Staff Writers

Disgruntled shareholders have waited until the major telco announced its half year results before launching a class action suit seeking $300 million against the company for failing to properly inform the market.

According to an AAP story running on the SMH site, law firm Slater & Gordon is representing a group of about 100 shareholders represented in the suit.

At issue is the much publicised ‘private briefing’ given to the Federal Government, in which new Telstra CEO Sol Trujillo informed the 51 per cent share holder that things were not all rosy at the factories. The Federal Government had this information a month before the opposition and ASIC pressured Telstra to publicly release the information to the stock market.

The AAP story outlines how at a hearing in the Federal Court, barrister Alister Abadee said his clients were angry that senior government ministers and the prime minister were given the sensitive information first.

“These things were disclosed to the commonwealth in August last year but not disclosed to the market until September,” he told the court.

“We know that at some point, certainly no later than the 11th of August, Telstra formed certain opinions (about its financial position but didn’t tell shareholders until September).”

In a case which could take up to five years to run its course, follows an investigation by ASIC late last year into whether the telco had breached stock market rules by secretly briefing the government on August 11 2005.

The secret briefings were not only reserved for the Government, insightful internal documents are also alleged to have been distributed to select members of the press, without shareholders having access to the information.

Although the ASIC issued only a strident warning (rather than a fine) to Telstra, the admonition demonstrates the class action suit may have some legs.

The report says Telstra spokesman, Rod Bruem, believed the shareholders who are suing Telstra would ultimately be disappointed.

“Those shareholders will ultimately be very disappointed after having been led up the garden path by this greedy and opportunistic law firm in what is a baseless action,” he said.

“The 100 or so shareholders that they have promised, on my maths, $3 million each are holding 1.6 million Telstra shareholders to ransom.”

Search maestro and current stock market darling Google Inc. has reportedly told the US Securities and Exchange Commission it plans to sell a further 14.2 million shares of class A common stock.

At current market prices that would raise a further US$4 billion for the company. It could add that to the US$3 billion it already has in the bank, but it’s unclear what it plans to do with US$7 billion in cash.
The company says it plans to use the money raised “for general corporate purposes, including working capital, capital expenditures and possible acquisitions of other businesses or technologies”.
It seems the company doesn’t have any particular acquisitions in mind at present though and will put the proceeds into highly liquid, investment-grade securities.
Google’s share price currently hovering just under the US$300 slipped three percent on news of the new raising.

Graduating from a position as Australia’s largest eBay PowerSeller, AuctionBrokers co-founders Paul Greenberg and Michael Rosenbaum are finding e-tailing a challenge worth getting into.

Launched just over 12 months ago the pair’s new site www.dealsdirect.com.au is growing at a rate of 30 per cent a month.

The company has just moved into new premises with a 6000 square metre warehouse packed to the gunnels with cut price goodies, which the company hopes will propel it to the number one spot for online sales.

Already the site is listed as the fourth most popular e-commerce destination in Australia behind, The TradingPost, eBay and Target.

“This looks like it’s going to be the online Christmas we have been talking about since 1999,” said Greenberg, who said the product going out the door is not restricted to DVD’s, CD’s and digital camera’s. Greenberg said DealsDirect is shipping jukeboxes, electric treadmills, garden furniture, even grandfather clocks in volume. The customers are buying these items sight unseen, demonstrating that if you treat your customers with respect and deliver good product at a good price, people are now happy to buy online, he said.

The company has grown to about 30 people, with five of these based in customer care, others in marketing and others as stock scouts, but the largest proportion work in the warehousing and logistics area.

The company sells not only direct to the public in small quantities, it has a sizeable business supplying other retailers and e-tailers with pallets of similarly priced stock offering free shipping.

Though Greenberg said email marketing is important to the mix, with the company doing a lot of email (subscribers receive as many as three a week), the company has also dabbled in a little radio advertising. It also leverages its significant AuctionBrokers exposure on eBay by pointing customers to the DealsDirect site. Greenberg says AuctionBrokers, an early eBay Australia seller pioneering the $0.99 auction for high-value goods, would typically have as many as 1500 active items on eBay.

Greenberg explained that key to the success of the company’s e-tailing business is careful buying. DealsDirect sources stock both direct from China and through local distributors targeting both branded and white label products. Occasionally it picks up distressed stock and orphaned stock in liquidations.

The product range is not so much designed to make DealsDirect an online department store as to deliver great prices where and when it can. This sometimes means reacting quickly to get product in and out of the warehouse as quickly as possible, he said.

We are not closed to the brands, but we find there is no real angle with a brand. There is a lot of channel management involved when you are dealing with branded product and you wouldn’t be able to get the favourable pricing because they have to protect their other channels, explained Greenberg. “We don’t aim to be a David Jones on line,” he said. “That involves too many lunches and not enough business.”

Though the company sources somewhat opportunistically, there is a growing need to switch from the present “intuitive” category management to a more metric driven approach, he said. Managing the categories as they grow is a challenge Greenberg is taking on now in anticipation for the year ahead.

The biggest savings, however, come from the company’s low cost of doing business. “If we were in a Westfield shopping centre we would be in a little store in the corner somewhere,” said Greenberg. Instead, getting the logistics right is critical and although he admits there is an argument for third party logistics (including drop shipping), the company has gone down the path of providing its own.

“That is where the action is,” he said. The need to be reactive and nimble lends itself to home grown logistics allowing DealsDirect to act quickly if it makes an opportunistic buy, explained Greenberg.

The Seven Network and Yahoo! have announced a deal to combine their online, mobile and IPTV businesses in Australia and New Zealand.

Under the terms of the agreement, Seven and Yahoo! will form a new 50-50 holding company that will own Yahoo! Australia & NZ.

