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Analysts attributed a 7c drop in Telecom's share price to $4.85 to a disappointing result rather than the resignation of chief executive Theresa Gattung today.
"I think the share price reaction is everything to do with a weak result," said an analyst, who did not wish to be identified.
The company reported a December half year net profit of $452 million, up 17 per cent on last year once a $871m writedown of Australian unit AAPT is discounted.
Ms Gattung's announcement she will step down in June, while not a surprise, still set tongues wagging and overshadowed the result.
Chairman Wayne Boyd paid tribute to her "inspiring and passionate" leadership.
Since last May the knives have been out for her after Telecom failed to persuade the Government not to force the company to open its network to rivals, but she said a seven-year tenure at the top in one job was always about her limit.
"I wasn't crowned emperor for life," she said.
Asked if she wished she had done some things differently, she said: "I don't do regrets."
She said it was tougher at the top for a woman, but hoped she had made it easier for any child to aspire to any job.
She said she was proud of her achievements that had taken Telecom into the mobile and internet age. She gave no hint about the future.
The half year result was boosted by a $65m tax credit arising from the AAPT writedown that analysts had not reckoned on.
As flagged, the company said its full year result would be down 2 to 3 per cent mainly due to increased regulation announced in May. Full year after tax profit was expected to be in a $875-895m range.
Still, the same analyst said the underlying result was below where the market was looking.
"Implicit within the company's guidance is a downgrade in underlying operating expectations," he said.
Although chief financial officer and ceo heir-apparent, Marko Bogoievski, said there were a further $80m in tax credits available and other credits would accrue from ongoing AAPT losses, analysts remained sceptical.
"There's no certainty. If there was, they would book the other $80m," said one.
He said performance of the data and broadband divisions, and perennial problem-child AAPT, all disappointed.
The company said the sale of its Yellow Pages unit, expected to fetch nearly $2 billion, was on track and bids were due on Monday.
Mr Boyd said a search for a new CEO would start immediately and candidates would be sought from within and outside the company.
He said it was a change management position, based in Auckland rather than in the present headquarters in Wellington. In a nod towards Mr Bogoievski and other internal candidates, Mr Boyd said Telecom had strong succession planning in place.
Analysts said the market would react positively to the appointment of Mr Bogoievski although that did not mean there was a preference for an internal over an external candidate.
The rehabilitation of relations with the Government was a high priority.
The performance of the company's mobile unit was the highlight of the half year with mobile revenues growing 39 per cent and 36.7 per cent in the first and second quarters respectively.
It signed up more than 100,000 new customers in the December quarter, compared with rival Vodafone's 89,000. Ms Gattung said she couldn't help bragging that Telecom had outdone Vodafone in new signings for eight of the last nine quarters.
Half-owned Southern Cross delivered some overdue returns, repaying US$54m ($80m) of shareholder advances and lined up to pay a US$12m dividend this year and US$10m next year.
The lowlight was again AAPT, although its A$20m loss from operations was an improvement of 39.4 per cent.
Telecom announced this week a A$320m ($366m) bid for Australian broadband company PowerTel and analysts believe this move, if successful, would help resurrect AAPT.
Costs increased 6 per cent despite a 1.4 per cent fall in labour costs, due to the shedding of 300 jobs.
Ms Gattung explained the slowdown in broadband growth as "growing pains".
The company is undertaking a review of broadband operations that will be completed by April 30.
The 2006/7 budget for capital spending had been increased to $810-830m from $800m, mainly due to expected increased demands for broadband.
- NZPA
