Thursday, August 12, 2010

Telstra's share price drop

Telstra sign on an Telstra Telephone ExchangeImage via Wikipedia

Telstra's posted its profit which was not what the market expected and as a result share price drop.

The main cause of worry for share owners is the drop in fixed line. As reported from the ABC ::

Telstra's chief executive David Thodey says the carrier's main problem is its failure to retain customers when they move from fixed-line to mobile services.
He says now is a transitional time for the company, during which it will embark on a new suite of strategies to stop the company from losing more market share.
"Today the greatest asset that Telstra has is our customer base, and we have been losing too many customers and we cannot allow it, in fact I am not going to allow it to continue," he said.
He says that might mean sacrificing some profits in the short-term.
"Do we maximise short-term cash returns, by reducing costs and losing market share, or do we bite the bullet and invest for longer-term growth?" Mr Thodey asked rhetorically.
Some good and bad news I think for consumers.
The good news and I think we are already seeing this is Telstra is going to be more competitive.
The bad news especially if the Coalition gets in. Telstra sees no profit in investing in infrastructure especially fixed line. Translated: no faster broadband in  country areas.
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