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BSkyB has boasted it is recession-proof, but not everyone in the City is convinced. That's why its shares took a pasting today, falling 19½p to 466½p to make it one of the worst-performing Footsie 100 stocks.
The satellite broadcaster last month jacked up interim pre-tax profits from £307 million to £388 million, boosted by an extra 171,000 subscribers, lifting the total number of paying viewers to 9.2 million. That has put the company well on track to meet its target of 10 million by 2010. The annual churn - customers cancelling their subscriptions - has dropped to just under 10%.
Chief executive Jeremy Darroch crowed that BSkyB had delivered a "great set" of results in a challenging economic environment by focusing on quality, value and customer service, adding: "We enter 2009 in a strong position."
But the Queen's stockbroker Cazenove is not so bullish about prospects for the group, which is celebrating its 20th birthday this month.
It has cut its rating on the shares from outperform to in-line, and warns current investment plans, the strength of the dollar and the recent billion-pound-plus auction for Premier League rights add to the group's cost base, making it that much more difficult to forecast profits over the next few years. In addition, Caz says, the recession may force customers to cancel their subscriptions before the economy can show any signs of revival.
Shares generally were unable to build upon last week's gains, with investors disappointed no agreements had been reached on President Obama's stimulus package for the US economy. The FTSE 100 index, which rose almost 150 points last week, was 4.83 lower at 4287.04 in thin trading.
Hammerson jumped 54¼p to 451¼p after the property developer confirmed plans to raise £584 million through a heavily discounted seven-for-five rights issue at 150p. It wants the cash to reduce debts, having failed to raise funds by selling off assets.
British Land, 20p dearer at 474½p, and Liberty International, 26p better at 402¼p, are also thought to be forming an orderly queue for shareholder handouts. They will not be alone.
Housebuilders may also be forced to tap shareholders at some stage, if they fail to strike deals with the banks over the high levels of debt brought on by the collapse of the housing market. Supported by the success of the Hammerson rights, Persimmon rose 5p to 345¾p, Barratt grew 6p to 86½p and Bellway put on 6½p at 676p. Taylor Wimpey, 1¼p better at 19½p, is continuing to talk to the banks about restructuring its debt of more than £1.6 billion. Its stock-market value is less than £200 million.
But rights issues will not be restricted to the property sector. DSG International, down 1p at 25½p, is also in need of extra cash.
Pali International has repeated its sell rating but raised its target for the shares from 12p to 16p on valuation grounds. It has been hoped DSG could stay out of trouble by selling the freehold its Swedish warehouse for up to £50 million, but banking covenants are being stretched and it could cost DSG as much as £300 million to rid itself of its European "disasters".
Banks today brushed aside the bonuses row to post some useful gains on the back of better-than-expected results from Barclays, which led blue-chips higher with a rise of 11.3p to 116.1p.
Barclays brought forward its results by a couple of weeks to allay speculation it may be forced to turn to the Government for extra funding. Lloyds Banking, down 1.4p at 103.6p, Royal Bank of Scotland, 0.9p better at 24.9p and HSBC, 2p cheaper at 547½p, are due to report in the next few weeks.
Miner Xstrata retreated 13p to 789½p after announcing plans to restructure its Sudbury nickel operations in Canada, cutting 686 jobs. The Fraser Mine Complex will be placed on care and maintenance, the Strathcona Mill will cut shifts and the Fraser Morgan development project will be deferred.
