Q. I am unhappy with the performance of my stock in Vodafone Group plc. I had been told it was such a great company. - FR, via the Internet

A. The world's largest cellular phone service provider by sales has enormous size and outreach. It has either majority or joint control of wireless service in 18 nations and a minority interest or partnership in many others.

It is, however, suffering the effects of weak economic conditions, especially in the previously resilient markets of Spain and the UK.

Its recent announcement of reduced revenue expectations for this fiscal year, ending in March, in which it cited additional disappointments in Turkey, Romania and Egypt, took a toll on its stock.

Vodafone shares are down 36 percent this year following a gain of 34 percent last year. The company recently launched a $2 billion share buyback program.

Besides enabling those buybacks, the firm's strong cash flow helps it to move aggressively to expand the scope of its operations.

For example, Vodafone recently spent $11.4 billion to buy a majority stake in Hutchison Essar, the third-largest mobile network in India; $900 million to acquire 70 percent of Ghana Telecom Co.; and an undisclosed sum to buy a major stake in the Australian cell phone retailer Crazy John's. Vodafone said it will add 50 stores in the UK, its home country, as well.

The consensus rating among Wall Street analysts on Vodafone stock is "buy", according to Thomson Financial, consisting of two "strong buys", one "buy" and one "hold".

Vodafone owns a 45 percent stake in Verizon Wireless. One problem, however, is that Verizon uses CDMA technology, while most Vodafone operations use GSM. The incompatibility of those technologies is a stumbling block to smoothly connecting its worldwide network.

It also faces fierce competition around the globe, and it pulled out of the Japanese and Swedish markets because of weak sales there.

It must also cope with separate government mandates in each country on what cellular service fees are allowable.

Management is solid. Vittorio Colao, previously chief executive of Europe for Vodafone, recently became Vodafone CEO when his predecessor retired. John Bond became chairman two years ago after a successful career at the HSBC global bank.

Earnings are expected to increase 11 percent in this fiscal year and seven percent the following fiscal year. The five-year annualised return is projected to be nine percent.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com

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