Telstra Shares Dumped as Sales Slump

Telstra shares dumped as sales slump

-----The corporate governance of Telstra

Student: Yuanwei.Chai (Steven)

Student Number: 3096105

Lecturer: Dr. Lisa Barnes

Date: 19/02/2010

Contents

1. Background --------------------------------------------------------------- 4

2. Why did those problems happened?--------------------------------- 4

3. Solutions ------------------------------------------------------------------- 4

4. Conclusions---------------------------------------------------------------- 5

References ---------------------------------------------------------------------6

Appendices --------------------------------------------------------------------7

1 Background

The proportion of the net profits of shares of Telstra were dropped 3.3% (actually-3.64583%=(1.85-1.92)/1.92)) from $1.92 billion of January of year 2009 to $1.85 billion of January of year 2010. The profits of sales were decreased because 1) the network of home phones was influenced negatively under the new IT equipment of the fibre-optic NBN of its future business, such 325 million fewer local calls as promoting the network grade; 2) pursuing the similar products at much lower prices without any backup. (White, 2010)

2 Why did those problems happened?

There were three mainly reasons of those problems happened. First, the mistakes of the Board of Directors (BODs), management’s and shareholders’: the BODs just mentioned the good history and future of the business, such new technology and a plan of 1Gbs of internet with Google and ignored the situation of losing franked dividend of shareholders. Furthermore, managements have not collected the negative information from their inferiors and taken that information with their opinions back to the BODs immediately. Finally, shareholders have not yet push the new strategy