Cable & Wireless Worldwide Profit to Miss Estimates; CEO Marsh Steps Down
Cable & Wireless Worldwide Plc (CW/), which provides telecommunications services to the U.K. police force, said full-year profit will miss estimates because of slower-than-expected sales orders. Chief Executive Officer Jim Marsh resigned.
The stock dropped the most since July 2010 in London trading. Earnings before interest, taxes, depreciation and amortization will be 5 percent to 10 percent “below current market expectations” in the 12 months through March, the company said today. The company will bolster investments in its hosting and cloud offerings and cut its dividend by half to 2.25 pence a share.
Cable & Wireless Worldwide, which separated from its parent company last year, is revamping its business to expand new services to make up for slowing sales in its traditional cable network business. In March, the London-based company said Tim Weller, its chief financial officer, would be leaving the company in July. The same month it predicted the next financial year’s gross margins in its legacy voice business will decline more than the 10 percent previously forecast.
“Is there anybody left to turn the lights out? Three profit warnings, a halved dividend and departures of CEO, CFO and head of investor relations,” Mark James, an analyst at Liberum Capital, said in an e-mail. “Cable & Wireless remains a core ‘sell’ idea for us.”
‘More Radical Approach’
Cable & Wireless shares slumped as much as 17 percent, and were down 16.4 percent as of 8:50 a.m. in London, cutting the company’s market value to 1.2 billion pounds ($1.9 billion).
Chairman John Pluthero has taken over the CEO role, replacing Marsh, and John Barton was named chairman, the company said today.
“It has been a very difficult 12 months and it is now important that we take the necessary steps to ensure the future growth of our business,” Pluthero said in the statement, adding that he will take “a more radical approach” to build on hosting, cloud and data services.
Cable & Wireless Worldwide on June 21 said it “considered and rejected” an approach for its global business division. The Financial Times reported on June 19 that Pacnet Ltd., a telecommunications group based in Hong Kong and Singapore, made an informal offer of $500 million for C&W’s overseas businesses.
“The potential remains for a doubling of value as a more radical approach is taken to the business, or as the management- related issues prompt bid interest for which the underlying asset values will become more relevant for the valuation,” Investec Securities analysts Morten Singleton and James Goodman said in a note to clients today. “We would be buying into any weakness.”
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