Currys Share Discussion Threads

[anony mous] 16/9/2014 10:06

Great opportunity to top up.I will have some more shortly...

[jondev] 16/9/2014 09:39

Why is falling so bad today? Is it the Scottish?

[katie priceless] 16/9/2014 09:37

And the share price fall's

[mikepompeyfan] 16/9/2014 04:29

The demise of Phones4u calls time on one of the fiercest rivalries on the high street and hands victory to Carphone Warehouse, now part of the enlarged Dixons Carphone, which has seen off all its rivals in a market that it helped to fashion.
Dixons Carphone shares rose 7¾p to 380p, their highest price since the merger of the two companies this year, as analysts predicted a boost in trading from former Phones4u customers.
“If we assume a transfer of Phones4u’s market share based on existing share in the UK market, for Dixons Carphone this could allow for £225 million of revenue upside,” Alastair Davies, an analyst with Investec, said. That would equate to 6 per cent of Carphone Warehouse’s growth rate, or 2 per cent at a group level.
The independent mobile phone retailer is an unfamiliar concept in most parts of the world, where consumers buy their handsets from the network they want to join rather than surveying the options offered by retailers. It was Carphone Warehouse and Phones4u that benefited most from a model adopted in Britain that put the onus on “middlemenR21; to sign up new customers.
In a prospectus designed to promote its bonds last year, Phones4u wrote that the choice of network was “irrelevant to the consumer”. That statement, although seemingly innocuous, was noted by many in the mobile phone sector, who were shocked that the company would be so brazen in talking about its key suppliers.
Andrew Harrison, the deputy chief executive of Dixons Carphone, who has spent 19 years in the sector, said that he had “huge respect” for his former rival but noted that something appeared to have gone “terribly wrong” at Phones4u for all four networks to walk away. Carphone has fought hard to maintain relationships with all the mobile phone networks, bar Three, and treats the contracts it signs almost like joint venture agreements to prove its value to them.
Carphone’s position as last man standing in a sector that was once awash with different mobile phone shops was not greeted as a huge success in all parts of the market. The collapse of Phones4u shows the power of the mobile phone networks, who were once reliant on the independent companies for growth and new customers. It will also boost the high street presence of some of the phone networks that will carve up the best Phones4u stores between them.
Nick Bubb, a consultant with Zeus Capital, said that the collapse of the Phones4u chain “seems good news for their principal competitor, one Dixons Carphone, but not if it means that the mobile phone networks are about to start taking more control of the distribution chain”.
EE and O2 are both owned by European telecoms companies that are desperate to reduce the costs of their British operations by cutting out the “middlemenR21;.
However, Mr Harrison believes that the merger with Dixons and a renewed focus on broader technologies will stand his company in good stead. “We’ve reinvented ourselves and we’re offering something different,” he said.

[anony mous] 15/9/2014 22:13

You can see that interview again onnews.sky.com/businessHe also blames the private equity company.Arh well....march onwards for DC.

[mikepompeyfan] 15/9/2014 22:13

Cynical Tim. Very cynical. ;-)

[tim 3] 15/9/2014 21:27

lol yeah sure nothing to do with them needing and having instant access to a load of trained staff!

[mikepompeyfan] 15/9/2014 21:02

dc. are the good boys now. Could save lots of jobs. Great free publicity. :-)

[anony mous] 15/9/2014 20:58

Skynews just had p4u boss on. Alot of positive talk for DC mentioned.

[mikepompeyfan] 15/9/2014 20:44

The collapse of Phones 4U into administration saw shares in Dixons Carphone edge higher as the City claimed prospects had improved for the newly merged electrical giant.

Analysts calculated customers swapping stores means Dixons Carphone could increase annual revenues by up to £225 million, as shares in the firm rose 2.5 per cent to 381.5p.

Investec’s Alistair Davies hailed the news as a “boost” for Dixons Carphone, saying “there could be an opportunity to capture market share”.

Meanwhile Deutsche Bank analyst Warwick Okines estimated Phones 4U’s administration could raise Dixons Carphone’s profits by 10 per cent, although he added the impact could hinge on whether Phones 4u – which made £105 million profits last year – is able to trade through the lucrative Christmas period.

[maximillian1] 15/9/2014 20:39

If this drops with Scotland,,,,take the gift and load up to the gunnions...

