 Telecom giants under pressure as demand falls
(China Daily)
Updated: 2008-07-23 07:40 Vodafone Group Plc, the world's largest mobile-phone company, reduced its sales forecast and Ericsson AB, the biggest maker of wireless networks, posted a 70 percent drop in profit as corporate and consumer spending slowed. Vodafone dropped as much as 16 percent in London trading, the most in 20 years, and Ericsson slid 10 percent in Stockholm. Newbury, England-based Vodafone said revenue will be "around the bottom" of a forecast range and the Swedish manufacturer reiterated its outlook for "flattish" sales. Europe's economic slowdown is eating into disposable incomes, denting revenue from services such as wireless calls and limiting infrastructure investments.
Sales may be "around the bottom" of the range of 39.8 billion pounds to 40.7 billion pounds, up from 35.5 billion pounds a year ago, Vodafone said. Vodafone buys Ericsson networks and sells phones made by the Stockholm-based company's venture with Sony Corp. Vodafone dropped as much as 23.9 pence to 125.35 pence in London trading. Ericsson lost as much as 7.5 kronor to 67.6 kronor, the biggest slide in eight months. They dragged other telecom-munications shares lower, with Spain's Telefonica SA posting the biggest drop in six years and Germany's Deutsche Telekom AG sliding as much as 6.9 percent. Sales excluding currency swings and acquisitions at Vodafone rose 1.7 percent in the first quarter, the slowest in more than a year. Lower spending and the dollar's decline will help Vodafone meet its profit goals for the year, Vodafone Chief Executive Officer Arun Sarin said. Ericsson has reported four straight quarters of falling profit as North American and European spending on networks wanes and Sony Ericsson Mobile Communications Ltd's phone sales slide. The Swedish company said second-quarter net income fell to 1.9 billion kronor ($320 million) from 6.41 billion kronor a year earlier because of costs to cut jobs and falling sales at Sony Ericsson, the 50-50 venture with Tokyo-based Sony. Agencies (China Daily 07/23/2008 page17) |
