Does Verizon Deserve This Rally?

Verizon (NYSE: VZ  ) is on a roll. Two weeks after announcing it would be carrying the iPhone, the carrier this morning reported strong fourth-quarter wireless subscriber growth. Shares of Verizon are up more than 2% as of this writing.

Interestingly, it was anything but a perfect report. Verizon's $0.54 in Q4 earnings per share missed the consensus estimate by a penny. Revenue also came in light. Yet neither miss mattered as investors fixated on the wireless division's results.

Big Red reported 955,000 net wireless subscriber additions, resulting in 94.1 million total customers. Both are impressive numbers, to be sure, but Verizon is spending as if growth is just beginning. Wireless capital expenditures rose $1.3 billion to $8.4 billion last year.

"Our capital spending was higher than 2009, driven by 4G LTE deployment and increased 3G network capacity requirements, which included preparing for the launch of the iPhone," ZDNet reported Verizon Chief Financial Officer Fran Shammo as saying.

He's referring to a plan to match chief rival AT&T (NYSE: T  ) in providing iPhone customers the option of a $30 unlimited data package. Expect iAddicts to take advantage and upgrade to Verizon's LTE network as soon as iPhone 5 and iPad 2 reach market.

Both devices should ship soon. Motorola Mobility (NYSE: MMI  ) demonstrated smartphones built for LTE at this month's Consumer Electronics Show. Other 4G devices based on Google's (Nasdaq: GOOG  ) Android OS are also on the way.

Verizon, meanwhile, continues to profit from more data traversing its varied networks. Its wireline FiOS service drew in 197,000 Internet subscribers and 182,000 new TV subscribers in the fourth quarter. For the year, wired broadband and video revenue increased 18.4% to $1.8 billion.

Add it up and you've got a telecom company that, despite a quarterly miss, produced nearly $17 billion in free cash flow last year and which shows signs of connecting in most markets in which it competes.

Can Verizon's strong performance continue? Leave a comment below. You can also rate Verizon in Motley Fool CAPS.

What will be this year's top stock? We've got a good idea. The Motley Fool has created a brand new free report called "The Motley Fool's Top Stock for 2011." In it, we reveal the little company set to profit from the broadband Internet expansion. Get instant access by clicking here -- it's free.

Interested in more info on the stocks mentioned in this story? Add Verizon, AT&T, Motorola Mobility or Google to your watchlist. You can also try any of our Foolish newsletter services free for 30 days.

Both our Motley Fool Inside Value and Motley Fool Rule Breakers services have recommended subscribers purchase shares of Google. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is an epic air guitar player.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 25, 2011, at 9:39 PM, rrd2015 wrote:

    let us not forget that while verizon is out there talking big - they took $1 billion in government bailout money - this was made public when Bernie Sanders got the fed to show who got how much. As far as I am concerned until verizon pays back every penny they should not receive our loyalty

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1428732, ~/Articles/ArticleHandler.aspx, 9/18/2014 12:04:52 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement