Member Info for KevRow

"It seems one or two cannot comprehend, and need the same thing repeated to them over and over and over and over and over again until maybe then it sinks in (must be age related.)

The market decides on the valuation of Vodafone on a daily basis.

NOTHING TO DO WITH BUYBACKS, which the purpose of them is solely to reduce share capital"

It's because you keep trying to play the same trick of reducing the number of shares without accounting for the cost of reducing the number of shares.

Instead, you hide behind this nonsense of "The market decides on the valuation of Vodafone on a daily basis.". The market will reduce the valuation to reflect the reduction in cash and it will be offset by the reduction in shares, so no real change. Shock horror, this doesn't turn out to be a fool proof way to drive up the share price by reducing the numbers of share in issue at zero cost.

"" and the reduction of this large discount to the assets value "

If you looked at the huge book value forthe German assets and compared it to the recent German performance, you would think the assets were over valued

Have to hope they dont have to do any write downs on book values within the forthcoming end of year results

Have to see what they do with the book asset value for Spain too, and later Italy"

This is a concern that I have. They couldn't make money in Italy and Spain so rightly jumped ship, they state they haven't been able to get a decent return in the UK for years and won't in the future without a merger and I'm not sure if the Germany results are going to be too pretty in the short term at least. They just don't seem to be able to get a decent return in Europe at the moment and I'm not sure that the net asset value reflects that yet.

"The market determines the value of Vodafone on a daily basis.

There is no direct connection between the assets that Vodafone have and the market cap. "

Yes there is. The value and performance of those assets largely determine the share price, as well as other factors beyond the companies control. This "large discount" is reflected in the current share price and the reduction of this large discount to the assets value is what you are stating is what makes the buyback excellent value.

Fingers crossed it start to close rather than continuing to widen!

"Vodafone net assets at about 63 Billion Euro

Current market cap is less then 22 Billion Euro

this makes buybacks excellent value, making investments purchasing at a large discount the assets that generate the Vodafone profits that are the main driver of market valuations."

Only if they can close that value gap but I'm glad that you now acknowledge the value of a businesses assets will have an impact on it's share price. Sadly, it seems to have been moving steadily in the opposite direction, so either the market is wrong, they aren't worth that in the first place/are depreciating in value, or the market believes that this management team can't realise their full potential. Hopefully, the picture will be clearer in May.

"Returns allocated to shareholders from profitability of the business will in the near future be distributed to Billions fewer shares."

This is true. The buybacks won't drive any increase in profitability but will mean that what profitability there is will be divided between less shares. I suppose the flip side would be that the 4 billion could be invested in a profit making venture, so you'd have an increased level of profit shared between the existing number of shares.

Just to add. In this regard, I don't disagree. If the buybacks are completed and the valuation gap between net assets at about 63 Billion Euro and current market cap at less then 22 Billion Euro closes, clearly they will have played a blinder. The elephant in the room is, will that happen!

"Vodafone net assets at about 63 Billion Euro

Current market cap is less then 22 Billion Euro""

So the market is valuing them at a significant discount. Why do you believe they are wrong?

It doesn't seem so long ago that you were arguing that asset values have nothing to do with the share price/market cap, now you seem to be suggesting that the buybacks are a good idea precisely because of the believed underlying value of the assets and that the current share price is trading at a significant discount.

"The buyback will be investing 4 Billion purchasing assets at way below the actual net asset value.

The value of the investment gets transferred to the remaining shares"

Minus the cost of the assets (4 billion) that were used to fund the purchase of the shares.

Time will tell if the remaining assets are being purchased at a significant discount or not but the hope will be that they are.

It uses its own cash, so you have a bigger slice of a smaller pie?

At the end, less cash and less shares. You seem to be focussing on the less shares as if it’s doesn’t come with a price attached.

Kr

''What do you think a cancelled share is?''

''it has created no value at the point of cancellation.''

''The 4 billion is essentially leaving the business ''

Stop the nonsense once and for all - 4 Billion is being INVESTED on behalf of shareholders, the result of which is shareholders will own a greater percentage of the business with the cancelled shares no longer having a right to assets and profits.

no more from me to you on the subject.

To keep it simple. 4 billion Euros will be spent on 4 billion Euros worth of shares (and then cancelled). If you are minded to think that this will add value in some way, then that's great. Maybe they should use the full 12 billion Euros on this one way bet and really make the most of it! Clearly, they are missing a trick!

To use your favourite phrase, they obviously have a lot of learn.

"Do you not get that as the shareholder you own a bigger part of the company for every cancelled share?"

A company that has used it's own cash, from a one off sale, to acquire these shares and so ends up poorer at the end of it? A bigger slice of a smaller pie.

""ffs does it really need spelling out? dividends are monies leaving the business"

What do you think a cancelled share is? Over time, this may prove to be beneficial, or it might not but it has created no value at the point of cancellation.

At the point of cancellation, you are just converting cash into a share to be cancelled. The 4 billion is essentially leaving the business in the form of these cancelled shares.

"Kr

why is it that things need repeating over and over

There is NO direct connection between value of assets and the market capitalisation..

Is about a third of the current market cap due to the Spanish and Italian assets ? -

NO

Vodafones total assets are about 155 Billion Euro with net assets at about 63 Billion

Current market cap is less then 22 Billion Euro"

This probably owes a lot to the markets perception of the current management team and their ability to extract value from these assets (clearly the buyers of Vodafone Spain and Italy think they can make a decent return) and the general perception of telecom companies ability to monetise their assets going forward.

A more fitting example is the last few Vodafone ex-divi days as you are dealing with cash which is the asset we are talking about. If the cash has no impact on the market cap, why does the share price open the next day at exactly less than what is being paid out?

"There is NO direct connection between value of assets and the market capitalisation. "

Yes, there is. There clearly is. For certain assets, how it is being managed etc. will also have a big impact on the market cap in either direction but value of assets still has an impact on the market cap.

Cash is the easiest of assets to value and reflect in the market cap. Once it's gone, it similarly easy to adjust the market cap to reflect that such as what happens when a divi is paid out.

"KevRow

of course if it comes to war in Taiwan or the Middle East or the US shutting down their Govt because they have run out of cash or any other such things.....then the markets dont care two hoots about numbers of shares , or matched cash levels ...or BuyBacks

all they care about is risk ...and with higher risks , share prices fall ...end of story"

Yes but no one, at any point, has disputed this. It's not related to anything that anyone is discussing.

"" So by your logic.."

it isnt my logic .... it is the market and the way it operates ... what "logic" you think there is ..is down to you to decide upon !!"

Either way, you seem to be suggesting that the share buybacks won't have a material impact on share price which is what has been under discussion.

"It illustrates that traders do care about things that impact the fundamentals.

well yes , but those "things" are more often that not linked to by algorithms and bots that move the millisecond a piece of data is out and picked up by the algos

Every RNS and media article from media publications is read by bots with words and figures turned into buys and sells .... and such like ....all of which ignore any Buy Backs !"

So by your logic, if it ignores the buybacks, you'd end up with less shares in issue and no change in share price?

"he said "keeps going down ex-div "...he didnt ask why it went down on ex-div itself"

I wasn't really asking at all. It's obvious why it goes down above and beyond the day to day factors that dedicate share price fluctuations and it illustrates that traders do care about things that impact the fundamentals.

So your belief is that the 4 billion in cash doesn't matter as traders are more concerned with "other things"? That's the belief as to why it will have no impact on the market cap when it's gone?

"" if the 4 billion in cash being converted into shares and then cancelled will impact the market cap and I'd say it clearly does "

I would say as previously that it does not ...because ..the traders wont really give too much of a damn about it .. "

Won't they? Then why does the share price keep going down ex-divi?