Rabu, 23 Juli 2008

LONDON (AFP) - British mobile phone giant Vodafone said Wednesday it would repurchase shares worth 1.0 billion pounds (1.3 billion euros, 2.0 billion dollars) and stressed that it was undervalued.

The move sparked a modest rally in Vodafone shares. However, it failed to reverse Tuesdays plunge of almost 14 percent -- the biggest one-day fall in its history -- after Vodafone warned that full-year sales would disappoint.

"The board of Vodafone Group has considered the market reaction ... and has decided to introduce a one-billion-pound share repurchase programme with immediate effect," the company said in a statement.

"This action reflects the boards belief that the share price significantly undervalues Vodafone."

On Wednesday, shares gained 1.86 percent to close at 131.40 pence on Londons FTSE 100 index, which finished 1.60 percent higher at 5,449.90 points.

Meanwhile, broker Collins Stewart downgraded the stock, lowering its target price to 129 pence.

"As Vodafones first-quarter has shown, not even telecoms are immune to an economic slowdown," the broker said in a report to clients that was quoted by Dow Jones Newswires.

Vodafone said Wednesday that the maximum price it would pay for any share would be no greater than 105 percent of the stocks average closing price during the five business days preceding the date of purchase.

On Tuesday, the group had warned that annual sales would be at the lower end of expectations because of difficult trading conditions, particularly in Spain.

In reaction, its shares tumbled by 16 percent at one stage but later recovered some lost ground to finish down 13.57 percent at 129 pence.

Tuesdays news came exactly one week before the departure of chief executive Arun Sarin, who after five years in charge was to hand over to his deputy Vittorio Colao.

Vodafone had said that full-year sales were forecast to be at the bottom end of its guidance range of between 39.8-40.7 billion pounds.

The company blamed the outlook on recent economic weakness, especially in Spain, and lower-than-expected equipment revenue.

Spain, like the rest of the eurozone, has been hit by soaring oil and food prices that are fuelling inflation, while its key building sector has been hurt by rising interest rates and the international credit crunch.

Growth in the first quarter was just 0.3 percent over the previous three months, and some analysts have warned the country could slip into recession, which is defined as two consecutive quarters of negative growth.


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