Thursday, December 18, 2008

Conference Call

Which I didn't bother to listen to.  Here is a link to their pitch slide. 

Everything sounded great except the dividend reduction of 50 to 60%.

With 200mm shares, the current dividend is about $380 million.  They offered guidance of $2.90 to $3.30.  Plus 6% to 8% compound growth for 5 years. 

And they want to cut the dividend of $380 million in half or more?  I suppose some dividend reduction is "prudent", etc.  Still, this is a utility and a lot of people own it for the dividend.

No wonder the stock price got killed.  Management needs to think its commitment to putting some cash in shareholder wallets.  People don't really want to wait 5 years for management to earn back the money they blew because of negligence.  How about a bonus moratorium or some sense of contrition regarding exactly how awfully they blew it.

They could think really hard before they do this.  Or not.

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