No surprise there
Explain to me again how the clueless CEOs of such companies even pretend to justify their ludicrously huge salaries when they cannot predict obvious effects of events that will impact their market
Pricier smartphones and lower EU roaming charges will dampen Dixons Carphone's bottom line, the retailer's CEO warned today in an unscheduled trading update that sent its share price crashing by 30 per cent. The company had dismissed the Brexit effect on its business in previous communications with investors some months ago, …
If the CEO rose through the ranks of a business then you would expect them to have a good grasp of how their business sector works. They might - or might not - be able to gauge the potential effects of a disruptive change in that sector.
If they came from a different business sector then one wonders how quickly they can adjust to the nuances of their new company's business model.
I have seen too many cases of senior management brought in from other companies who merely try to apply their - often failed or inappropriate - strategy from that previous employer.
Re: AC of "If the CEO rose through the ranks..."
I once read some commentator* say most CEOs have just one trick. Their success is determined by how well they can identify a company that needs their trick, and knowing when it's done and time to move on.
* might have been Bob Cringely talking about Lou Gerstner's services-first strategy that worked at American Express and IBM, but I can't find a reference to be sure.
When most of the floor space in your retail outlets is devoted to other things such as White Goods, TV and domestic Appliances.
Would I buy a phone from them? Not on your life
Would I buy any other electrical device from them? Not if I could help it.
Multiply that by a few million and it is easy to understand why your profits are down.
You seem to have forgotten the "Carphone Warehouse" part of the name, which typically operate separate stores dedicated to Mobiles.
Now would I buy a phone from Carephone Warehouse? Probably, as they are usually unlocked and can be on any network.. So you're better of getting one from there, than going directly to the Network operators where you will be tied in.
As for the rest of the losses, not surprised, as the place is a bureaucratic hell-hole, I'm surprised anything ever gets done! Interesting news on the Connected World Services, and great shame (they develop business-2-business software solutions etc), as they've got some awesome platforms and are probably the most agile and "non-corporate" division of the company. I wonder if part of these loses though are down to re-organisation internally, for example a recent acquisition being shifted away from CWS into Dixons..
That obviously does have some impact, but they make little margins on those physical product, a huge chunk of their income comes from upselling and cross selling services (Just bought a new XBox and TV, surely you want a faster internet connection? or 4K Sky TV?).. In addition, they have quite large international operations.
"You seem to have forgotten the "Carphone Warehouse" part of the name, which typically operate separate stores dedicated to Mobiles."
They've already shut a large number of standalone stores and will be turning many of their Currys PC World superstores into a 3-in-1 - standalone CPWs will only exist where there's not a CPCWCPW within a sensible distance. You can expect this to ramp up a little to save costs, there are still retail parks that have a CPW and a CPCW at opposite ends which won't last long.
"Now would I buy a phone from Carephone Warehouse? Probably, as they are usually unlocked and can be on any network.. So you're better of getting one from there, than going directly to the Network operators where you will be tied in."
Sadly, the opposite is true. Buy from CPW and you're tied into a 24 month contract - having to buy yourself out of airtime and handset if you want to leave early.
Buy from O2 and you can pay the device off and walk away, there's no 24 month contract on the airtime. Sky do similar, and Gifgaff follow a similar model - creating a credit agreement for the phone, and a separate airtime plan. O2 also unlock the device for free on request - not sure about other networks but they were happy to supply a code for my Huawei after 3 months, which I then sold as unlocked.
The environment inside a CPW is that of desperate sales. Their conversations are all about spending as much as possible rather than being genuinely helpful.
Pretty sure CPW were doing 24 month contracts, with airtime and handset paid for as one, 2 years ago....
You're very much tied in unless you can stump up for the whole 24 month airtime bill - which is madness really, what they're saying is that if you leave after 12 months, you have to pay for 12 months of airtime you won't be using.
With O2 (bought direct), Sky, Gifgaff... if you leave after 12 months you pay off the rest of your handset credit agreement, and walk away - without making any more airtime payments. No lock-in.
Most of the devices were never locked, CPW just put your choice of SIM in and the SIM tied you to a network contract... the trick was to buy on PAYG, with the right device the phone was subsidised more than the compulsory credit topup added. Just dump the expensive SIM straight away.
But your specifically talking about contracts there - But the handset you usually receive is the "base" (with any of the bloatware or crapware) from the Network operator, additionally it is unlocked, so your free to put a SIM in it from another network.
"Buy from CPW and you're tied into a 24 month contract - having to buy yourself out of airtime and handset if you want to leave early."
