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Seven takes financial pounding

Maybe they needed David Koch advising them on Their Money? Stock market volatility will hit Seven hard.

Maybe they needed David Koch advising them on Their Money?

The fallout from the credit crisis and weak advertising is expected to slash Seven Network’s first-half bottom line by up to 50 per cent, but in a further warning, the company said it was near impossible to predict what the final profit figure might be.

Spooked investors sent its shares tumbling to a near three-year low, notes The Australian. But the profit bombshell was well timed as Seven activated a flagged on-market buyback of up to 40 million shares.

Under the buyback, billionaire Kerry Stokes, who owns 45 per cent of Seven, could increase his stake in the company up to 56 per cent.

Given the market volatility, Seven warned “it is practically impossible to reasonably forecast earnings for this half but it is likely that the profit before tax (including significant items) will be approximately 40-50 per cent below the prior corresponding period”. That guidance, according to one analyst, would suggest a first-half profit of between $62-$72 million.

Early this year, Mr Stokes took a $700 million punt on the stock market, investing in several unknown companies. But it has backfired. As of market close on Friday — on the back of an unprecedented week for global financial markets — the “estimated market value” of that listed securities portfolio was $645 million.

Source: The Australian

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