S&P 500
7,226.20
+0.01%
Dow Jones
49,494.60
-0.62%
Nasdaq 100
27,685.40
+0.66%
Russell 2000
2,804.78
-0.02%
FTSE 100
10,364.50
0.00%
Nikkei 225
59,260.50
-0.78%

Telecom & Wireless

Analyzing Verizon (VZ) & Telco Industry

Photo of Douglas A. McIntyre
By Douglas A. McIntyre Published
Follow 24/7 Wall St. on Google
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

By Yaser Anwar, CSC of Equity Investment Ideas

  • VZ’s results were in line with The Street’s expectations. VZ earned $1.03 billion in Q4 of 06 vs $1.66 billion in Q4 2005. Verizon Wireless added 2.3 million customers vs The Street’s estimate of 2.1 million, most of them prized monthly subscribers, and VZ’s profit came short thanks to restructuring costs.
  • Quick Synopsis: Wireline revenues were in line with weaker consumer offset by strong business trends. FiOS video was also strong while data was a bit softer than expected. However, The Street continues to believe demand remains robust for the new service.
  • VZ’s business segment fundamentals will continue to gradually improve in 07 thanks to improving pricing trends (in enterprise and consumer revenues) and realized merger synergies. VZ seems to be progressing well with its growth strategy and expect a stronger focus on cost cutting going forward.
  • Competition in the industry has intensified thanks to the entry of cable companies in the Telephone Services sector. Declining service prices coupled with the introduction of new and sophisticated technologies to improve the overall service quality are enabling the wireless companies to rapidly add new customers.
  • Hence, wireline companies are losing ground to wireless as well as cable companies. Furthermore, VoIP has resulted in lower rates of telephonic services is leading to loss of subscribers for the wireline companies. According to the IDC, the VoIP subscriber base is expected to reach 27.0 million by 2010 from 4.2 million in 2005.
    Looking to Network with People in the Financial Industry
    | Connect with me on Linked In or email me yaser AT yaseranwar.com |
  • Wireline margins were 28% for Q4, higher than expected. The strength appears due to a $100 million sequential step-down in SG&A. In contrast to last Q, wireline margins were better than expected, which leaves room for optimism in 2007. Total wireline revenues were $12.7 billion.
  • FiOS Internet subscribers increased to 687K in Q4 vs 522K in Q3. FiOS TV subscribers grew to 207K vs 118K and homes open for sale doubled to 2.4 million from Q3. Management expects FiOS dilution to peak in 1Q07 at $0.11, and then gradually decline, for a total negative impact on 2007 EPS in the $0.30 range.
  • Strength continues in the wireless industry, as the national carriers added 6.3 million net additions vs 5 million estimate. Q4 net additions were down 12% YoY better than the 15% decline in Q3.
  • VZ’s Wireless division reported strong growth with total revenue of $10.10 billion vs Street’s estimate of $9.9 billion. Service revenue came in at $8.68 billion, higher than expected, and OIBDA of $3.75 billion came inline with expectations. These results can be credited to higher customer growth in the quarter, particularly strong data revenue growth of 87.6% in the quarter.
  • Total enterprise revenues came in positive territory (up 2.5% YoY vs -1.5% last year), thanks to growth in managed network data and IP-based services, which outpaced continued pressures in traditional voice and circuit-switched volumes. Strategic data revenues grew 7.5% sequentially to $1.1 billion on growing demand for Internet, Ethernet and ring services.
  • According to the Telecommunication Industry Association (TIA), the industry’s revenues are expected to grow at a CAGR of 9.5% by 2008, reaching $1.10 trillion. The industry is mainly divided into two segments. Broadband subscribers totaled 41.2 million in 2005 and are expected to grow at a CAGR of 13.9% to 69.2 million by 2009.
  • The Diversified Telecommunications Services sector generates total revenues of about $697.00 billion, the Wireless Communication Services sector brings in revenues worth $153.50 billion. The industry is witnessing fastest growth in the broadband market due to the falling prices of services and improvement in infrastructure.

    • http://www.equityinvestmentideas.blogspot.com/

    Photo of Douglas A. McIntyre
    About the Author Douglas A. McIntyre →

    Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

    McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

    His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

    A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

    TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

    McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

    Continue Reading

    Douglas A. McIntyre |

    Analyzing AT&T (T) & Telcos

    By Yaser Anwar, CSC of Equity Investment Ideas On Dec. 28th, T agreed to offer additional concessions in a letter…
    4 Telecom Giants Are Goldman Sachs October High-Yield Dividend Picks
    Lee Jackson |

    4 Telecom Giants Are Goldman Sachs October High-Yield Dividend Picks

    These Buy-rated stocks in a Goldman Sachs research report make sense for investors concerned about the potential for a significant…
    Douglas A. McIntyre |

    Sunset For Ma Bell

    AT&T (T) appropriately makes the point that its earnings now are driven by its cellular business and its new fiber…
    Trump Regulation Rollback Could Be Huge for 4 Telecom and Cable Giants
    Lee Jackson |

    Trump Regulation Rollback Could Be Huge for 4 Telecom and Cable Giants

    All four of these companies are expected to benefit from the changes in Title 2 of the Communication Act and…
    Douglas A. McIntyre |

    The 24/7 Wall St. Interview With Ivan Seidenberg, CEO Of Verizon

    24/7 Wall St. interviewed Ivan G. Seidenberg, the Chairman and CEO of Verizon (VZ), recently. The conversation covered Verizon’s major plans,…
    Paul Ausick |

    AT&T Adds More Wireless, Broadband Subscribers

    Wikimedia CommonsTelecommunications giant AT&T Inc. (NYSE: T) said last night that it expects to add 500,000 new postpaid wireless subscribers…
    Douglas A. McIntyre |

    AT&T (T): The Consumer Can Still Afford A Phone

    AT&T (T) posted strong results. The company thanked Apple (AAPL) because the iPhone helped drive the telecom company’s wireless results.…
    4 Stocks to Watch From a Challenging Cable Television Industry
    247patrick |

    4 Stocks to Watch From a Challenging Cable Television Industry

    Here are a few cable television stocks that you may want to consider for your portfolio.
    4 Strong Buy High-Yield Blue-Chip Dividend Stocks That Crushed Q2 Earnings
    Lee Jackson |

    4 Strong Buy High-Yield Blue-Chip Dividend Stocks That Crushed Q2 Earnings

    This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through…

    Top Gaining Stocks

    Cboe Global Markets
    CBOE • Vol: 1,568,143
    New Pluto Global
    PSKY • Vol: 12,285,993
    Seagate Technology
    STX • Vol: 7,378,346
    Oracle
    ORCL • Vol: 26,317,675
    Datadog
    DDOG • Vol: 6,247,779

    Top Losing Stocks

    LKQ
    LKQ • Vol: 4,367,433
    Clorox
    CLX • Vol: 13,260,523
    Stryker
    SYK • Vol: 4,519,455
    Mohawk Industries
    MHK • Vol: 1,859,865
    Amgen
    AMGN • Vol: 3,818,618