Vodafone Share News (VOD)

Shares in the UK's largest tile and wooden flooring specialist, Topps Tiles, have not escaped the sell-off which has laid many small company shares low since the start of March. As the company explained to investors on Tuesday, however, it has enjoyed a 'good start' to the second half. Boosted by higher levels of consumer confidence the firm's like-for-like sales for the seven weeks ending on May 17th grew by 5.6 per cent, versus a drop of 2.6 per cent during the comparable period of last year. The firm's Chief Executive continues to believe that sales are expanding ahead of the market and he remains confident, to which one can add the improvement in margins. In particular, it may be worth noting that sales must have accelerated across the second quarter to reach the higher average rate announced by the firm and the balance sheet is strengthening. The stock may not be headed back to the heady days of 2007, when it was trading at 300p, but they have already caught the eye of professional value investors. Hence, as trading remains on target, the Daily Telegraph's Questor team retains its recommendation of buy.The tricky thing about fixed costs is that when revenues fall profits need to drop even faster. That is why Vodafone's operating profits were down by 18% last year. Yes, emerging markets, especially India, did fantastically well, but that only tells a third of the company's tale. Spain and Italy, on the other hand, face brutal competition, with revenues per user dropping. The answer? Spend more. Vodafone will splash out £19bn globally over the next two years on investment aimed at providing best-of-breed mobile service in all key markets. That is roughly £7bn more than its usual outlays. Nevertheless, given annual operating cash flows of £6bn and strong balance sheet, heavy investment is in fact the natural strategy for the firm. Yet demand for its new product is uncertain, some worry. As well, its strategy will only work if the European economy improves steadily and regulators are relaxed about consolidation. Nevertheless, "if you think the European winter will soon turn into glorious summer, here is a place to bet on it," writes the FT's Lex column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB