John Pluthero – Thank you and goodnight | FT Alphaville

John Pluthero – Thank you and goodnight

When we last looked at the Cable & Wireless Worldwide share price (about seven hours ago) it was down around 12 per cent.

By the close of play in London it was down 26 per cent.

John Pluthero what have you done?

The answer, it seems, is to have hosted a post results meeting that did nothing to reassure nervous investors or analysts. And we mean nothing, we really mean nothing.

Mark James, the telecoms analyst at Liberum Capital, sums up the mood well.

Cashflow. A simple question unanswered. CWW has cut the dividend citing the need for Balance Sheet strength. We understand that. Peers such as Colt do not pay a dividend for similar reasons. Yet CWW is unable to tell us when it believes net debt will go down rather than up. It increased by £89m in H1. Even allowing for the £77m the dividend paid in the period, demonstrably CWW does not make any money.

How will the incoming CEO be measured? Mr Darby will have a discretionary bonus of up to 100% of his salary, and £600,000 of shares which will only be released upon achievement of “appropriate” performance criteria. We believe investors should ask what these criteria are. Our view is that they should have at their heart, cash generation: something lacking to date in CWW.

What is strategy? The outgoing CEO has outlined a strategy – of sorts. But the incoming CEO arrives in 8 days time and may have a completely different agenda. Investors will not hear the new CEO’s strategy until the full year results (May 2012). Perhaps they shouldn’t invest in CWW until then, either.

We’d go further and ask why you’d want to hold CWW until May 2012? Surely there are better places to park your cash, unless you believe that CWW is a takeover target.

And we don’t.

It’s cheaper to lease capacity than buy at the moment.

Related link:
Controversial head of CWW steps aside – FT