I watched the bid-ask volumes this morning and there were several times where the ask volume grew very large (the side of the specialist's book that holds offers to sell). It might have peaked at 50 times the buying side. Whenever the price got down slightly below $36 the ask volume fell back significantly. So I think it might be that some big institution is rotating into something else and will not sell much below $36.
The interesting part was that this huge volume was being lapped up without driving the price below the short term price support set last week or (more importantly) the long term, upward sloping support level that has been in place since July2002. Somebody is loading up as the other sells. Otherwise the price would be a lot lower.
Maybe the specialist is buying for his inventory...to sell on the next leg up?
The SBC thing has an already spooked market more upset. It has nothing to do with competition but the possibility VZ could decide to enter a competitive bid. That would cost them $2 a share easily. One does not want to be an acquirer in this market.
VZ earnings release was quite solid. Wireless was terrific while wireline not bad at all. The key in wireline is to look at quarter over quarter revenues for signs of stability. They've had their 3rd Qtr in a row of stable revenues and despite increasing competition there's reason to expect they can hold a stable trend. Data revenues are now 21% of total wireline revenues and growing near 8% per year with good prospects VZ will continue to cut cash costs from wireline to mintain margins and it's role as a cash cow. Cash expenses in wireline were down 2.3% for the year and 5.7% in the 4th Qtr.
The market is fixated on the weakness in wireline without looking at it and recognizing substantive improvements. They also seem to be missing the fact wireless is 40% of revenues up from 34% while traditional wireline dropped from 43% to 38%. Next year it could be 47% to 35%. In two years 50% to 32%. While VZ transforms itself into a higher growth company they are maintaining the stoggy old wireline business as a cash cow. This is Business strategy 101. It's not rocket science. It's execution. They are doing it.
It's unlikely many analusts are going to appreciate this but it's happening. Eventually they will catch up.