Shares in Vodafone plunged nearly 14% after it warned that annual revenues would hit the bottom of its forecast range because of the economic downturn.

Shares in the world's biggest mobile phone company crashed 22.6p to 126.6p this morning and closed down 13.57% at 129p. The fall dragged European telecoms shares lower, along with the FTSE 100, which closed down 40.2 points at 5364.1.
""Telecoms results, globally, have shown remarkable resilience to date to the economic slow-down, but Vodafone has kicked off the telecoms results season with a reminder that nothing is immune,"" said Collins Stewart analyst Mark James.
Though first-quarter revenues met City expectations, the market was spooked by the warning that growth is slowing. Vodafone said it now expected its full-year revenues to be around the bottom of its previously stated range of £39.8bn to £40.7b, hit by the slowing economy and lower-than-expected equipment revenues.
""Perhaps it was always too good to be true,"" said James. ""The Spanish and UK telecoms markets, resilient to the economic slowdown to date, finally look to have cracked. Whilst management has left earnings targets intact, pointing to cost-cutting potential, we believe today's results will be taken poorly."" He downgraded his recommendation on the shares to ""hold"" and said earnings estimates could be scaled back as well.
Vodafone's chief executive, Arun Sarin, said the ""relatively severe macroeconomic environment"" was to blame. ""Frankly as a company we are not immune to it but we are much more resilient than most other companies,"" he said.
He sought to reassure investors by stressing that the company's expansion plans would not be affected by the economic slowdown. ""Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services, with strong revenue growth in
[emerging countries] and another good quarter of data revenue growth offsetting weakness in Spain,"" said Sarin.
Vodafone added 8.5 million subscribers in the three months to the end of June, taking its customer base to around 269 million. Group revenues climbed 19% to £9.8bn in the quarter, with organic growth, which strips out acquisitions and disposals, of 1.7%.
Thanks to continued efforts to cut costs, the company said it remained on track to post operating profits of £11bn to £11.5bn, as previously indicated.
The results will be the last for Sarin, who steps down next Tuesday after five years at the helm. He will be succeeded by his deputy, Vittorio Colao, who joined the company in 2000.
Sarin did not feel he was leaving Vodafone in disappointing circumstances, saying he was handing over a healthy company to Colao and finance director Andy Halford. ""Here is a company that produced £9.8bn of revenues
[in the first quarter], growing revenues by 19%,"" he said. ""I feel very good as to where the company is and how it's traveling. Andy and Vittorio will pick up the baton and keep running – we will ride this one through.""
Spain was particularly weak: Vodafone's Spanish organic service revenues fell 2.5%, compared with expectations for a 3% rise and 5.1% growth in the previous quarter. Sarin said that the main problem for Vodafone in Spain was that many migrant workers who had been working in construction were returning home. He said this problem was not replicated in the UK, at least not on the same scale. Spain and the UK make up around 13% of group revenues. ""Here the story is around competitive pressure, it's a very competitive marketplace and prices continue to fall,"" he said.
""One might say, 'Hang on, isn't there a housing and migrant issue here?' Yes, but it's on a much smaller level for Vodafone. Our brand here in Vodafone for a very long time has been a big brand, very good with business, very good in government, good with a number of segments.""
The UK saw mobile service revenue growth of 2.1%, but revenues from phone calls fell by 4.4% from a year ago. Other major European markets also struggled: the anticipated improvement in German revenues failed to materialize, and in Italy service revenues grew by just 0.6%.
Faced with intense competition and regulatory pressure over pricing in western Europe Vodafone is hunting for growth in emerging markets. It recently snapped up a controlling stake in Ghana's third-largest mobile phone company for $900m (£450m).
Roger Appleyard at RBC Capital Markets said: ""We cannot rule out a large acquisition but it is more likely Vodafone continues to make selective smaller acquisitions and builds its presence in nascent and emerging markets whilst focusing on cost reduction in the mature businesses.""
Swedish mobile maker Ericsson reported better-than-expected second-quarter earnings today. It beat forecasts for the second consecutive quarter, posting earnings before interest and tax of 4.7b Swedish kroner (£394m) excluding restructuring costs, against forecasts for SKr4.3b.
(Source: Guardian)