Not my experience. I bought my phone sim free unlocked from CPW, it was a reasonable deal and I had the phone there and then.
Presumably the O2 phone will still have network customised software though? Giffgaff I think sell base versions, not sure about Sky. I've no particular objection to a fixed contract if I can get a good deal, but the slowness of EE bringing out updates for their customised version of my phone after Samsung have done the base version means my next phone will be bought direct.
I tried to buy a phone from them one day. When I realised it is conditional to me giving up all my personal data ... I noped out of it.
Sadly the only business cases where you can exchange money for a service without strings attached these days seem to be online.
@ Karlis 1 "I tried to buy a phone from them one day. When I realised it is conditional to me giving up all my personal data ... I noped out of it."
Depends what they requested. If you were a new customer they would normally do a credit check and they would typically ask for proof of address (e.g. utility bill) and proof of identity (e.g. driving licence). That seems reasonable. Exactly how extensive was their request?
@pleb "Buy from CPW and you're tied into a 24 month contract - having to buy yourself out of airtime and handset if you want to leave early." Not my experience. I bought my phone sim free unlocked from CPW, it was a reasonable deal and I had the phone there and then.
This charging for the remainder of a fixed term contract was dealt with by OFCOM a year or two ago. Companies can charge for the remainder of a contract (I'm thinking of service provision rather than payment for equipment like a handset) but only the actual cost to them which is normally much less than the headline monthly price. Sorry - I don't have a link to hand with more details but if DixCar are charging the full monthly airtime rate for contracts cancelled mid-term they ought to be taken to task on it.
Let's go with brexit.
Nothing to do with the ECB allegedly relaxing QE later in the year.
Nothing to do with our low interest rates.
Nothing to do with European stability after the French election.
So in effect the Euro is a better proposition for investors than the pound at the moment.
Brexit I will concede does cause instability but it's not the only reason for the weak pound.
That's before we even look at carphone warehouses business model.
I also can't remember any one in the remain (project fear as you put it) camp telling me phones would go up in price.
Yeah and considering we haven't actually left yet why do you think the pound is crashing in value?
Come on, you're an intelligent person, you tell me why something that hasn't happened yet and isn't going to happen till 2019 is causing the pound to fall in value? Add to that why are all the politicians making it as much about bafoons as they can?
I'm sorry but the pound crashing in value is preparing you for the second vote, nothing else. Everyone will vote right this time. (right depends on your own viewpoint)
"Come on, you're an intelligent person, you tell me why something that hasn't happened yet and isn't going to happen till 2019 is causing the pound to fall in value? "
The referendum _has_ happened. Over a year ago. It's the decision to leave that caused the pound to drop, not the leaving.
So what you're saying is that the currency markets are determined by politics and the media and there's really no sense or logic to it. Surely that can't be right. Then again it could be set up for someone to make a nice big fat profit out of the currency fluctuations.
I would l also be interested in the opinion of someone who understands economics more than me to explain why the pound fell in value the instant the result of the vote was known.
When history looks back on all this I do hope someone puts a note in about how the currency markets were manipulated to punish the common man for the choice of a country. Regardless of which way you voted or will vote that's just not cricket.
@ Andrew Moore
"...Project Fear becomes Project Fact."
Really? No. The EU rules borking up profits, thats the EU doing it and so would occur if we remained. As for the price of handsets going up, we have a party who are negotiating leave but are only half heartedly into it. Of course there is uncertainty.
But project fear so far has remained project fear. Or for us watching it is getting funnier to watch as it continues to grasp at straws.
"From June, EU legislation meant people were able to call, text and use mobile data at no extra cost regardless of the EU country they visited. This change is also expected to hit DixCar's profits."
Those evil EU beaurocrats, eh? Making our phone calls cheaper abroad! Disgraceful!
I presume that all phone companies' profits will suddenly rise again once we have actually left and they can charge British people whatever the hell they want again for roaming whilst abroad.
Not sure what's so funny about that myself.
@ Adam 52
"No, that's gay marriage. Don't you remember the UKIP campaign?"
Actually no. I dont recall any campaign by UKIP about that. The only recollection I have of anything like that from UKIP was from some councillor who expressed his views but not the views of the party.
But please do provide a link to the UKIP campaign
"The sound of euro-sceptic chickens coming home to roost."
Please tell me that label is coming back again. It was amusing seeing the label vanish quickly when we were proved right over the euro currency and I now take it as a badge of pride. Sounds better than brexiter.
"please tell me that label is coming back again."
For those that have followed the Euro since it's launch ? Will understand it is a far more stable currency that pound sterling. Despite the horrendous attacks by the global monetarists. To think otherwise is a 19th century mindset.
