Weekly Digest
Weekly Digest Issue No. 430
28-08-2008
by Deirdre McArdle
Babcock & Brown meltdown: the implications | Meteor: bright point in Eircom results | ComReg unbundles line share pricing decision | Student initiatives a step in right direction | Windows Vista to get image makeover | New iPod models on way?
Babcock & Brown meltdown: what does it mean for Eircom?
The changing fortunes of Australian investment house Babcock & Brown have been making the news recently. A profit warning in mid-August led to its share price tumbling, while last week's board and management re-shuffle did little to assuage investors' fears. News reports during the week have theorised what this all means for Eircom. Babcock & Brown owns nearly 8 percent of Eircom and its listed fund, Babcock & Brown Capital Management (BCM), owns 57.1 percent of the Irish telco. Speculation has been rife that Eircom will be put up for sale as Babcock & Brown announced its decision to focus on its three core businesses: infrastructure, real estate and operating leasing. However, a spokesman for BCM stressed to ENN that while BCM is managed by Babcock & Brown, it is a separate entity with a separate board and governance structure. "BCM remains very pleased with the performance of both Eircom and Golden Pages, particularly in the current market environment. We would like to reiterate that as previously stated, BCM has no current plan or timeframe to exit either Eircom or Golden Pages and this remains the case," he said.
Meteor: the bright point in Eircom results
In light of strong competition in the market and the general slowing economy, Eircom's financial results have been less than stellar of late. For the firm's fourth quarter it posted revenue of EUR512 million, up just 2 percent on the year-ago figure of EUR500 million. EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 5 percent to EUR177 million. Growth in the firm's fixed-line business has almost ground to a halt, with revenue in the segment increasing by 1 percent to EUR406 million, while fixed-line EBITDA remained unchanged from the previous year at EUR145 million. The jewel in the Eircom crown is without a doubt its mobile operating arm Meteor, which saw fourth-quarter revenue grow 14 percent to EUR123 million on the back of subscriber growth and higher ARPU (average revenue per user). Meteor's quarterly earnings jumped an impressive 33 percent to EUR32 million, up from the EUR24 million reported in 2007. The mobile operator currently has 983,000 subscribers and 19 percent of the mobile market. Overall, the group's full-year figures had a brighter sheen to them with revenue growing 4 percent and EBITDA up 8 percent. Eircom said it added 138,000 broadband subscribers during the year. Its total broadband subscriber count as of 15 August was 608,000. It's an unsettling time for Eircom at the moment. The increasing speculation about its future, coupled with tougher market conditions and increased competition appear to be taking their toll.
ComReg unbundles line share pricing decision
The news that ComReg is to "set aside" its decision of 27 June 2008 to direct Eircom to cut its LLU line share pricing from EUR8.41 to EUR2.94 reverberated around the telecoms industry this week. Following ComReg's June decision, Eircom brought an appeal to the High Court. ComReg has said the financial cost of the appeal, along with the "burden" on ComReg's resources and the "probability" that any High Court decision would be unlikely to be reached before 2009, is behind its decision to reverse its directive to Eircom. The line share price cut formed part of a wider assessment of the LLU market by ComReg, which was originally scheduled to be finalised in September 2008, according to Mark Kellet, CEO of Magnet Networks. While Kellet told ENN he is supportive of ComReg's proactive approach to the LLU issue, he said he is frustrated by the lack of progress in the overall LLU pricing structure, which he said looks like it won't be finalised until some time in 2009. For his part BT Ireland's CEO Chris Clark echoed Kellet's disappointment and said he "looks forward to the setting of a new price as soon as possible". This lack of resolution in the LLU market is not just affecting the broadband market in general, it is also having a negative impact on the Irish economy and is effectively hampering the country's ability to portray itself as a so-called knowledge society, said Kellet.
Student initiatives a step in the right direction
The falling interest among students of pursuing a career in IT has been well documented over the past number of years. Government and industry commentators have highlighted the negative impact it's having, and will continue to have, on Ireland's economy, and many remedies have been suggested. Two initiatives launched this week certainly have the right idea: show students just how interesting and varied a career in IT can be. Engineers Ireland, along with ICT Ireland, has kick-started the 'Champions Programme', which will see 'champions' from over 50 technology companies visiting schools around the country to talk about their lives and experiences, and why it's worth considering a career in technology. Meanwhile, the hugely successful Irish gaming firm Havok has unveiled the 'Havok Physics Innovation Contest', a global competition to find the 'next big thing' in game developing. Amateur game developers are being asked to create an innovative playable PC game demo. While four winners will ultimately be selected, one of these will definitely be an Irish third-level student. David O'Meara, MD of Havok, has long stated his desire to hire Irish graduates, but he's found the supply of highly-skilled graduates to be severely depleted of late. The contest forms part of Havok's plan to encourage Irish students to engage in maths and science, and ultimately a career in the IT industry. It's initiatives like these, which emphasise the real-life experiences of IT professionals and the diversity of the IT sector, that are most likely to get through to students.
Windows Vista to get image makeover
As it attempts to raise the flagging profile of Windows Vista, Microsoft is to plough USD300 million into an ad campaign that bigs up the operating system. Some USD10 million of that pot will go to funnyman Jerry Seinfeld, whom Microsoft has tapped to front the ads, along with Bill Gates. This concerted effort by the Redmond giant follows an Apple ad campaign that saw Vista being portrayed as a middle-aged, bumbling businessman, compared to Apple's OS Leopard, which was shown as a hip sharp-shooter. While research firm Forrester has predicted that businesses' attitudes to Vista are changing and 2009 will be a "big year" for the operating system, current feelings for Vista are lukewarm at best. Just this week CEO Steve Ballmer said that Microsoft is willing to consider extending XP's shelf life if that's what customers want; however he did say that he believed the majority of people who buy new PCs prefer to have Vista on them rather than XP. In a bid to get Microsoft to keep selling XP until the next version of Windows is released, an online petition -- 'Save XP' -- has been set up. It has attracted over 200,000 signatures to date. Sounds like Seinfeld is going to have to earn every penny of that USD10 million.
New iPod models on the way?
As Apple faces the possibility of a class action lawsuit about the connection speeds of its iPhone 3G, the blogosphere is abuzz with speculation that the firm is to roll out a number of new products in early September. Apple watcher and Digg founder Kevin Rose has predicted the launch of a new iPod Nano, which will be thinner and longer than the current model and have a larger, curved screen. Rose also suggested there will be some aesthetic changes made to the iPod Touch, which will also feature Apple's 2.1 firmware. The firmware will be rolled out to the iPhone thereafter. He said on his blog that along with these changes Apple is planning on cutting the price of its iPod line in a bid to curb any cannibalising of iPod sales by the iPhone. Also on the cards, according to Rose, is iTunes 8.0, which will feature new functionality. Rose's Apple predictions have generally been hit and miss; he had previously claimed there would be three different versions of the original iPhone and that the iPhone 3G would feature video chat. However, he did correctly predict the price point of the iPhone 3G.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 