Seven and Yahoo! will each hold three of the six board seats in the entity. The two companies will combining their online teams and are expected to launch a new name and distinct online presence in late January, coinciding with Seven’s coverage of the Australian Open and the Olympic Winter Games in Torino, as well as the opening weeks of the 2006 television season.

The vision for the combined teams is to create the best entertainment, information and communications experience for Australian internet and mobile users, the company said in a statement.

New consumer offerings will ultimately be available across online, mobile and IPTV in areas such as news, sports, entertainment, TV, games, music, and travel. Seven will also contribute AUD$10 million to match the existing development capital in the business, offline promotion through the Seven Network and Pacific Magazines, as well as Seven’s 33 percent stake in mobile solutions provider m.Net Corporation Ltd, which is subject to obtaining required consents.

The deal will allow the joint venture to offer advertisers combined offline and online sponsorships across Yahoo! Australia & NZ, the Seven Network and Pacific Magazines.

Correspondingly, by partnering with a leader in local digital content, Yahoo! will be better positioned to exploit opportunities for growth in Australia. Seven is the largest television company in Australia reaching 98 per cent of Australians through its owned and operated stations and affiliate agreements. Seven’s publishing company, Pacific Magazines, is the second largest magazine company in Australia, with more than 6.6 million readers each month across its 15 publications.

Chairman and chief executive officer of Yahoo! Inc, Terry Semel, said: “Yahoo! and Seven have very complementary businesses and brands, and we see this as a tremendous opportunity to build a leadership position in Australia. This is the best combination to benefit from increased broadband penetration, rich media consumption, and the growing cross-media advertising spend. Together, I believe we can deliver the most engaging and innovative rich media experience for Australian audiences and advertisers.”

Executive chairman of Seven Network Limited, Kerry Stokes, said: “We are building on our strengths to create a broad media company focused on the delivery of relevant content to all Australians across a number of delivery platforms. Yahoo! is the global Internet leader and their focus on developing compelling content to engage with online audiences complements our strategy.” 

Coles Myer has released a stunning fiscal 2005 result with after tax profits up more than 17 per cent despite the company’s ailing Megamart stores costing it a whopping $38.5 million in loses.

Sales for the group which include Coles, Kmart, Target, OfficeWorks and Liqourland grew by 13.3% to reach a staggering $36.6 billion.

Chief Executive John Fletcher has delivered for the company a stunning result that includes a return on investment that has doubled since 2001 increasing 17.6 per cent since last year to reach 24.1 per cent.

After tax profit is up 17.6 per cent to $678.1 million and shareholders will be happy with a dividend which has grown by nearly 15 per cent. They will receive 33.25 cents per share.

“This year’s double-digit sales and earnings growth has been achieved in the most challenging year this team has faced,” Fletcher said.

“In the 12 months following the removal of shareholder discount, we experienced a highly competitive retail market as consumer spending tightened and while the business undertook significant transformational change,” he said.

“The Group was able to meet the high end of its guidance despite lower than anticipated earnings from Myer, which was impacted by tough trading conditions in the second half, and a significant loss by Megamart.”

Both the Myer chain and its nine Megamart stores are slated to go with the company saying it has had experssions of interest in the Myer chain.

Although Myer revenues grew by 2.1 per cent for the year, EBIT earnings fell substantially while Megamart sales actually fell over the previous year prompting the company to put aside more than $80 million dollars to handle the loss it will incur divesting itself of the failing business.

A Target’s Statement release by the Board of of Volante Group has called on shareholders to reject the bid labelling the $1.01 offered per share as “absurdly low”.

Pointing to an independent report prepared for Volante by Lonergan Edwards & Associates, which valued the shares at between $1.27 and $1.44 each, the company said the offer doesn’t take into account the strategic value of the firm.

Finding that the offer was “neither fair nor reasonable” Lonergan Edwards’ estimates are between 26 per cent and 43 per cent more than the $1.01 per share being offered by Commander.

Volante Chairman, Robin Crawford, said “The implied multiple of the bid is well below IT sector historic transaction and forecast trading multiples and represents an unusually low premium, negative in some cases, to pre-offer trading prices.

“As well, the Commander offer doesn’t reflect either the strategic value of Volante’s strong competitive position in the high-end Managed IT Services sector, the value of that to Commander, or the company’s improving outlook.

Crawford said the Group was forecasting significant revenue and earnings growth from its emerging services business between now and fiscal year 2007.

“Services revenue is forecast to grow by close to 50 per cent from $103.9 million in FY 2005 to $155.7 million in FY 2007. Group EBITDA is expected to grow at a compound annual growth rate of 12.0 per cent per annum with NPAT growing 15.6 per cent per annum between FY 2005 and FY 2007.

“In light of all of these factors, Volante directors, who collectively own just under four per cent of Volante shares on issue, do not intend to accept the $1.01 Offer from Commander for any of these holdings,” Crawford said.

No financial results yet for the year ended 30 June 2005, but Harvey Norman’s has announced sales for the full financial year.

The result, though not quite as stellar as JB HiFi’s 30 odd per cent overall, certainly compares to its like-for-like result of 4.7 per cent.
Rolling up all the “Harvey Norman” stores, commercial divisions and other sales outlets in Australia, New Zealand, Slovenia and Ireland (excluding Singapore) total sales for the company equalled $4.06 billion for the year ended 30 June 2005.
This, compared to $3.67 billion for the year prior, represents an increase of 10.6 per cent.
Like-for-like sales which doesn’t count new store openings increased by 5.3 per cent in 2005 over the 2004 result.
During the financial year, eleven new stores were opened in Australia and New Zealand.