Home / Markets / Industries / Telecom
Tuesday, November 11, 2008
Vodafone Posts 35% First-Half Profit Decline
Donna Fuscaldo
FOXBusiness
Vodafone Group (VOD), the UK phone operator, posted a 35% decline in first-half profit and lowered its full-year sales target amid a challenging market in Europe and competitive and regulatory pressures.
Despite the results and outlook, Vodafone did raise its free cash flow outlook for the year and announced plans to cut costs, which drove the stock higher.
For the six months ended September 30, Vodafone reported net income of 2.14 billion pounds ($3.33 billion), or 4.02 pence a share. That compares to 3.29 billion pounds, or 6.19 pence a share, in the year-earlier six-month period. Excluding items, Vodafone posted first half earnings of 7.52 pence a share, higher than the Thomson Reuters consensus of 7 pence a share.
Sales for the first six months gained 17% to 19.9 billion pounds.
For the full year, Vodafone is targeting sales of between 38.8 billion pounds and 39.7 billion pounds, lower than its past target of 39.8 billion pounds. The company did say it still expects to post adjusted operating profit between 11 billion pounds and 11.5 pounds. The company is targeting cutting costs by 1 billion pounds by 2011.
Vodafone upped its free cash flow target to between 5.2 billion pounds and 5.7 billion pounds, thanks to lower capital spending and tax payments.
Commenting on Vodafone’s cost cutting strategy, Chief Executive Vittorio Colao said in a press release that the strategy “reflects the changing economic and market conditions.” He said the company will focus on free cash flow. “We will improve operational performance through customer value enhancement and cost efficiency, supported by a 1 billion pound cost reduction programme. We will pursue growth opportunities in total communications, specifically mobile data, enterprise and broadband. In our emerging markets, the priority will be execution and we intend to further strengthen capital discipline,” said Colao.
FOX Translator
No data currently available.
No data currently available.
It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
