It looks like Vodafone payed for too many things with new shares.
By other measures, though, Vodafone looks less impressive. Its stock market capitalization has grown twelvefold since Gent became CEO in 1997. Yet the value of each share has not even doubled over the same period — blame the tech swoon and the dilutive effect of Vodafone's penchant for issuing new shares to pay for deals. Investors have also had to swallow losses related to acquisitions. After writing off nearly $23 billion in goodwill, Vodafone reported a net loss of $14.6 billion for the year ended Mar. 31, 2003. Some investors wonder how productive Vodafone is. "Their return on invested capital is now about 3%. They need to get that up to the high single digits," says Bruno Lippens, portfolio manager with Dutch asset management firm Robeco.
This is one case where pro forma earnings may be useful. When a company goes on an acquisition binge, it is nice to look at their financials without the effects of those new companies. Then you can see if their core businesses are actually growing, or if all the earnings growth is due to the acquisitions. If the only way they can grow is to continually acquire new companies – then sell, sell, sell. Good CEOs are focused on core competencies and competitive advantages, not acquisitions. If core businesses aren't improving that is a very bad sign. (I haven't seen Vodafone's financials, and don't know if that is the case with them or not, but it seems to be implied by the article)