disregarding the noise: my thoughts

Stocks trading around 8 times 2010 FY earnings (ex abnormals).

On average over the past 10 years it trades at 13 times earnings.

It would be prudent to acknowledge that these provisions in the rail division can be considered to be irregular or one off in nature particularly over a 10 year period.

On normalized earnings, Earnings Per Share is around $0.57 so in a normal environment at a 13 times multiple you'd expect the stock to be sitting around $7.40 or so.

So if it's at $4.52 before the the trading halt and in a normal environment with no train delay issues it should be trading around $7.40 in a normal environment then we can say that the market is penalizing DOW to the tune of $2.88 per share.

If you multiply this market "penalty" of $2.88 by the number of shares on issue (333,663,000) then you get $961m.

So for these one-off provisions of $190m plus whatever the additional provision will be (lets assume another $190m) the market is penalizing by $961m. I don't believe this fair.......but DOW is also being penalized for:

-Crap management
- Uncertainty
- Possible need for a rights issue

The Rights Issue is the main impact on the share price other than the delays.

So if we assume that they'll want to raise say $200m at $4 per share then it's an additional 50m shares onto the register. Thus bringing the normalized EPS from $0.57 to $0.50 per share.

Again at the pre halt trading price of $4.52 and using this post rights issue EPS of $0.50 we're looking at the stock currently trading at 9 times earnings............that's ridiculous.

As I said before, let the share price crap itself over the next few weeks, let DOW become the ugly duckling in the media and Mr unfavorable for the next few weeks but after this the risk is on the upside.

Eventually these trains will get on the tracks, eventually they will get serviced and eventually the market will figure this one out.