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Verizon Communications Inc. Message Board

  • investora2z investora2z Oct 5, 2013 6:55 AM Flag

    SA articles

    There have been a couple of articles on SA regarding the future prospects of Verizon. One author has recommended to buy the stock based on safety of investment and dividend income. The author mentions that Verizon has better gross and net margins as compared to AT&T (T) though the debt is relatively higher. The difference between gross and net margins is low and hence improvement in efficiency can help it quickly improve the net margins. Another author recommends to sell Verizon due to expected increase in competition leading to reduction in margins. Threats from competitors like America Movil (AMX) and Deutsche Telekom (DTEGF.PK) can put pressure on the bottom-line, and also make it difficult for the company to maintain the revenues. These two companies are huge in their respective countries, and have begun to increase their penetration in the US market based on lower cost products. The plans, both for post and prepaid, are less restrictive. The longer period contracts being offered by Verizon may not be so popular going forward. Phones are also available without contract from other stores like Wal-Mart (WMT) which offer latest versions. In addition, the demand for used phones is also increasing, and resale value is becoming an important consideration in the minds of customers. The price conscious customers do not mind used handset of a good quality high end phone (previous version). This way they can possess phones from high end brands like Apple (AAPL) at an affordable cost., instead of going for lower rung brands. This is more preferred because two consecutive versions of phones are not always so different in technology or features. Usell (USEL), which provides a platform for buying / selling used phones, reported phenomenal growth in revenues in 2013. This indicates the increasing demand for used phones. However, Verizon can surely be expected to take more strategic steps to counter the competition.

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