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Vodafone Cuts Value Of Goodwill By €41bn

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OFF TOPIC BUT ECONOMY RELATED...

I noticed this on the FT site:

< Link >

Vodafone cuts value of goodwill by €41bn

By Andrew Edgecliffe-Johnson and Kate Burgess in London

Published: February 27 2006 08:43 | Last updated: February 27 2006 21:21

VodafoneVodafone, the UK-based mobile phone company, on Monday unveiled one of the biggest post-acquisition writedowns, saying increased competition and tougher regulation had cut its expectations of long-term growth in the mobile phone industry.

The decision to cut the value of goodwill on its books by between £23bn (€34bn) and £28bn (€41bn) marked a low point in Vodafone’s relations with its shareholders. Several said the move would increase pressure on Arun Sarin, the group’s chief executive.

The group said recent price competition in mature markets and the threat from new technologies such as internet telephony, had prompted it to lower its long-term growth assumptions.

The “overall proportionate mobile revenue growth”, Vodafone’s preferred measure, would be in the range of 5-6.5 per cent, the company said. This was below the guidance it gave a month ago that organic growth would be in the middle of a 6-9 per cent range.

Vodafone has tested investors’ nerves several times in the past two years.

Some of the group’s largest shareholders had already expressed their deteriorating confidence in Mr Sarin’s ability to deliver strong returns. “This will only swell their ranks,” one of the company’s top-10 investors said on Monday.

Mr Sarin repeated that he had the board’s full support, and only one large shareholder expressed dissatisfaction in public.

David Cumming, Standard Life’s head of investments, said: “This further downward revision to guidance highlights that Vodafone has to review its global strategy in light of continued operational disappointment.”

Vodafone’s epic battle for Mannesmann symbolised an era of record-breaking and gravity-defying deals, fuelled by inflated stock prices.

Mr Cumming questioned the company’s failure to predict a slowdown which investors had already foretold. “The fact that most investment analysts were already expecting Vodafone to miss its own forecasts must be an additional concern to the Vodafone board.”

Capital Research and Management, Vodafone’s largest shareholder, had reduced its holding in recent weeks from 7.18 per cent to 5.97 per cent.

Vodafone shares fell in London by more than 5 per cent initially before closing down 3¼p at 113¾p.

WHAT EFFECTS WILL THIS HAVE ON THE VALUE OF OTHER COMPANIES ON THE STOCK MARKET?

IS A RE-EVALUATION UNDERWAY OF SIMILAR COMPANIES?

COULD THE STOCK MARKET BE HEADING FOR A RE-ADJUSTMENT ITSELF?

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Doesn't mean much, operating profits will still roughly be the same. They are not overpaying for operators in European countries now and putting fair value on the ones they have overpayed for.

Time a Vodafone share purchase right and you are looking at least a 25% rise in a short time!

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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