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Verizon Communications Inc. Message Board

  • pestodigenoa pestodigenoa Jan 30, 2007 9:04 AM Flag

    Verizon's Big Bet Starts to Pay Off

    Fourth-quarter results vindicate CEO Seidenberg's efforts to transform the telco into a multichannel delivery service
    by Spencer Ante

    Under Chief Executive Ivan Seidenberg, Verizon Communications (VZ) is trying to reposition itself as a provider of premium communications services�depending less on the meat-and-potatoes phone company fare of decades past. To that end, Seidenberg is pushing ahead with a plan to spend $18 billion to build a network capable of delivering not just telephony but also Internet access and a gamut of TV and video. Bigger rival AT&T (T) is upgrading its network too, but spending far less�$4.6 billion�to get it done.

    Comparisons like that have scared some of the sharpest minds on Wall Street, causing many analysts and investors to question whether Verizon's outsize investments will produce an equally outsize payoff.

    But on Jan. 29, Verizon's earnings announcement provided some fresh evidence that Seidenberg's bold strategy is beginning to gel. Although the company's fourth-quarter revenue fell due to taxes on the sale of assets and costs related to a spin-off, Verizon's results surpassed Wall Street estimates in several key areas. Its wireless arm continues to propel the company, its enterprise business is showing signs of a turnaround, and new markets in video and broadband are also gaining momentum. "It was a solid quarter," says Todd Rosenbluth, an analyst with Standard & Poor's, which like is owned by the McGraw-Hill Cos. (MHP). Verizon's stock edged higher on the announcement, gaining 20�, to $38.03, but that may be because some of the improved outlook is already reflected in the stock price, which has risen more than 12% since late November.

    Wireless Steals the Show
    In the fourth quarter of 2006, Verizon earned $1.03 billion, or 35� a share, down from $1.66 billion, or 59� per share, a year earlier. Net income was reduced primarily by a $541 million after-tax charge related to the sale of the company's telecom assets in the Dominican Republic and $101 million in costs stemming from the spin-off of Verizon's directory business. On the sales side, fourth-quarter revenue totaled $22.6 billion, a 26.1% increase from a year earlier, though a big chunk of the gain came from the acquisition of the MCI long-distance business in early 2006. Without the benefit of MCI, Verizon grew sales 3.9% over the year-ago quarter.

    As it has for years, Verizon Wireless, a joint venture with Vodafone (VOD), stole the spotlight from Verizon's other businesses. It added 2.3 million new customers in the fourth quarter, ending the year with 59.1 million customers. Analysts at Bank of America (BAC) expected just under 2 million subscribers. AT&T's mobile-phone business, formerly known as Cingular Wireless, added 2.4 million customers in the same quarter, ending the year with 61 million customers.

    Though Verizon's gain was smaller, analysts believe the company is attracting a higher-quality customer, measured by revenue and loyalty. As proof, they point to the fact that a higher percentage�88%, or 2.1 million�of Verizon Wireless subscribers are "post-paid" customers that sign up in retail stores for two-year contracts. By contrast, only 67%, or 1.6 million of AT&T's 2.4 million customers, came from retail stores. The remaining customers, who typically pay in advance to use a phone for a short amount of time, tend to be either under 18 years old or don't have the wherewithal for a regular calling plan. As a result, Verizon's average revenue per user grew 2.9%, to $50.78, beating analyst estimates of $49.71. "Verizon's customers are going to be more loyal and generate more profitability for the parent company than AT&T's customers," says S&P's Rosenbluth.

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    • This stratgy Would have worked but not under the management of Bell Atlantic / NY Tel. Sell while you have a chance.

    • Yours is not to reason why.........yours is but to buy buy buy .....don"t be just any old fool on any old hill....... Be part of the revolution and step into the 21 first century ca ching baby

    • Now if you have passed so many prime homes, for the sale of Fios and Fios TV, and you only get these numbers is VZ ahead of the game? Dose it warrant the extra cost to the new system, and the higher installion cost? What we are not getting is the true ROI of the FIOS project. The up front cost seem to be higher now than the shareholders were told at the start of the project. The numbers of people comming on line with the full package seem to be less than the projected amount. Remember when Ivan talked about the number of homes pasted and the numbers that we would get, it does not seem to be happening? Now we see Fios internet numbers and Fios TV numbers. Are the numbers for TV and Internet seperate subscribers or are some counted twice? I know that it is a numbers game at VZ. The numbers have to justify the project until it actually starts to make money for VZ. If you take a look at what this is costing other LOB we don't seem to be getting the bang for the buck yet. Will it be the 5 or 10 year time frame before we actually start making money from FIOS?
      The broadband growth included 165,000 new customers for FiOS Internet -- the high-capacity fiber-optic lines that Verizon is installing across half its local phone network in place of copper phone wires at a cost of $23 billion. At year-end, FiOS Internet was available to 4.8 million homes with 687,000 customers, a penetration rate of 14 percent.

      Subscribers to FiOS TV, a pivotal weapon in the battle against cable, grew by 89,000 for a year-end total of 217,000 -- a penetration rate of 9 percent among the 2.4 million homes that had access to FiOS TV.

    • If you think VZ and T are truly stuck in "non-competitionville" your stuck in an old story line. Those managers are retiring or retired. Denny Strigl knows how to compete. If your theory about "noncompetitionville" was correct you wouldn't see the acquisitions and investments coming out of T and VZ happening.

      Granted they waited many years to get in shape....but they are in shape now and they have plenty of market position, technology, brand equity and cash to compete with. Cable is not without its their message boards if you doubt it.

      To those who wonder if these boards influence stock prices...probably not. But an important lesson from politics is to never let a lie go unchallened. If the lie goes unchallenged it grows and more people start believing it.

    • Ya but are thy paying anything?
      You guys are in a dream world.
      Cable is chewing up dialup, look at the CMCSA numbers.
      200,000 digital phone adds a month, and CMCSA is just cranking it up.
      The phone co's. have never been in a competative environment. All they have ever known is gowing to the PUC for rate increases, ripping customers eyeballs out with chargers they can't understand on their monthly bills.
      You will see.

    • But all those other guys, Comcast, Charter, Cablevision, etc. are advertising on FIOS. We will take their add money toguether with the customers

    • But all those other guys, Comcast, Charter, Cablevision, etc. are advertising on FIOS. We will take their add money toguether with the customers

    • But all those other guys, Comcast, Charter, Cablevision, etc. are advertising on FIOS. We will take their add money toguether with the customers

    • One of the problems is FIOS can't be advertised on Comcast, Charter, Cablevision, etc. VZ's best weapon is their door to door selling channel (Go Craig H !!!)

    • BAD MARKETING. My brother in law has it available in his area, but he never knew until i told him. Now, he LOVES it!

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