As the sun rose above the yardarm I was sure that market talk would be all about Dixon Carphone, easyJet and maybe some Trump Gossip and the Supreme Court’s judgement on BREXIT. The FTSE was scheduled to open up +35 points. Then there was silence; enter stage left a statement from BT Group’s CEO Gavin Paterson.  Not only was he rather downbeat about the UK in the coming year, particularly business and the public sector, but he metaphorically blew our brains out, in telling investors that its Italian offshoot had been indulging in accountancy irregularities for some time – it appears that as much as €300 million has not been properly accounted for over quite a protracted period of time.  The market was very unhappy and vented its spleen taking BT’S shares down 17% without them touching the sides. As I speak BT’S shares are down 21% – £6 billion in value at 302p. 142 million shares have been traded – average daily turnover is 19 million.  This will have been an embarrassment for Gavin Paterson, who was groomed by Lord Ian Livingstone for the job.  Mr Paterson is very personable, smooth as silk and the epitome of a matinee idol.  He is quintessential dream marketing, PR and media man. When Lord Livingstone took over the reins from Ben Verwaayen the shares stood at 80p in 2008. The shares were near enough 400p at the end of 2016. So the company was perceived to have done well.


What went wrong? I think there were several issues.  Clearly the skulduggery in Italy has been going on for some time. So the management must be questionable. Mr Paterson may have had all his ducks in a row but maybe some were not up to the job in hand. Secondly BT Openreach has produced a disgraceful service on broadband and the internet which affects many providers.  The UK’s broadband is third world in quality and wholly unacceptable. This news may trigger the breaking up of BT.  Gavin Patterson has spent far too much on sport and in particular football.


Shareholders will have lost confidence in Patterson’s leadership – hence the share price cascading downhill.  It is all very well hosing out the Italian CEO Gianluca Cimini.  But let’s be honest he’s the oily rag not the engine driver. Mr Patterson will be under huge duress to put new management in place and respond quickly by implementing changes quickly with a better thought out business plan – if not I suspect he will be for the high jump!  


As for the rest of the session at 3.15pm the FTSE 100 is up 15 at 7165.  Miners have been very popular – up 4.5% with oil stocks slightly disappointing – +0.5%. As for those companies that posted numbers today – easyJet is down 9% (foreign exchange & cost issues). Dixon Carphone disappointed (-5%). PZ Cussons are really under pressure with poor sales – shares down 9.8%. Marston’s were OK -1.75% with Crest Nicholson -0.5% and IG, having had approval for their results, saw their shares slip by 2.5%.


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