Call up Verizon

06/13/2003 12:00 am EST


Andrew Seybold

Editor-in-Chief, Forbes/Andrew Seybold's Wireless Outlook

Andrew Seybold is an industry-leading expert in the wireless sector. Meanwhile, Roger Conrad, follows the wireless industry along with the broader utility sector, including electrics, water, and telecom. Both advisors currently recommend purchase of Verizon. Here are their outlooks.

"Of all the service providers in the US, Verizon Communications (VZ NYSE) outperforms its peers," says Andrew Seybold , editor of the Forbes/Seybold Wireless Outlook.  "The wireless division has been the key reason. Wireless represents 32% of Verizon’s $67 billion in revenue and 28% of its estimated $8 billion in net income for 2003. The company has the highest revenue, EBITDA, margins, and gross additions to its subscriber base of any national wireless network operator. It does that while maintaining the lowest cost per gross addition.

"The stock, as a result, has done relatively well, although like most service operators, it suffers from a heavy debt load. The company has $43 billion in long-term debt, accounting for about 25% of capitalization. Its p/e is 13.9 and the company has $4 billion in cash. The stock is likely to benefit from excitement over Wi-Fi (wireless fidelity). Verizon recently announced that by the end of this year, it would install wireless pay phones in New York City. The biggest picture, though, is about generating revenue from data applications. With the fastest network, the greatest breadth, and smart management, Verizon’s shares should pay off well.

Adds Roger Conrad, editor of Utility Forecaster , "Verizon will gain $625 million towards debt reduction from the sale of its stake in a Czech wireless company, jointly held with AT&T Wireless. In another piece of good news for this company, which continues to climb a wall of worry, it also settled a long-simmering labor dispute last week. Verizon and five states have gone to court to block MCI from coming out of bankruptcy. Meanwhile, Verizon continues its increasingly bloody price war against all comers, last month slashing broadband service prices well below cable modem rates. With superior resources, bundling and customer retention, it’s heavily favored to win. The company continues to find success with product bundling and remains a superb value in telecom. Verizon is a buy for the patient investor up to 38."

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