January 31: Boardroom changes at Vodafone

January 31: Cable & Wireless and Vodafone are our big stories today. C&W has made a profits warning, is losing its chief executive and reorganising itself. Vodafone has made what looks like a concession to shareholders with two highly significant boardroom changes.

C&W stock fell more than 13 per cent after the group warned that earnings would be hit by customer defections and falling margins in the UK. It is also time to say Ciao to Caio: the chief executive, Francesco Caio, is leaving after just three years. Seemingly he has been restructured out of a job with the group reorganising itself to create two self-contained units: UK and overseas.

It is tempting, especially if you hold the stock, to think that all this might herald some sort of break-up. But don’t hold your breath: this business is a mess. It is hard to imagine anybody wanting to buy the UK business and the overseas business, although in better shape, has huge structural problems for any buyer. There is also an intriguing line in the announcement about UK earnings being hit by a reduction in non-recurring items. We are just checking whether the company ever declared previous profits to have included non-recurring contributions. The other question is where this leaves Richard Lapthorne, chairman since January 2003, who surely must share some of the blame for C&W’s difficulties. As for what any of this means for Thor Bjorgolfsson, the Icelandic billionaire who has been trading the stock, I have no idea. Read Lex online.

Vodafone has announced that Sir Julian Horn-Smith, deputy chief executive, will retire in July. Sir Julian is, with Sir Christopher Gent, the key architect of the global strategy with which investors have grown so disenchanted. Sir Julian, 57, says today’s announcement is “long planned”. Sure. Another way to look at this is that an apologist of Vodafone’s strategy, and therefore a likely defender of chief executive Arun Sarin, is conveniently leaving just as investors are growing restive about that strategy and Sarin.

At the same time Tony Watson, former boss of Hermes, is joining the board as a non-executive. He comes from a very activist tradition and very in-tune with the investment community. His appointment doesn’t look good for Sarin. The counter-argument, of course, says Sarin is now safe: with Sir Julian going, a new chairman coming and a new-ish finance director, you need someone around who knows how the place works. But I’m not so sure.

Watson’s appointment doesn’t look great, either, for Paul Hazen, the “senior independent director”. Hazen is a former director of AirTouch, which Vodafone bought in 1999. I know which of the two I think is the more senior and independent.

Coincidentally, Hermes itself is in the news. South Korean prosecutors have indicted Hermes Investment Management over allegations that it manipulated Samsung Corp’s share price, recommending that the courts fine the fund manager Won7.3bn ($7.6m).

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