MARKET COMMENT
The Week Ahead: Vodafone and C&W

By David Kuo (TMFDragon)
November 8, 2002

Christmas is coming! So, rather appropriately, there are results next week from a couple of companies involved in the toy sector, namely Hamleys and Hornby. Telecoms also feature havily with interim numbers from Vodafone and Cable & Wireless.    

Vodafone Group (LSE: VOD) reports first-half figures on Tuesday. The company has been in the news recently regarding its bid for the French telecom operator, Cegetel, and with the launch of its Vodafone live! multimedia service. The focus next week, however, will be on the performance of its existing operations about which not much has been heard in recent weeks.

Cable & Wireless (LSE: CW.) reports interims on Wednesday. Chief executive Graham Wallace will need to conjure up an act worthy of Houdini is he is to escape the wrath of disgruntled shareholders. The company's Global data unit is still loss making, dogged by continually declining revenues. C&W is undertaking a review of Global's activities to return the division to profitability, which it hopes will be by the end of 2004. This will mean more job cuts and a further reduction in capital expenditure. The main bone of contention, however, will be its infamous cash pile, which is slowly dwindling away.

Reckitt Benckiser (LSE: RB.) has third-quarter numbers on Wednesday. Like its peers in the household goods sector, Reckitt Benckiser is focusing on margin improvements. Profitability has benefited from a better product mix and costs reductions through its "Squeeze" and "Xtrim" programmes. The company has also benefited from growth of new products.

A number of food processors, all heavily involved in the dairy sector, have numbers to report next week. These include Uniq (LSE: UNIQ), formerly Unigate, Northern Foods (LSE: NFDS), Dairy Crest (LSE: DCG) and Robert Wiseman (LSE: RWD). Uniq is repositioning its business in the chilled food sector. It has slowly moved away from the commodity-type dairy products such as spreads and yoghurts and into more profitable ready-meals and salads. It recently completed the sale of its St Ivel's operation to Dairy Crest. Uniq's move into chilled foods puts it into direct competition with Northern Foods, whose five biggest customers are Marks & Spencer (LSE: MKS), Tesco (LSE: TSCO), Sainsbury (LSE: SBRY), Asda and Safeway (LSE: SFW).

There are also figures from a couple of companies for whom Christmas can't come soon enough. These are Hornby (LSE: HRN) and Hamleys (LSE: HYL). Hornby said in July that the start to the new financial year has been encouraging. The company has accelerated the number of in-store concessions and plans to launch a number of new products for Christmas. Hamleys is also expected to deliver strong interim numbers following its upbeat trading update in July.

Notable results

Monday: Hamleys, Uniq.
Tuesday: BOC Group, Business Post, Emap, Luminar, MMT Computing, Northern Foods, PowderJect Pharmaceuticals, UK Land & Vodafone Group.
Wednesday: Antisoma, C&W, Galen Holdings and Reckitt Benckiser.
Thursday: 3i, Capital Radio, Dairy Crest Group, Glenmorangie, Young & Co's Brewery.
Friday: Fuller Smith & Turner, Hornby & Robert Wiseman Dairies 

The writer has a beneficial interest in Vodafone.