Rabu, 23 Juli 2008

Shares in cell phone service providers Vodafone, America Movil and Millicom plunged Tuesday as their outlook for growth darkened amid slowing global economies.

June-quarter financial results released by Vodafone (NYSE:VOD - News), America Movil (NYSE:AMX - News) and Millicom International Cellular (NasdaqGS:MICC - News) alarmed investors that consumers are cutting back on wireless spending in developed countries where economies have slowed and in emerging markets troubled by double-digit inflation.

U.S.-listed shares of Vodafone fell 13.9% to 25.60. Millicoms stock shed 22.6% to 75.48 while America Movils shares dropped 3.9% to 49.50.

"Its not a pretty picture," said Evan Miller, a London-based telecom fund manager at Gabelli Asset Management. "The reality is that consumers are modulating their wireless usage.

"It doesnt mean theyre giving up mobile service, but theyre scaling back on minutes, phones and data plans."

Wireless firms also are being hurt by intensifying competition and regulatory changes, analysts say.

U.K.-based Vodafone, the worlds biggest wireless firm by revenue, slashed its full-year sales forecast, dragging down the shares of European phone companies and gear makers. Vodafone partly blamed a weaker Spanish economy for its lowered outlook, sending U.S. shares of Spain-based Telefonica (NYSE:TEF - News) down 6.7% to 76.83.

Shares of Germanys Deutsche Telecom (NYSE:DT - News) slid 5.2% to 16.67 while France Telecoms (NYSE:FTE - News) stock dropped 3.9% to 30.19.

Vodafone said its fiscal first-quarter revenue rose 19% from the year-earlier period to $19.6 billion, boosted by emerging markets such as India and Turkey. But thats just a 1.7% increase from the previous quarter.

Vodafone warned that full-year revenue growth will be at the lower end of its earlier estimate, roughly 12%. Its high-end estimate had been 14.6%. Its sales rose 14.1% for its fiscal 2008, ended March 31. Vodafone didnt release profit results with Tuesdays interim quarterly report.

"It was clearly a more challenging quarter," Vodafones outgoing chief executive, Arun Sarin, told analysts on a conference call. "We are beginning to see an impact from the current economic environment, which is greater than we expected."

Sarins successor, Vittorio Colao, is due to take over next week. Vodafone owns 45% of Verizon Wireless, which added 1.5 million customers in the second quarter, Vodafone said. That beat consensus analyst estimates for 1.33 million subscriber additions.

Still, Verizon Communications (NYSE:VZ - News) stock fell 1.3% to 34.68. Shares of AT&T (NYSE:T - News), which reports earnings Wednesday, fell a fraction, at 31.82.

AT&Ts stock has flopped 22% since May 29, despite a strong outlook for sales of Apples new iPhone 3G. AT&T is the exclusive provider of iPhone service in the U.S.

Analysts have lowered AT&T second-quarter estimates on fears its landline business did poorly.

America Movil, Latin Americas biggest wireless firm, said Monday that its second-quarter profit rose to 99 cents per American depositary receipt, up 34% from a year earlier and in line with estimates. Revenue, however, failed to meet views, rising 13.6% to $8.2 billion.

"Brazil was the problem market this quarter," Pali Research analyst Walter Piecyk wrote in a note to clients. He said America Movil is facing "increased pricing pressure" in Brazil.

Millicom, which operates mostly in Latin America and Africa, missed analyst estimates as well.

Tuesday, it reported second-quarter earnings of $1.22 per share, up 21% from a year earlier but below forecasts of $1.34. Revenue jumped 37% to $843 million, but analysts had expected $864 million.

"The global credit crunch and rising inflation worldwide has not to date impacted our businesses in a significant way," Millicom CEO Marc Beuls said in a statement.

"However, higher inflation globally has increased the cost of goods, which leaves consumers with less disposable income," he added.

Some wireless stocks that have been taking a beating weathered Tuesdays telecom sell-off.

U.S. shares of Russias VimpelCom (NYSE:VIP - News) rose a fraction, at 27.90. Its stock has shed 33% in 2008. On Monday, it said it would buy a 90% stake in a Cambodian wireless firm for $28 million. VimpelCom also plans a wireless venture in Vietnam.

Shares of China Mobile (NYSE:CHL - News) rose 1.3% to 69.75. Its stock is down 20% in 2008. But the firm added a higher-than-expected 7.5 million customers in June. And it should get a lift from the Aug. 8-24 Beijing Olympics, analysts say.

Analysts say phone companies may cut back on capital spending. In developed countries, most wireless firms have already built out speedy 3G networks.

Ericsson (NasdaqGS:ERIC - News), the biggest maker of wireless networks, Tuesday posted a 70% drop in profit. Its shares fell 9.2% on Tuesday, to 11.22.


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