Yahoo Finance Vodafone to cut 11,000 jobs as new boss says ‘performance not good enough’
Vodafone (VOD.L) shares have hit their lowest level since 1997 on Tuesday, after the telecommunications fir announced it will axe 11,000 jobs worldwide over the next three years.
The cuts equal around a tenth of its global workforce and will affect its UK headquarters and other countries.
The company, which employs around 104,000 people around the world, declined to say how many jobs would be lost in Britain.
Vodafone has 12,000 staff in the UK, based in seven offices including at its UK headquarters in Berkshire.
Margherita Della Valle, who was permanently appointed CEO last month after her predecessor Nick Read was ousted late last year, said: "Our performance has not been good enough.
"My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness."
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She was speaking as Vodafone reported a 1.3% drop in full-year earnings to £12.8bn ($16bn). That figure missed its own guidance.
Revenues stagnated at €45.7bn, with growth in Africa and higher equipment sales offset by lower service revenue in Europe.
It also forecast earnings would be "broadly flat" for the current financial year.
Shares in Vodafone have fallen 25% over the past 12 months compared with a 4% gain in the FTSE 100 (^FTSE).
"Margherita Della Valle — more like Cruella de Vil. The recently appointed boss of Vodafone had some harsh words for her new charge as she made the stark assertion that performance had not been good enough, indicating the need for change and unveiling swingeing job cuts,” Russ Mould, investment director at AJ Bell, said.
"With her strong words accompanied by a plan to remove 11,000 staff from its payroll in just three years, Della Valle has signalled she is not messing about. But it will take more than just streamlining the business to make it relevant for the 21st century world of telecoms.
"The company is close to concluding its merger with Three as it looks to build scale in a competitive mobile market. Della Valle says she wants to focus on customers, simplicity and growth. It is the latter which may well determine if she is perceived as a success by shareholders."
Matt Britzman, equity analyst at Hargreaves Lansdown, said the firm's performance had been "lacklustre" in recent years.
"Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn't buck the trend,” he said.
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"Higher energy costs and continued weakness in Germany meant underlying cash profit came in below the recently downgraded company guidance.
"New CEO, Margherita Della Valle, has been very vocal about the host of challenges she's facing in her new role — the honesty is refreshing but not enough to keep shares from falling on the news."
Neil Wilson from markets.com said it was a bold move as investors are not sure she will manage to turn the company around.
“This has the look of a kitchen sink job from the new CEO Della Valle as earnings are weaker than expected as she gets to grip with this supertanker and tries to turn it around. It’s a bold move but investors will want to see what she does with Spain and Italy, selling these to focus on Germany and emerging markets, and reduce its debt, albeit this was down almost a fifth to ~£33bn.”
Watch: Vodafone to cut 11,000 jobs as CEO says ‘our performance has not been good enough’
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