"Will understand it is a far more stable currency that pound sterling"
Erm what? Sorry if you ment that as a joke, normally it would be posted by a named commenter with the joke icon or even the troll icon. If not then you may not be aware of the euro.
"To think otherwise is a 19th century mindset."
Oh. So no fact just 'I am right or you are using outdated thinking'. The euro should have gone under already. To avoid that the EU sacrificed countries and the eurozone is years behind the US and UK in recovering from the recession. We are currently having currency reactions to uncertainty, but to mistake that for the euro being a better currency is shocking. We are still waiting for them to decide what they are going to do with their currency to fix the underlying problem. Can they somehow convince politicians to sacrifice their elections for fiscal transfer or do they split the euro up into levels (currencies)?
EU legislation meant people were able to call, text and use mobile data at no extra cost regardless of the EU country they visited. This change is also expected to hit DixCar's profits.
They've sold the phone, they've got commission from the network, why would it hit their profits when people go on holiday for a week or two?
"They've sold the phone, they've got commission from the network, why would it hit their profits when people go on holiday for a week or two?"
Presumably it's that commission that is the issue. Networks anticipate losing income, therefore retailers get offered lower commissions on sales. Given how easy it is to buy a phone through a network, or just from Amazon or often directly from the manufacturer, retailers like Dicphone have a seriously weak negotiating position; about all they can do is accept whatever a network says and pray they don't change it any further.
I would expect this will be twofold:
1. ID mobile is a network run by Carphone (which uses 3). They will have higher costs as a result of the legislation >> hits profits.
2. Network providers have to pay extra and can't directly charge this to the customers >> they charge the sellers more
I'm currently doing a refresh cycle in work, upgrading iPhone 6 devices to 7 and Galaxy S5 to Galaxy S7 for my clients. I just can't see if it was my money any killer feature to justify me getting into a £40 a month contract again for 2 years if I had a iPhone 6 or S5 that was due an upgrade. Currently I'm using a B&Q Aquaris Ubuntu Edition E4.5 on a rolling £5 a month sim and it does everything I need.
Now it doesn't do Snapchat or Instagram, but to be honest now I'm not using I'm realising I'm not actually missing that much.
I'm currently doing a refresh cycle in work, upgrading iPhone 6 devices to 7
Wouldn't it make more sense to wait 6-12 months, once the iPhone8 is out, and you might get a better deal on the 7s? Or don't Apple prices ever go down?
Genuinely curious. Have no idea of the details of Apple pricing.
Just wait until we get close to Crimble and the pawn shops/cash converters will have plenty of iPhone 7/7+ and 6s/6s+ for sale at very good prices.
It is just not worth upgrading to new anymore like buying new cars. Let some other sucker carry the off the lot/out of the store depreciation.
Apple prices do drop but not by much, probably £50 a handset. What you are saying makes sense but we just have a 2 year handset refresh policy (mostly because of support/warrenty) shich just happens to fall late spring, just mopping up the last now. If it was October every two years would probably be better as Apple refresh usually in September.
"Genuinely curious. Have no idea of the details of Apple pricing."
For computers: New model comes out, old model disappears from the shop. Three months later the old models start appearing as "refurbished" at a lower price. But also, when new models arrive, the price is newly calculated according to the exchange rate (prices for existing models rarely ever change, even with quite strong currency fluctuations), and the last time this was quite bad for the UK, when old models were priced according to pre-referendum exchange rates, and new models were priced according to post-referendum exchange rates.
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It means you can pay off over 2 years, instead of paying up front. Three groups benefit:
1. People with money locked into longer-term investments/savings. Instead of paying the penalty for withdrawing today, I can buy now, and schedule my money arrival to avoid the penalty.
2. People who don't have the money today (e.g. because it's in your rainy day pot), but do have a decent income - instead of waiting until you've saved up enough for the phone, you can get it now, and pay for it over the next 2 years.
3. People who would otherwise buy a network airtime + phone deal over 24 months. They can now buy a cheaper SIM-only airtime deal, and compare the costs directly.
In 2010 the top of the range handsets were around £400 (iphone 4 & Galaxy S) and an average contract was £25 - £28 pm
In 2017 the equivalent handsets are £850 and contracts are £50 - £55 pm
So the cost has effectively doubled in 7 years however if you use an inflation calculator the £400 should now be around £480.
Greedy manufacturers are to blame, oh and CPW may have changed but a lot of people still remember the good old days.
