Vodafone results: the post-match analysis

NEWS Vodafone got into the record books yesterday by posting the biggest loss in UK corporate history. Despite the apparent bleakness of a £13.5bn deficit, its share price actually went up following the announcement (albeit briefly - it was back in the doldrums by the end of the day), and calls for the head of the well-remunerated Sir Christopher Gent were surprisingly muted. So what's going on? The pundits had their say in this morning's newspapers. Here are a few of the choicer quotations... Patience Wheatcroft, business editor, The Times
"The business should keep growing solidly, if the accounts ever make meaningful comparisons possible, but the delayed miracle of third-generation mobile phones looks unlikely to deliver miraculous profits. The dividend is the only objective measure for investors. That is up five per cent in a difficult year, which is reassuring but not yet enough to justify a 1.4 per cent yield." City Comment column, the Daily Telegraph
"Operationally, things look fair. Vodafone is generating cash, £2.4bn last year, margins are up and costs under control. The tough question is the growth one: will people use their mobiles as an internet wallet, Walkman and camera? So far, slow connection speeds and small screens have dampened consumer enthusiasm only if we can be persuaded to spend more using ever trendier mobile phones will sentiment really turn." Dominic White, writing in the Daily Telegraph
"Despite the billions [Sir Christopher Gent] is investing in 3G... [he] is keen to play down its arrival on the mass market, describing it as a '2005 issue'.
'3G will take some sorting once we've launched the services', he said. 'I would buy a GPRS handset and stay with that for the next few years.'
It remains to be seen whether investors will hang on for that long." Joel Ripley, an analyst with JP Morgan Chase, quoted in the FT
"'Investors are taking these things [the future of 3G] with a bit of a pinch of salt. And [Vodafone] did not say a whole lot about wireless data... to make me feel warm and fuzzy.'" Companies Report column, the FT
"Vodafone [shares] remained remarkably steady on what was being billed as the worst ever set of UK corporate results. The figures had been broadly expected and the big plus on the surface was the absence of any huge write-downs, particularly provisions related to the acquisition of Mannesman... However, one of the more bearish analysts said that Vodafone's decision not to write down its acquisitions implied that it was 'unable to face up to past errors, was still in acquisition mode and therefore destined to destroy shareholder value'." Christian Maher, an analyst at Investec Securities, quoted in the Guardian
"'There is no doubt that this company's cost structure and ability to generate cash in excess of the wider mobile sector is still there. The issue seems to be the competitive advantage that its scale affords, and that is going to take some months to assess.'"