Vodafone buys own stock on losses
Vodafone suffered a 14 percent fall in its share price yesterday, swaying confidence in the cell phone market. Stephen Beard reports Vodafone hopes to boost faith in its stock by buying some of it back.
Vodafone logo (Sajjad Hussain/AFP/Getty Images)
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Stacey Vanek-Smith: Another big market mover today is Vodaphone. Yesterday, it reported a disastrous quarter, partly because of sluggish handset sales. Investors went on a selling tear and the world's biggest cell phone company lost about $20 billion of its share-value. Then Vodaphone made a bold move: It announced that it's buying back $2 billion worth of its own stock. Stephen Beard has the story.
Stephen Beard: Vodaphone says the 14 percent fall in its share price after yesterday's trading statement was overdone. The buyback is aimed at restoring confidence.
But investors remain nervous. They had assumed the cell phone business would be immune to a general economic downturn. That come what may, people would carry on babbling incessantly into their phones. But Vodaphone's statement dispelled that cosy notion. The company's earnings in Europe have fallen.
Justin Urquart-Stewart is with Seven Investment:
Justin Urquart-Stewart: It showed that as the economy was worsening, people with their discretionary spending decisions decided well, we're not going to use our phone quite so much.
Vodaphone fared worst of all in Spain. The collapse of the property market there has thrown thousands of migrant workers out of a job. Many have now left the country -- and the Vodaphone network.
In London, this is Stephen Beard for Marketplace.
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