NZ stocks: Slide in Baycorp, Telecom sends market down 1pc

12.00pm

A steep fall in Baycorp Advantage shares after a profit warning yesterday and a further fall for Telecom post its result sent the sharemarket down 1 per cent today.

Baycorp slumped over 40 per cent as investors yet again punished a stock for revealing a negative surprise. There was hefty turnover worth nearly $3 million.

The NZSE-40 capital index was down 19.58 points to 1928.94 shortly after 11.30am -- its lowest level in over a year. Turnover was moderate at $19.4 million

Telecom fell 10 cents, 2.2 per cent, to 471 after it announced a first quarter net profit of $146 million -- at the lower end of the $145 million-$150 million range it forecast last week.

There was $6.6 million worth of Telecom shares traded.

Craig Robins, senior broker at Salomon Smith Barney, said today's fall took the share price down to the point it fell to after last week's profit warning.

"It's more of a sentiment thing really," he said.

"The market will be looking for a little more transparency in terms of the costs-out story."

He said there were revenue timing issues which the market needed more information on.

"The revenues in Australia are down but I think the market will take a little bit of comfort from the fact that it is not necessarily the revenues in New Zealand.

"The bottom line is the stock is going to do some work around these levels. We are still very positive," said Mr Robins, who said his firm downgraded its profit forecast last week.

"The tone may be a little softer over coming days and weeks but I think the structural and thematic story is still there from our point of view but it is more of medium-term story rather than just a short-term story."

Baycorp shares crashed 136c to 189 -- after the company issued a warning last night it expected only minor growth in earnings per share (EPS) in the 2002/03 financial year, with the benefits of a 2001 merger only flowing through in later years.

Baycorp was created in 2001 from a merger of New Zealand's Baycorp Holdings Ltd and Australia's Data Advantage Ltd.

"EPS before significant items and goodwill amortisation for the year ended June 2003 is expected to show little growth over the last year with the real benefits expected to flow in 2003/04 and 2004/05," Baycorp Advantage said in a statement.

Mr Robins said Baycorp was still viewed with scepticism.

"There are issues there -- transparency, debt levels, acquisitions and quality of earnings. So it's still on a relatively high (price/earnings) multiple."

There was heavy turnover in Powerco, worth $3.3 million. It was rose 1c to 162.

Contact Energy fell 7c to 368.

Among other movers: Broadway rose 3c to 40c, Fletcher Building fell 2c to 304, Fisher & Paykel Healthcare fell 10c to 1070, Port of Tauranga rose 8c to 418, Sky TV City rose 3c to 770, and Westpac NZ fell 10c to 1490.

Tranz Rail fell another 2c to 126 after revelations about the high price it is paying for its rights issue to raise $66 million.

There were 14 rises and 40 falls among the 94 stocks traded.

Wall Street had another rough day with the Dow diving 176 points, 2.1 per cent, to 8360.69 and the Nasdaq falling 40 points, 2.9 per cent, to 1319.13.

- NZPA