PN Shares

Lot of selling today - Has there been a press comment?

Could be reaction to the reorganisation, the U turn on the "Voice of the Customer", the changing back from questions to tickets or the general malaise that is Plusnet.

Highly unlikely, much more likely for someone to do the following calculation wrt to bulldog's sale:

An excellent and concise analysis.

It will also be another month or so before Q3 results are published to determine how many customers they have currently.

whats the current value of a share?

Yes indeed. Wonder what they'll look like. I'd guess bad, but we'll have to see.

My calculations assumed that a bulldog customer was worth the same as a plusnet customer which probably isn't the case, because a bulldog customer has their whole home phone line service taken, driving up the average revenue per user -- probably double that of plusnet's. I think C&W must of been desperate to sell (or have a very lucrative deal with the LLU rental afterwards) to let it go for that price, I don't even think that values a customer worth 3 months revenue!

103p. http://uk.finance.yahoo.com/q?d=t&p=&q=q&s=PNT.L&m=L

ahhh so they have risen again then

Again, excellent observations and accuracy because it was only recently I was reading a market report valuing existing ISP customer between

Don't think so, the lowest they've been is 94p and only that for a week when they initally listed. The lowest price they've been in the last year is 97p so they are barely above the water here.

It's interesting that PlusNet haven't yet spun the COO's departure (and restructuring) to the City. Presumably he wasn't a director and they are therefore under no obligation to notify the Stock Exchange. Maybe they reckon it would do more harm than good.

Although not a huge volume of shares changed hands today (66k), virtually every transaction was a sale. On previous bad days there have always been some sizeable buys mixed in with the sales.

Simon

Actually, if you look at Thursday's trading overall, there was a decent slip. Mostly due to Blair's news, and the resignations on Wednesday. The pound fell too.

The graphs are showing a drop from 400p to 100p in the last 6 months.

Some larger purchases first thing this morning - someone looking to get the price back up a bit? - the directors, maybe..............


Michael

Probably exercising their rights to purchase some more shares at a preferred rate..

Forgive my ignorance, but how can "virtually every transaction be a sale"? Surely every transaction must be between 2 people or organisations, one who sells and and the other who buys.

The FTSE100 fell by just over 1% on Thursday; PlusNet shares fell by 5%.

Simon

Technology shares normally suffer the biggest falls as most people want to stick to tried and trusted/bricks and mortar companies in times of crisis.

The FTSE 100 isn't the best guide in all cases.

If you compare the relevant sector to Plusnet it's a lot closer.

As an extension of what you just said and probably a moot point but Plus.net are AIM listed and not in the FTSE 100 any way..

Of course it doesn't suit pr100 on his anti PN campaign to acknowledge that obvious fact. People are just selling their shares to the trader fairies at which point the shares just mysteriously disappear in a puff of smoke.

In reply to:

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Of course it doesn't suit pr100 on his anti PN campaign to acknowledge that obvious fact. People are just selling their shares to the trader fairies at which point the shares just mysteriously disappear in a puff of smoke.

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Anyone who understands how the market worked would know that there are indeed many bluffs (puffs of smoke) in the trading game. And that money does indeed disappear when there is consistent selling pressure. Market makers can lose money. And anyone who's been more exposed to the long side recently has certainly lost money in this stock.

Shares aren't traded directly. They are bought and sold through the same kind of "retail/wholesale" supply chain as TV sets or apples. Stockbrokers are the "retailers" and they simply take instructions from buyers and sellers and do a trade with the market maker ("wholesaler") who sets the spread (buy/sell price differential) for a share - typically by assessing the demand for trades he receives from different stockbrokers. Always, the buyer pays more (ie the top end of the spread) than the seller gets (bottom end of the spread).

Market makers may find buyers to match sellers or they may keep a float - ie they are buying shares without selling them, or vice versa. The float is necessary to ensure that sellers can always dispose of their shares even if there may be currently no demand for them - and it represents both a risk and a possible reward for the market maker.

So if you include market makers as 'buyers' then yes, every share transaction has a seller and a buyer, albeit at different prices because of the spread. But if you mean that every share sold by an owner is bought by a new owner, that isn't the case - at least, not in real time.

Because of the role of the market makers, a day's trading could theoretically be all sales and no buys, as PlusNet's almost was yesterday. A more typical day would see a greater variety in the number of sellers and buyers - see this list of PlusNet trades today where the assumed sells are coloured red and the assumed buys are in blue. Note that a big seller of 73764 shares could only get 101p for them at 10.42am but it looks like the market maker found a buyer for them at 106p an hour and a half later. But for that period of time, such a large chunk of shares without an immediate buyer in sight represented a potential risk to the market maker, hence the low price he was willing to pay for them. For the time that the market maker held on to those shares, they were part of his float. It would of course be interesting to know who the seller was; and even more interesting to know who the buyer was. It's possible that the buyer would be an existing large institutional holder of PlusNet shares who feared that allowing such a large number of shares to remain in the float would drive down the value of his existing shareholding.

More information here.

Simon

In reply to:

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The float is necessary to ensure that sellers can always dispose of their shares even if there may be currently no demand for them

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"Always" is not strictly true because if liquidity is insufficient, sellers may sometimes not dispose of their shares at all (e.g. in a crash scenario such as when Enron hit the floor) or more likely will be quoted at price which is at vast distance from bid. Albeit MMs are normally obliged to make a market and should ordinarily accept all trades at NMS.

Also (re yr latter example) it's not necessarily the case from the print that it was the same MM who took execution on the two trades you've suggested. Albeit it's likely.

Otherwise it's very good summary.

Edited by Nessus (Fri 08-Sep-06 14:30:31)

"It would of course be interesting to know who the seller was; and even more interesting to know who the buyer was."

75,000 would represent a notifiable amount. Odd that one hasn't been seen. A large volume of Pipex stock was traded at 4.30pm yesterday.

TT

Thanks, Simon - that's an admirable summary.

Was the issue price 90p?

If so, it's getting perilously close!

Michael

90p yes. It's only a psychological barrier - but if breached it would possibly accelerate the fall.

Simon

Plusnet customers are profitable whilst Bulldog have lost buckets of cash for every one they signed up so that must factor into your equation somewhere?

I don't think so, it was the marketing cost and rollout cost that killed them, once they've got them then I'm sure they are at least profitable if you don't include the capex of the LLU network with them.