Not every mobile company is printing money these days. In the wake of positive earnings reports from several companies, British giant Vodafone has released a warning that has caused its share price to drop dramatically. The company warned that margins would drop next year, caused by an increasingly competitive European market and heavy investment in the troubled Vodafone Japan. The funding of the Japanese division was unexpected. The company reports that it is an attempt to make the group more competitive.
While investor confidence was undermined by these revelations, it was also pelted by the news that the company would face tax liabilities of £5 billion over the next three years.
In the face of this barrage of bad news, stock prices fell 153⁄4p to close at 1291⁄4p, the biggest single day stock price decline for the company in seven years.
It’s not all bad news, though. Pre-tax earnings and revenues both increased in the six months ending in September. The company is looking to move customers to their 3G network and establish a presence in the world’s emerging markets to maintain that growth and restore the share price.