and/or capital growth (unless it's a Bernard Madoff scheme) these days.

Whilst the BT share price could now be seen as slightly over-cooked, anyone buying in at around the £0.70 - £1.10 range will be thankful that they decided to invest some hardearned cash, long term or short term.

Most people are a bit punchdrunk from BT over the last years, but at those levels investing was a complete no-brainer.

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