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I preface this discussion with the admission that I'm stuck in the 50's or 60's technologically. Only the insistance of my wife got me acquainted with a computer and Divine Intervention somehow led me to Mr.Market's site.
Not owning a cell phone and not even knowing how to operate one unless the wife or kids push the correct buttons , hand me the phone and say "speak", I'm completely unbiased as to what company is best. I hear talk of dead zones and only 1 bar but that's the extent of my knowledge.
Then, all this talk of Verizon and the i-Phone showed up. My son several months ago said "Verizon is going to offer the i-Phone. That will be Huge". Jim Cramer and several other stock talkers have VZ on their favorite list for 2011.
Let's look at Verizon. They currently have about 93 million U.S. wireless customers a virtual dead heat with AT&T. Fundamentally they trail AT&T with last 12 month sales at -3% and forecast earnings -5% (i-Phone not figured in). AT&T sales being 3% and earnings at 14%. They both pay hefty dividends over 5%.
Verizon by most accounts will start offering the i-Phone later this month. Anticipated gains don't seem to be priced in as the stock price was in a range between 31.36 on 12/14/09 and 31.47 on 9/16/10. Since it has increased 14.1% to 35.78 not out of line with the general market.
Let's look at the arguments for and against Verizon.
Pros: AT&T, VZ's chief competitor ranks last by far in customer satisfaction and will lose 2.3 million customers in the first month as VZ offers the i-Phone 4. This will grow to 6 million new accounts in the coming months.
Verizon is known for superior coverage and and cell reception. Jeff Nelson VZ director of corporate communication says "Our network is built for reliability, it's in our DNA". VZ has learned from AT&T's mistakes and can handle the great increases in data capacity.
Also AT&T recently dropped their flat fee plan for unlimited data usage while VZ maintains theirs.
Sprint and T-Mobile may be more at risk of losing customers as many of their account holders refused switching to AT&T but have been waiting for Verizon to offer the i-Phone.
Verizon is expected to form a strong partnersip with AAPL by selling other products such as the i-Pod in their stores.
Cons: Forrester Research says that initial problems the switch is sure to encounter make it not worth the trouble to change carriers. With AT&T switching to the improved 5th generation i-Phone probably in June, why would VZ customers sign long term contracts for phones that will be outdated in 5 months?
AT&T also will have the option of offering cheaper Google Android headsets that have been well received by current users.
VZ's contracts historically have been more expensive than AT&T's. Especially in this economy people will put up with some inconvenience to save a buck.
AT&T will be pressured to improve their customer relations as they realize a serious threat that can no longer be ignored.
AT&T has learned from their failures and doesn't believe that Verizon can handle the increased data capacity and traffic millions of instant new customers will entail.
With 45% of VZ's wireless segment of the company owned by Vodaphone, VZ won't have enough free cash to continue their generous dividend.
It might all come down to a battle between Apple's i-Phone and Google's Android.
Who do you favor?
---------billy
Not owning a cell phone and not even knowing how to operate one unless the wife or kids push the correct buttons , hand me the phone and say "speak", I'm completely unbiased as to what company is best. I hear talk of dead zones and only 1 bar but that's the extent of my knowledge.
Then, all this talk of Verizon and the i-Phone showed up. My son several months ago said "Verizon is going to offer the i-Phone. That will be Huge". Jim Cramer and several other stock talkers have VZ on their favorite list for 2011.
Let's look at Verizon. They currently have about 93 million U.S. wireless customers a virtual dead heat with AT&T. Fundamentally they trail AT&T with last 12 month sales at -3% and forecast earnings -5% (i-Phone not figured in). AT&T sales being 3% and earnings at 14%. They both pay hefty dividends over 5%.
Verizon by most accounts will start offering the i-Phone later this month. Anticipated gains don't seem to be priced in as the stock price was in a range between 31.36 on 12/14/09 and 31.47 on 9/16/10. Since it has increased 14.1% to 35.78 not out of line with the general market.
Let's look at the arguments for and against Verizon.
Pros: AT&T, VZ's chief competitor ranks last by far in customer satisfaction and will lose 2.3 million customers in the first month as VZ offers the i-Phone 4. This will grow to 6 million new accounts in the coming months.
Verizon is known for superior coverage and and cell reception. Jeff Nelson VZ director of corporate communication says "Our network is built for reliability, it's in our DNA". VZ has learned from AT&T's mistakes and can handle the great increases in data capacity.
Also AT&T recently dropped their flat fee plan for unlimited data usage while VZ maintains theirs.
Sprint and T-Mobile may be more at risk of losing customers as many of their account holders refused switching to AT&T but have been waiting for Verizon to offer the i-Phone.
Verizon is expected to form a strong partnersip with AAPL by selling other products such as the i-Pod in their stores.
Cons: Forrester Research says that initial problems the switch is sure to encounter make it not worth the trouble to change carriers. With AT&T switching to the improved 5th generation i-Phone probably in June, why would VZ customers sign long term contracts for phones that will be outdated in 5 months?
AT&T also will have the option of offering cheaper Google Android headsets that have been well received by current users.
VZ's contracts historically have been more expensive than AT&T's. Especially in this economy people will put up with some inconvenience to save a buck.
AT&T will be pressured to improve their customer relations as they realize a serious threat that can no longer be ignored.
AT&T has learned from their failures and doesn't believe that Verizon can handle the increased data capacity and traffic millions of instant new customers will entail.
With 45% of VZ's wireless segment of the company owned by Vodaphone, VZ won't have enough free cash to continue their generous dividend.
It might all come down to a battle between Apple's i-Phone and Google's Android.
Who do you favor?
---------billy
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