Tags: Verizon | thrives | wireless | strength

Verizon Gains On Wireless Strength

By    |   Wednesday, 05 Oct 2011 04:55 PM

Verizon (VZ), the country’s second-largest phone company, is thriving, largely thanks to its wireless division, the country’s largest. Many experts believe Verizon Wireless provides superior service over its competitors. Customers apparently agree. Verizon Wireless added 2.2 million customers in the second quarter, doubling the total of No. 2 wireless provider AT&T (T).

Verizon also began selling Apple’s iPhone this year, ending AT&T’s exclusivity. In the second quarter, Verizon activated 2.3 million iPhones. Comparatively, AT&T had 3.6 million activations.

Many consumers are dropping their traditional landline phones, so Verizon is competing against cable companies on phone service. It’s also competing against cable to provide TV and Internet service. The business performance of Verizon’s new fiber optic network FiOS, however, has been lackluster so far.

Verizon’s fixed-line service for businesses has shifted to data and Internet services and away from ordinary phone service. The increasing demand from businesses to manipulate data in multiple locations should help Verizon’s business in this area.

The company’s stock has an attractive dividend, trading at a recent yield of 5.6 percent. Verizon’s profit soared more than six times to $3.6 billion in the second quarter from a year earlier. Revenue rose 2.8 percent to $27.5 billion.

Continuing gains

Standard & Poor’s analyst Todd Rosenbluth has a hold rating on Verizon shares. “With its strong operating margin and perception of network quality, the company's wireless segment should be a driver for VZ in 2011 and 2012, even as we see higher subsidies for smartphones launched on 3G and 4G networks,” he writes.

“Meanwhile, we expect the global enterprise segment to lag a broader market recovery. However, we are encouraged by the relative stability in VZ's wire-line segment over the last six months, helped by FiOS gains and by the company's dividend. We believe wireless industry consolidation should help VZ defend and possibly grow its market share.”

The company next reports around Oct. 21.

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Verizon (VZ), the country s second-largest phone company, is thriving, largely thanks to its wireless division, the country s largest. Many experts believe Verizon Wireless provides superior service over its competitors. Customers apparently agree. Verizon Wireless added...
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