Strewth, Strathfield In More Strife

The Age

Friday April 1, 2005

CHRISTOPHER WEBB

STRATHFIELD was again at the receiving end of the market's vengeance, losing almost 20 per cent of its share price yesterday.

The discounting added to the 21 per cent fall the previous day, when the mobile phone and electronics gadgets group shocked its close followers with a massive earnings downgrade.

Whereas onlookers were looking for current year earnings of $5 million to $5.5 million - as forecast by the company - John Winstanley and co came out with forecast that stated the group would earn between zero and $1 million.

The market had little time to digest the news on Wednesday as it was released minutes before the closing bell, but yesterday the scrip weakened as the day progressed and ended up losing 2.1 ? to 8.9 ?. The average price for the day was 9.3 ?.

As so frequently happens when a stock is put through the wringer, particularly one that commands a few pennies, clients of Commonwealth Securities, E*Trade and Westpac appeared in large numbers on the buying side.

Commonwealth bought 4.5 million shares, E*Trade picked up 1.4 million shares and Westpac bought almost 1 million shares.

There were 258 trades in the stock and Commonwealth on the buying side did 132 trades. No wonder the broker is coining money.

The discount brokers soaked up stock, much of which would have come from professional investors who had to call for an oxygen tent when the earnings downgrade hit the deck.

After all, this was an outfit that just 30 days earlier put out a screed that gave no hint that current half earnings would fall in a big hole.

The professionals take umbrage when a downgrade arrives in such a fashion, and they pushed the selling button hard.

Meanwhile, Winstanley issued the briefest of brief statements that was described as an earnings clarification.

Winstanley said the company had received several queries about the downgrade and it wanted to clarify that underlying earnings before interest, tax, depreciation and amortisation (EBITDA) included in the current year forecast were in a $5.4-$6.4 million range.

The statement was presumably issued as a confidence booster, as it noted that EBITDA was a reflection of the operating cash flow generation within the business.

However, judging from the weakening share price, sellers were not taking much notice.

Strathfield's EBITDA for the first half was $5.1 million and net earnings were $2.9 million, so all yesterday's clarification did was to confirm what a disaster the second half was shaping up to be. Yesterday, about 5 per cent of stock not in directors' hands was booked on the market and at 8.9 ?, the company was valued at $27 million.

Place your bets, please.

Auction man pleased with action 'though fake leg stands

CHRISTOPHER Deutscher, chief of Deutscher Menzies, has declared himself well pleased with the firm's latest auction, which moved 83 per cent of paintings by value in a sale that raised $7.1 million.

"It was outstanding, given what we had. We were a little down on stock expectations; it's slim pickings out there.

"There's not a lot of willing vendors at the moment with big-ticket items."

Yesterday he took a swipe at the toffee-nosed crew from Sotheby's, accusing them of copying his firm.

"We had Sotheby's competing at the same time.

"They decided to hold their first March auction ever, but they didn't do as well as we thought they might," he said.

"In a competitive sense, it was a good result for us.

"They started to take on our design format. Blatantly.

"They copied our catalogue layout and they copied the big capital letters we use for artists' names and the double-page spreads. Quite remarkable, really.

"They only did $2.9 million in the end," said Deutscher.

Topping the passed-in paintings on the day of the auction was an Arthur Streeton oil entitled Sydney Harbour 1895.

The catalogue estimate, before the hefty 20 per cent buyer's premium and GST, was $150,000 to $200,000.

But, two days after the auction the vendor let it go for $130,000.

Deutscher said it was "a bit surprising" that Arthur Boyd's The Stockman didn't sell but the failure to sell of John Brack's painting of an artificial leg in the middle of a room came as no surprise.

"We couldn't get it away," he said and observed that it was "a very difficult picture to live with. But I would have thought that perhaps a museum would have been interested."

THE DEUTSCHER SALE

THESE SOLD

ARTIST PAINTING SALE PRICE * ESTIMATE **

Whiteley Orange Fiji Fruit Dove $759,000 $924,000

Boyd,A Saul and David $384,300 $268,400

Whiteley Flame Tree, Port Vila $329,400 $427,000

Olsen Bungle Bungle Ranges $219,600 $274,500

Shead Epiphany $219,600 $219,600

Booth Painting $184,800 $231,000

Nolan Voss $178,200 $231,000

Lindsay Court to Peacocks $170,800 $207,400

Onus Evening Reflections $152,500 $122,000

Williams Trees $145,200 $184,800

AND THESE DIDN'T

Streeton Sydney Harbour $213,500

Boyd,A The Stockman $184,800

Brack Still Life with Leg $152,500

Blackman Razzle Dazzle $109,800

Klippel No 253b $103,700

Booth Strange Landscape $62,830

Blackman The Red Dress $61,000

Rees Harbour, McMahon's Point $54,900

Williams Avenel $48,800

Namatjira Ghost Gum $37,210

* HAMMER PRICE AND BUYER'S PREMIUM AND GST.

** MID-POINT OF CATALOGUE ESTIMATE AND BUYER'S PREMIUM AND GST.

© 2005 The Age

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