QBE 'wiped out' as errant trader causes havoc

FRANK O'HALLORAN is accustomed to dealing with cyclones and tropical storms, but even QBE's steely chief executive couldn't prepare for the value of his company disappearing in an instant.

O'Halloran's team got the shock of their lives yesterday afternoon when a broker mistakenly tried to sell more than 500,000 QBE shares shortly after 2pm for 2 cents apiece - quite a discount to $22.80 at which QBE had been trading seconds earlier.

Buyers swooped on the bargain stock, effectively wiping out QBE's $20 billion market value as the shares plunged to 0.1c and thereby driving the whole market down more than 80 points.

Fortunately for an embarrassed broker, and for QBE, disaster was averted when the stock exchange quickly cancelled all trades valued at less than $22.20 while the insurer was placed in a trading halt for 10 minutes.

Value hunter

The British billionaire Vincent Tchenguiz has stepped up his campaign to wind up Challenger's flagship infrastructure fund.

It appears the Iranian-born Tchenguiz is keen for the scrutiny of Challenger's wannabe-Macquarie model to be as public as possible after setting up unlockthevalue.com.au. The site highlights Tchenguiz's argument that CIF would be better off realising its value by selling assets - worth $4.05 a share on its books - and distributing proceeds to unit holders.

After already calling an extraordinary general meeting on August 28 for shareholders to vote on his proposal for the Challenger Infrastructure Fund - in which he holds 18.5 per cent - Tchenguiz faces a battle winning over CIF shareholders. For one, the largest shareholder happens to be the manager of the fund, Challenger, with a 33 per cent stake.

Maybe Tchenguiz realises that the more public his battle, the more Challenger might be embarrassed about its management of the fund, whose shares rose 4c to $2.86 yesterday.

A public airing could also increase pressure not only from some CIF unit holders but shareholders in Challenger itself, whose annual profit will be dragged down by the deflating value of the fund.

More of the same

Given the tendency of Telstra's boss, Sol Trujillo, to underpromise and later overdeliver, pundits can expect more of the same when he unveils his third full-year profit result next month.

Analysts are picking a full-year figure of $3.78 billion, up from $3.28 billion last year.

UBS reckons Telstra could upgrade its long-term guidance for earnings in 2010.

The Swiss bank's analysts point out that the telco's current long-term forecasts will not be too challenging, given it needs only to boost revenue by 0.6 to 1.8 per cent to achieve it - not exactly a tough ask, even in a slowing economy.

Macquarie Equities believes investors will be most eager to hear about Telstra's guidance for 2009, the progress of its IT transformation and any changes to the longer-term guidance.

The broker estimates Telstra is also likely to book a $30 million provision from what it is owed by Bill Express - the bill payments and prepaid technology company which collapsed recently - and a $30 million depreciation charge on its Hong Kong mobile phone subsidiary CSL New World. These one-off items could reduce Telstra's earnings growth by 1 per cent.

Shareholders hoping for an increase in the dividend shouldn't hold their breath.

Macquarie analysts point to the global credit crunch and a $4 billion-plus outlay on building a new national broadband network - that is, should it win the Federal Government's tender - as scuttling any thoughts of a rise in the payout.

Shares in Telstra rose 3c to $4.42 yesterday.

Up for grabs

The Woolworths boss, Michael Luscombe, will be keenly awaiting a decision this morning from the New Zealand Court of Appeal that will either add oxygen to his ambitions to take over one of the country's largest retailers, The Warehouse, or cruel them.

Cashed up and keen to sink his teeth into a deal, Luscombe has been holding on to hopes the court will give him the green light.

The deal could be his first billion-dollar transaction - an important milestone to show investors his deal-making skills at a time when the Australian competition regulator is unlikely to be giving any green lights to further consolidation this side of the Tasman.

Las Vegas losers

Given Aristocrat Leisure's profit downgrade late on Tuesday, attention could now turn to the performance of Crown's investment in the Cannery Casino Group.

With three casinos in Nevada and another in Pennsylvania, Cannery has been hit by what a Macquarie gaming analyst, Steve Wheen, has described as a "staggering" fall in gaming revenues in Nevada in May.

Revenues fell 15 per cent compared with this time last year, and in one area of Las Vegas the performance was twice as bad.

The Eastside Cannery, a newly built casino due to open next month, sits in an area known as the "Boulder Strip" where revenues have fallen 30 per cent.