Vodafone Revenue Alarm Rattles Telcos
07/22/08 - 10:39 AM EDT
Robert Holmes
Vodafone (VOD Quote - Cramer on VOD - Stock Picks) warned that revenue for the full year will be at the lower end of its previous estimate range, raising fears for other voice and data providers.
The U.K.-based mobile communications giant said that due to its first-quarter performance and recent economic weakness, along with lower-than-expected equipment revenue, it now expects full-year revenue to be near the bottom of its previously stated range of 39.8 billion British pounds to 40.7 billion British pounds. Shares of Vodafone were dropping nearly 14% to $25.68 in early trading. European rival Deutsche Telekom (DT Quote - Cramer on DT - Stock Picks) traded 6.1% lower in sympathy, and BT Group (BT Quote - Cramer on BT - Stock Picks) was losing 4.6%. Vodafone's warning came in the company's second-quarter statement, where it also said that revenue rose 19.1% from a year ago to 9.83 billion British pounds ($19.64 billion) Revenue growth was affected by "the recent deterioration of the macro economic environment and the continuing trend of intensifying competition as penetration rises" in Spain. Vodafone added that other outlook measures are unchanged, resulting from continued focus on cost reduction with adjusted operating profit in the range 11.0 billion British pounds to 11.5 billion British pounds. Vodafone said results are "likely to continue to benefit from foreign exchange." "Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services," said Vodafone CEO Arun Sarin. "Whilst we expect revenue around the bottom of the outlook range, our continued focus on cost reduction enables us to reiterate our operating profit and cash flow guidance for the year."
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