[mikepompeyfan] 15/9/2014 17:01

Sources at Phones 4U say that Dixons Carphone is now the only major place when customers can get comparisons between operators. And that, as far as Phones 4U is concerned, is not a good thing.
Dixons Carphone said in a statement: ""We would like to offer our support to the colleagues and customers of Phones 4U. With regards to our Phones 4U shop-in-shop colleagues we hope to help them secure new jobs with us and will be opening up discussions with the administrators to agree what we can do."

PwC, which is expected to be appointed as administrator on Monday, will decide on whether the business can continue to trade.

[rkjones] 15/9/2014 14:52

Presumably, for the same reasons, the EE contract to Sept 2015 is also terminated leaving the field to DC.

[tim 3] 15/9/2014 14:28

Exactly Mike.

dc. could not have hoped for better timing.

Am hearing not surprisingly they are going to offer many of the existing p4u instore staff jobs.

[skinny] 15/9/2014 13:35

Haven't phones4u effectively done that by going into administration?

[mikepompeyfan] 15/9/2014 13:29

'More rapid Store Within a Store conversions'.

Great isn't it. Phones4u in store sites get removed immediately and replaced by cpw sales points. All hopefully in time for Christmas. You couldn't hope for better.

I wonder at what point Dixons can tear up their currently running agreement with phones4u ?

[skinny] 15/9/2014 12:24

Copied..

Deutsche comment on P4U going into administration:
"This has played-out more quickly than we had expected, given that P4U had supply contracts running until February 15 with Vodafone and September 15 with EE. We believe Dixons Carphone will continue to be an important distribution channel for the mobile network operators, and it is well placed to capture Phones 4 U’s market share. This could boost outer-year profits by 10% or more.
EE has previously indicated it wants fewer, deeper relationships with third party distributors. We do not expect any change to EE and Dixons Carphone’s relationship. They already have a supply contract agreement in place, and we believe that Dixons Carphone’s c1100 points of sale (once Store Within a Store has been rolled out) represents a valuable channel to the MNOs. Earlier this year DC signed a new long term distribution agreement with Vodafone.
At this stage it is unclear whether an administrator would attempt to operate Phone 4 U's 720 stores through the profitable Christmas period. This is likely to hinge on whether it can maintain supply in the short term from the MNOs. P4U generated LTM gross profit of £330m (including 1.578m contract connections), and Carphone's market share is around 20%, so taking its natural market share could add c£65m gross profit. Even with some higher operating costs, this could add 10-15% to Mar-16 group profits. Given the close overlap in retail proposition of Carphone and P4U, it could take an over-proportional share of the business. P4U operates concessions within 160 Dixons (Curry's/PCWorld) stores, which generates around £8m/2% of Dixons Carphone's profits. Today’s news could lead to more rapid Store Within a Store conversions. It could also enable DC to deepen its relationship with Samsung, which had franchise agreements with both companies.
Our 400p TP is based on DCF (WACC 9.1%, RFR 4.5%, ERP 4.5%,TG 1.5%), while a bull case with higher synergies achieved is 440p. This bull case, as we set out in our initiation report (An electric combination, 19 August), allows for some profit growth at Carphone Warehouse UK due to higher 4G profitability, but does not include anything for changing competitive landscape. The stock trades on CY15 (ie largely pre-synergies) P/E of 15.2x versus the UK Retail Sector on 14.0x."

[muscletrade] 15/9/2014 12:22

There is some very good coverage of the DC situation today over on FT Alphaville and I am sure the chaps over there will not mind if I copy it here.

Thanks FT Alphaville team.

"Dixons Carphone PLC (DC.:LSE): Last: 379.40, up 7.2 (+1.93%), High: 388.00, Low: 377.00, Volume: 3.12m
PM
Well..
PM
Point was made over on the right earlier that DC might be next in terms of getting contracts ripped up
BE
Well ………;….. Possibly. But probably not.
BE
Relationship’s rather stronger. And — I’m sure one of the rabble can clarify this for me — Phones4U customers are cheapskates.
PM
hehehe
PM
were
BE
Better, probably, to keep Carphone in the tent. That was my impression.
BE
Sellside incoming. Here’s Barclays.
BE
This is a major positive for Dixons Carphone that now remains the only mass independent retailer of networks. EE sales at P4U were about £500m. If we were to assume that Dixons Carphone could get 50% of this sales apply a 25% gross margin (Carphone gross margin) then we are talking about an extra £62.5mn gross profit for Dixons Carphone. We would expect Dixons Carphone shares to do particularly well today on the back of the P4U news. As a reminder when Vodafone announced that it would leave P4U (Vodafone was £212m of P4U sales) DC share price was up c6%. *

BE
And Deutsche.
PM
Fair enough
BE
This has played-out more quickly than we had expected, given that P4U had supply contracts running until February 15 with Vodafone and September 15 with EE. We believe Dixons Carphone will continue to be an important distribution channel for the mobile network operators, and it is well placed to capture Phones 4 U’s market share. This could boost outer-year profits by 10% or more.

