Vodafone, where's the bottom?

So, Vodafone had another bad day on the markets today. It has just about replaced Tesco as the unloved big behemoth FTSE100 company of the moment by the city. The share price has been consistently falling since hitting a high of around 192p back in August, closing today at a little over 162p.

This morning Vodafone gave its half year report and typical of a company that didn't need to surprise anyone with something that would hit the share price further, the company delivered a nasty surprise.

The Group incurred a total impairment charge of £5.9 billion in relation to the carrying value of goodwill of its operations in Spain and Italy as a result of challenging market conditions and adverse movements in discount rates.

There's that word again "challenging".

Not even the news that a Verizon dividend would actually be payable at the end of the year was enough to save further falls.

Verizon Wireless

VZW, our US associate, achieved organic service revenue growth of 8.0%* in H1 and 7.8%* in Q2. Our share of profits from VZW was £3.2 billion, up 27.4%* year-on-year. VZW's net debt declined from US$6.4 billion at 31 March 2012 to US$1.9 billion at 30 September 2012, despite spending US$3.7 billion (net) on the acquisition of spectrum in H1.

On 12 November 2012 VZW declared a dividend of US$8.5 billion (£5.3 billion), of which Vodafone's share is US$3.8 billion (£2.4 billion). The dividend is due by the end of the 2012 calendar year. The Group intends to commence a £1.5 billion share buyback programme after receipt of the dividend.

http://www.digitallook.com/news/rns/20493394-10097/VOD-Half_Yearly_Report_html


So, if you are a long term buy and hold investor or enjoy catching falling knives, the fall in Vodafone's share price in the last 3 months might not bother you and long term you might be right, but right now the longer term charts for the company look awful. Make no mistake, the trend is down, it is a question of where the bottom is. Even worse, the monthly chart below suggests that this may go much lower regardless of fundamentals like the chunky dividend yield it now offers.

There is support on this chart at 158 which was bounced off today. After that you are looking at some potential support lines in the 130's. The death drop is down to around 108. I can't see it going that low, but I don't like the fact that this monthly chart is suggesting that the fall is still in its early stages. If 158 support holds then Vodafone investors might be spared the big fall, but this is a dog of a chart unless you are a short seller.

Vodafone