So true. I started with the first Note at under £400. Then I got the Note 4 at a bit over £400. No way am I now going to find double that money for a Note 8 - I am married, and wish to remain so. I'd like to buy a new Note, but it needs to fit in the same slot in my budget.
The referendum was over a year ago and the pound has recovered from it's lowest point against the dollar since then so any effects on prices should have been factored in a while ago. The pound has continued to fall against the Euro but, if anything, this would lead to an increase in revenues outside the UK.
Smartphones hit the innovation ceiling a few years ago. But while refresh cycles have slowed there are still plenty of people happy to pay for new premium models such as the latest I-Phone or Samsung Galaxy, especially if they're on a contract and consider a new phone every two years part of the deal.
So, all in all, nothing new since the last earnings call. Guy obviously needs to learn about getting the bad news out as early as possible so that the next set of earnings look better.
The pound has continued to fall against the Euro but, if anything, this would lead to an increase in revenues outside the UK.
It would if you were a manufacturing company doing exports as well as sales within the UK.
The pound falling is good news for exporters, but bad news for importers.
Dixons and the Carphone warehouse are predominately importers from outside the UK selling within the UK. Hence, it's bad news for them unless they can find manufacturers within the UK for goods, which they certainly won't do for smartphones.
The pound falling is good news for exporters, but bad news for importers.
The pound has risen against the dollar in the last six months which would make imports less expensive than a year ago. Most inputs for phones for the UK are priced in dollars.
Carphone Warehouse has operations in Europe which should boost earnings in pounds.
The note on the roaming is also complete bullshit: companies have had years to prepare for this and, indeed many companies had got rid of most if not all roaming charges long before this year's deadline. A CEO who is not aware of these developments isn't doing his job properly.
My Xperia XZ cost me £411.74 sold my one plus one (bought near launch due to the invite system) to CEX for £101 it was having battery issues so i swapped it out and then realised its reached EOL so sold it. The reason I bought the Flag ship at the time is i want a decent spec phone that isn’t laggy. It does its job. Also the fact O2 screwed up my 3T 128GB order (they were supposed to deliver at launch).
Now I’m cutting costs in an effort to save as much as I can I wont be updating for another 3 years.
Also depreciation on phones is mental a £411 phone that was on discount of 25% is now worth less than £132 less than a year later. CEX is the benchmark for this one.
That's because when fashion trends are passed, the objects of said trend drop in value significantly.
Men can wear or carry three sorts of fashion accessories while being socially acceptable.
1) A (wedding or engagement) ring. Wearing huge number of gold necklaces etc would just make a man look a like a prat, as judged by society.
2) A wristwatch. (either a casio if you want to tell the time, or a uber expensive LOOK AT ME watch)
3) This years/months trendy phone which can be waved around in an extravagent show of wealth.
And of course none of this is to do with Austerity budgeting, the widening pay and social gap, essential costs (conveniently excluded from official Inflation calculations) ravaging disposable income, and people having to make that terribly difficult decision whether to buy the latest new mobile tech jewellery or food, clothes, rent/mortgage, fuel and transportation.
I also claim today's prize for the longest sentence.
.. is that it's apparently mandated that your telco sends you an SMS every time you cross the border to inform you of applicable tariffs.
The madness comes from the fact that they have apparently not taken away the mandate after levelling the charges across the EU, so now I get an SMS instead telling me that nothing has changed tariff-wise after crossing the border, duh. The problem is that I live practically on top of the border so I tend to collect a lot of these SMS without an ability to kill that off.
Lunatics, the lot of them.
Get back off your soap box! The recent changes may indeed affect people's bills, especially if they make a lot of calls in the country they're visiting.
Mind you, if you do mind being informed of charges then you deserve anything that's coming to you in your blissful ignorance.
Mind you, if you do mind being informed of charges then you deserve anything that's coming to you in your blissful ignorance.
I suspect the real complaint is that despite being tracked to within an inch of their live by mobile providers every second a phone is live, they can't be arsed to implement a simple algorithm that only informs a user if something has actually CHANGED. You know, useful information?
"Explain to me again how the clueless CEOs of such companies even pretend to justify their ludicrously huge salaries when they cannot predict obvious effects of events that will impact their market"
TBH, I think the issue is more about business-politics rather than business-nous: bad news has to be couched as gently as possible to minimise impact to the share price and potential bad news will be handwaved away in the hope that nothing will actually happen until after the current incumbents have cashed out their stock options.
Anyhow, as other people have noted, the mobile-phone industry is in much the same place as the PC white-box market found itself a few years ago. Technology has become commoditised and differentiation between both product-versions and product-vendors is increasingly limited, while OEM manufacturers are undercutting premium brands and driving profit margins down.