BE
EE has previously indicated it wants fewer, deeper relationships with third party distributors. We do not expect any change to EE and Dixons Carphone’s relationship. They already have a supply contract agreement in place, and we believe that Dixons Carphone’s c1100 points of sale (once Store Within a Store has been rolled out) represents a valuable channel to the MNOs. Earlier this year DC signed a new long term distribution agreement with Vodafone.

BE
At this stage it is unclear whether an administrator would attempt to operate Phone 4 U’s 720 stores through the profitable Christmas period. This is likely to hinge on whether it can maintain supply in the short term from the MNOs. P4U generated LTM gross profit of £330m (including 1.578m contract connections), and Carphone’s market share is around 20%, so taking its natural market share could add c£65m gross profit. Even with some higher operating costs, this could add 10-15% to Mar-16 group profits. Given the close overlap in retail proposition of Carphone and P4U, it could take an over-proportional share of the business. P4U operates concessions within 160 Dixons (Curry’s/PCWorld) stores, which generates around £8m/2% of Dixons Carphone’s profits. Today’s news could lead to more rapid Store Within a Store conversions. It could also enable DC to deepen its relationship with Samsung, which had franchise agreements with both companies.

BE
Our 400p TP is based on DCF (WACC 9.1%, RFR 4.5%, ERP 4.5%,TG 1.5%), while a bull case with higher synergies achieved is 440p. This bull case, as we set out in our initiation report (An electric combination, 19 August), allows for some profit growth at Carphone Warehouse UK due to higher 4G profitability, but does not include anything for changing competitive landscape. The stock trades on CY15 (ie largely pre-synergies) P/E of 15.2x versus the UK Retail Sector on 14.0x.

BE
And Investec.
BE
No news has been announced on EE’s agreement with Carphone Warehouse (which currently has all 3 networks in its stores), but the troubles at Phones 4U should act as a boost for CPW via market share gains.
For context, P4U had 11% market share with c. £1.1bn of revenues, and EBIT of £100m+. CPW has 19% of the UK market. Theoretically, if we assume a transfer of P4U’s market share based on existing share in the UK market, for Dixons Carphone this could allow for £225m of revenue upside (c. 6% for CPW 2% at a group level).
Applying a similar gross margin as for CPW (25%) and a small element of incremental costs relating to the revenue upside, this could represent a £45m opportunity for forecasts (FY15E: £337m PBT, FY16E: £408m PBT and 21.3p 26.3p EPS respectively). We note this may be more back-end weighted.
Valuation: On our current forecasts, Dixons Carphone shares trade on c.15x CY15E EPS vs. sector on c. 14x, assuming just £80m of synergies – a number we feel is underpinned with scope for upside. We believe the strong cash generation of the business also offers upside from cash returns to shareholders, given 3x earnings cover / 7-8% FCF yield

BE
And Exane.
BE
Are Dixons Carphone at risk?
We believe not. Excluding Phones4U, they demand up to 80% market share of independent providers. As part of their decision to terminate the agreement with Phones 4U Vodafone announced an “enhanced distribution partnership” with Dixons Carphone. We believe the other networks are likely to have made similar decisions".

end.

[tim 3] 15/9/2014 11:42

Would not be surprised, most shorters lose in my experience.

[mikepompeyfan] 15/9/2014 11:33

Can people still be shorting this ? Ouch !

[tim 3] 15/9/2014 10:59

Yes ,plenty of things in their favour at present.

[cockneyrebel] 15/9/2014 10:16

Just waiting for the RNS saying EE are going with DC. now - where else are they going to go?

Must be good for 10% on the share price if/when that comes imo.

FTSe 100 entry in a week's time too - FTSE100 trackers still gonna have to get long imo.

CR

[maximillian1] 15/9/2014 09:13

Bet the slide rule are out.....402 next..

[mikepompeyfan] 15/9/2014 08:23

Next news 8th October. 'Strategy' day. Something to look forward to.

[mikepompeyfan] 15/9/2014 08:21

I think we've answered that then ;-)