THINKING OUT LOUD

Telstra cuts jobs, stock price rises

Job cuts trend watch continued………..In a continuation of my commentary, once again, the word “restructuring” features in the news circular.

It’s with a forked tongue that write about this trend designed to improve corporate earnings. Such restructuring is designed to save the company money and improve its share price. The social concern relates back to individuals personal financial circumstance.

Sadly, many employees have mortgages and family obligations to cover and it’s possible that gainful employment with a large corporation may have allowed hubris to rear its head.

“Telstra has confirmed it will bring forward $200 million of restructuring costs and 6000 job cuts to this financial year as part of its ‘T22’ transformation plan. The telco had previously announced 9200 jobs will go. It’s bad news for staff but good news for investors who expect $2.5 billion worth of annual cost savings promised by T22.” On an investing note, do you recall the pessimism surrounding Telstra and its share price last year.

The chart below shows the stock (in June 2018) touching the $2.60 level it last saw in October 2010.

Amazingly, in June 2018, CEO Andy Penn announces the new T22 Strategy. Since then and over the past 11 months, the stock has risen 40%.

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