Admittedly, the above impacts Android devices more than Apple, but I suspect even Apple will find themselves having to trim their profit margins as the quality of mid-range Android devices continues to rise.
Personally, I'm using an S7 Edge, and from what I can see, there's pretty much no point in moving to the next generation. E.g. the S8 has a slightly better CPU/GPU, a slightly larger screen, slightly longer battery life and exactly the same physical camera technology. None of which really screams "You need to upgrade NOW!!11!".
I'll therefore probably stick with my current phone until the 2-year contract runs out, by which time I'm hoping that there'll be something more interesting; if not, then I may just drop back to a SIM-only deal.
One of the things that's mentioned here is that people are hanging onto mobile phones for longer. I don't want to be a militant tree-hugger here, but when you think of all the resources that go into a phone, for it to be cast aside after 18-24 months, because everyone wants the latest shiny...well, the whole consumer culture thing depresses me a bit.
If perfectly usable phones are getting used for a bit longer, then I say that's a Good Thing.
And if a bunch of shysters like PC Dixon's Curry Warehouse get a bit of a kick in the plums when they do their annual accounts, then that's just an added bonus.
Market saturation and maturity of product? Next gen mobiles are little better than 4 generations ago - so desire to upgrade is limited (until battery life becomes an issue) . Seems a little perverse to blame brexit but the current zeitgeist seems to put all negative news in a brexit paradigm and all positive news as "despite" brexit.
Across the pond this is called the Trump effect.......
2019 can't happen quick enough for the UK and 2020 for the USA as after that maybe the MSM will have to come up with a different excuse for everything (tm)
Made me think...
My old original Note just gave up the ghost after 5 years - stuck at boot screen, recovery mode not available. Actually 5 years isn't so bad, but even so, why? I'd expect a TV to easily surpass that. Is it capacitor rot? Or solder rot? Or what. The phone is in stellar physical condition.
My Note 4 needed a new motherboard after just 2 years, eMMC failure. An Honor 7 in the family has died even sooner, shuts down when battery drops to 99% (seriously!).
A solid-state device, physically looked after, what makes them die so young?
Who the hell cares if phones go up in price - because of Brexit or not Brexit. Perhaps those who "have to have" there latest glitzy rubbish every year will think longer before wasting their money on needless upgrades. When it breaks or becomes unserviceable replace it, in the meantime concentrate on things for your future like a pension.
Well I was all set to upgrade to the latest iPhone last year, then I realised it would be a downgrade from my 6 as it had no headphone port. As a result I now pay £9 a month instead of around £40 and that's enough saving to rather concentrate my mind on if any future upgrade is worth it.
If the manufacturers are actively removing features from new products that are a key requirement for existing users, while putting UP the price, what on earth do they expect?
Phones are commoditized. Apart from a few prestige phones it's a race to the bottom, with ever slimmer margins and less profit per sale. It affects the entire value chain from component manufacturers to retail.
Beer because soon it's in the same price category with your Chinese Android phone.
It IS interesting to read the comments here - makes me VERY happy to be in Hong Kong where the mobiles I have had cost me between £60 & £70 with a dual SIM, and talking about SIMs, I only use voice & NO data, and the original HK$50 "starter" for something like 180 days actually cost me HK$30 (£3) with a "recharge" co$ting me HK$48.
The ONLY reason I "recharge" is because at the end of the recharge period I always have an astonishing HK$150 or so still in credit. I just CAN'T drive down the balance !!
Previously - I'd run the credit balance down to microscopic value - letting it expire - since a new SIM with new number would only cost me £3 for another multi-month validity.
As for the mobiles - a Doogee costing about HK$700 (£70) which I sold for $750 a couple of years later, and a Lenovo [also dual SIM] for ~£80 ----> Both from Groupon.HK.
Am I glad to have tossed UK out more than 40 years ago? You bet your life I'm glad!!
To be fair, CW is currently selling a sim-free dual-SIM android phone for £47. And if you can fight through the filtering options on Amazon, there's something similar for £36.
As ever, you pays your money and you takes your chances; for me, the camera and screen size are the most important features, so I tend to stick to the higher end of the market via a 24-month contract to make the cost slightly less painful.
If those weren't a criteria, these days I'd be quite happy with whatever budget Android device was on sale at the time; quality has come a long way from the early android-landfill days!
It's pretty sad if you count mobile phone prices as a major reason for preferring one country to another.
I hope for your sake you haven't heard of chinas own aliexpress, gearbest, focalprice etc. ?
Still, at least you are still able to access the Reg website at the moment!