SHAREHOLDERS take a lot on trust with Charles Dunstone, chief executive of Carphone Warehouse. He is an entrepreneur who has created a FTSE-100 company based on reading changes in the fast-moving communications and technology market. And for investors who have backed him, their loyalty has paid off. The company has morphed from a mobile-phone retail specialist to selling broadband and is now intending to ride the laptop boom. It’s easy to get left behind in this game and lose your relevance to the marketplace, but so far, bar a few hiccups in terms of delivery, Dunstone has kept up with the trends.

However, as the company (now worth £2.4 billion) gets bigger so the stakes are raised. His latest move, confirmed last week, is setting up a European joint venture with Best Buy, America’s top technology appliance retailer.

As my colleague James Ashton, Best Buy is everything Dixons should be. Its giant stores offer a huge range, low prices and low-pressure sales through an informed staff who don’t work on commission. They help customers sort out their HDMI from their wi-fi, and it seems to be a formula that works. Last year, Best Buy’s revenues were $40 billion (£20.5 billion) and the company is the largest speciality retailer of consumer electronics in America and Canada, accounting for 17% of the market.

It also regularly tops the polls of the best companies to work for. Carphone and Best Buy already have a tie-up in the US, but this new deal is a step change. More importantly, Carphone gets a £1.1 billion capital injection. Dunstone’s company is now debt-free, with the ability to pay for Tiscali’s UK broadband business, a deal that would turn him into the biggest broadband supplier in Britain.

If the group can dominate the laptop market, it will be in a strong position to sell broadband subscription. Dunstone likens the growth of laptops to the telephone that used to sit in the family hall and was shared by everyone. It was replaced by multiple phones, then by mobiles as each member of the family wanted their own privacy. And it is not just the young who want this kind of equipment – even Dunstone’s mother is asking him for wi-fi internet radio.

The prize is there for shareholders to see, but as he did the Talk Talk, he now has to do the walk walk and deliver the earnings growth. He also has to make it work with a partner that, due to its deep involvement, will rub out any takeover premium in Carphone’s share price.

Flying dividend

THE board of British Airways faces a couple of tricky decisions this week when directors sit down to consider the company’s full-year results, which are out on Friday.

They must decide whether to pay a dividend, breaking a seven-year drought for the UK’s biggest airline, and whether to pay staff, including chief executive Willie Walsh, their full bonus for the year in the wake of the disastrous opening of Heathrow’s terminal 5.

Much rests on the the airline’s key performance target, the achievement of a 10% operating margin. This has become something of a holy grail for the company over the years, with successive managements setting out their stalls to achieve it, but falling short. This year it is going to be a near thing – some analysts forecast a narrow miss, some see BA just squeaking over the line.

Hitting 10% triggers payment of the full bonus to thousands of airline staff including Walsh – something that might not go down well with the thousands of passengers who were inconvenienced by the shambolic opening of T5, but perhaps necessary to maintain staff morale given the battering it has taken. Directors might even decide – although this would take some gumption – that staff deserve the bonus because of the T5 stress, even if the 10% margin is not achieved.

Next is the dividend. BA had warmed the City up to expect a payout of about 8p a share, the first since the 2000-1 financial year. It will be more than adequately covered – analysts think BA’s underlying earnings per share for the year will come in at about 56p – but paying it might be the wrong thing to do.

BA had a decent run last year, harvesting the last fruits of the boom on Wall Street and in the City. The outlook for the current year is dire, however, due to the soaring oil price. If oil stays at $120 a barrel or higher, there might be no earnings per share next year, and no dividend. In this case, discretion might be the better part of valour: the airline’s directors should hang on to that dividend payment, because they might need it this time next year.

Listen to the drums

IT was a tactic used by Mick Davis to great effect last November when he tried to drum up an auction for the £41 billion mining company Xstrata where he is chief executive.

He and his advisers prepared a very detailed briefing document and put the information into the public domain.

Last week Marius Kloppers, chief executive of BHP Billiton, the global mining group, did the same thing when he gave a four-hour briefing to boast about the huge potential of its petroleum division. He said if the oil and gas business traded as an independent it would rank as the world’s 25th-largest listed petroleum company, comparable to mid-tier independents such as Apache, Hess, Woodside and Anadarko.

Of course, Kloppers denies the subsidiary is for sale, but any potential buyer now has more detail to analyse the merits of tabling an offer. And if one came along, the huge cash injection would be very useful for Kloppers – he is in the middle of the world’s biggest takeover battle to acquire rival Rio Tinto.

A cheeky offer

THE bizarre offer, announced late on Friday, that Eurasian Natural Resources Corporation (ENRC) had made a £15.50 a share offer for domestic rival Kazakhmys needs some more explaining. The cheeky offer was pitched below Friday’s opening price of £18.95, a price that fell to £17.86 when Kazakhmys put out a statement just before the market closed.

Not surprisingly, it was rejected and ENRC will probably withdraw its offer later this week when a bid deadline imposed by the Takeover Panel expires. ENRC’s advisers, Credit Suisse and Deutsche Bank, don’t look the smartest bunnies in the room after submitting such a low-ball offer.

However, investors in Kazakhmys should know that their chairman, Kim Vladimir, met his counterpart at ENRC, Sir David Cooksey, the former chairman of Advent Venture Partners, last January. It was a private meeting at London’s Carlton Tower hotel, where apparently Vladimir, who stands to pocket a $7 billion windfall, said an offer would have to be made in cash.

Judging by Vladimir’s rejection, it is not enough – but by how much we don’t know. Vladimir’s driver picked up a letter from ENRC on Thursday night, yet it took an entire day to dismiss it. In the meantime, ENRC has won few friends in the investment community, which says the offer has shown disrespect to the London market. And I have to agree that submitting bids at this level does seem to be a senseless task.

john.waples@sunday-times.co.uk

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