It’s one thing taking on the government and the regulator. But today, Fortress Telstra seems to be doing King Canute impersonations as it tries to avoid formalising what the market has already done – giving it one big profit downgrade.

Telstra’s decision to appeal the ACCC’s decision to lower the price it can charge competitors for reselling its landline service is business as usual. But putting off the financial reckoning in the meantime looks plain silly when “more than $1.1 billion was wiped from Telstra’s value yesterday as fund managers and retail investors face the prospect of waiting weeks – if not months – for certainty on dividends.”

Yesterday the stock fell 9c to $3.67, just above its all-time low of $3.63 in late March, and it’s touched that all-time low in this morning’s trade. Even Goldman Sachs JB Were (who would like a slice of the action from flogging T3) has taken the knife to Telstra’s profit outlook and valuation. Goldies’ teleco analyst, Christian Guerra, has released a cascading series of earnings-per-share forecasts reductions – 0.8% this financial year, 1.2% the next, 4.4% in FY09 and 5.1% in 2010. His valuation of the stuck has been slashed from $4.05 to $3.75.

What particularly seems to concern Guerra is that the ACCC’s fee cut from $22 to $17.70 a line in the cities might go further – perhaps to $15. Guerra restates Goldies’ short-term “underperform/hold” call on Telstra because:

(1) We expect consensus earnings downgrades;

(2) We expect further negative news flow (e.g. new Telstra guidance); and (3) lack of clarity on Telstra’s future earnings.

Pretty much says it all. Now someone just has to tell Sol.