Vodafone shareholders are hurting badly. Since former chief executive Arun Sarin bowed out on a high this summer, they have watched helplessly as the stockmarket has wiped billions of pounds off the value of the company – more than a third in fact.
Sarin’s decision to leave and hand over to Vittorio Colao now looks like great timing given what has happened to the world economy since July. While Sarin is now surfing in Hawaii, Colao is grappling with the problems of running the world’s largest mobile phone network during market conditions the like of which have not been seen since the Wall Street Crash of 1929.
For a short time last week Vodafone shares actually dropped below £1 for the first time since 2002 – the dark days of the dotcom burst.
At the time of writing, they had bounced back above that psychologically significant level, but the pressure is still on.
Thousands of Vodafone employees have seen the value of their stock options deteriorate – many will now be worthless – and for Colao motivating the troops is as much a challenge as mollifying the big City cheeses.
Of course, in these historic times the need to keep your job is motivation enough for many people, and at least things aren’t as bad as they are in the decimated banking sector.
But market mayhem of recent weeks has seen the Vodafone share price experience vicissitudes that are dramatic even by its volatile standards.
Take last week for instance. Shares dropped almost eight per cent on worries Vodafone’s fast-growing emerging markets business will be, well, a bit less fast-growing, because of the economic downturn.
The cause was weaker-than-expected results from a Luxembourg-based emerging markets mobile phone operator called Millicom International Cellular.
Full article in Mobile News issue 426 (November 3, 2008).
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