CABLE COMBINE PROSPECTS
The steady recovery in Cable & Wireless ordinary stock, which has been held in face of dull markets and a disap- pointing January traffic, looks significant. At £67 -the stock is not overvalued in relation to the 4 per cent. dividend predicted by the board, the indicated yield of 6 per cent. being reasonable enough, but I suspect that the buyers think they have something more to go on than that. The probability is that some sort of arrangement is now being completed between the Cable combine and the British and Empire Governments regarding the future of Empire com- munications. The final details, I believe, have not yet been agreed but directly or indirectly the combine should receive a contribution towards the maintenanc! of strategic cables which are unremunerative from the purely com- mercial standpoint. For example, it may be that the rental of £250,000 which the combine pays to the Post Office for the use of the beam radio may be substantially reduced.
At this stage, one can only guess at the possible benefit of such an arrangement to the combine but an annual saving of £150,000 would not be out of the question. Now as a consequence of the drastic reconstruction carried through last year Cable & Wireless capital is very highly geared, the ordinary capital of £6,883,102 being preceded by £16,766,591 of 5f per cent. preference. It follows that — (Continued on page 342.)
FINANCE AND INVESTMENT
(Continued from page 34o.) a comparatively small improve,ment in profits means rela- tively much to ordinary stockholders. On The hypothesis that a net benefit of £150,000 a year may be deriVed from a new deal with the Government there would be an addition of 21 per cent. to the earnings on the ordinary stock.
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