Will These Large Caps Go Bankrupt?

• Report this Comment On February 03, 2009, at 4:27 PM, Seano67 wrote:

  Interesting article. I've got to say I'm shocked to see Verizon on that list.

• Report this Comment On February 03, 2009, at 5:14 PM, TMFinept wrote:

  You shouldn't be surprised to see companies like Sprint and Verizon on this list, or any utilities really, because the Z-score heavily factors total assets as a divisor. Utilities have substantial asset bases. Manufacturers and non-manufacturing industrial companies have larger coefficients for each score-determining factor but I doubt a telecom would be classified as such so it is perhaps unfairly discriminated against because of its substantial asset base.

• Report this Comment On February 03, 2009, at 6:22 PM, FoolTRW wrote:

  After seeing Verizon on the list it definitely indicates there is a flaw in the Z-score.

• Report this Comment On February 03, 2009, at 6:23 PM, Midas5280 wrote:

  I'm surprised El Paso Gas (EP) is not on the list with the huge debt they have and articles discussing potential bankruptcy. I got out of this stock toutsuite with first hint of forthcoming bad news.

• Report this Comment On February 03, 2009, at 6:32 PM, demarvin wrote:

  It is very unfortunate that the actions of our elected leaders have positioned numerous firms such that the only viable option is liquidation. It will take such a drastic action as liquidation of thousands of jobs to convince enough people that we cannot continue to live a life of continuous credit,this certainly applies to government spending.Are we so stupid to not realize that the devaluation of the dollar is in process and that sooner, not later something called inflation will happen. Remember,wages will never keep up with inflation and when taxes are figured in we will have leveled the playing field as our current elected president promised,we will all be poor.

• Report this Comment On February 03, 2009, at 6:36 PM, Seano67 wrote:

  If they ever got into any real trouble, Verizon could always chop that beautiful dividend. That would be a tough measure to take as it would no doubt harm the share price in the short-term, but if that's what's in the best interests of the company (and its shareholders) over the long haul, then that's what you have to do and most investors would come to accept that.

• Report this Comment On February 03, 2009, at 6:37 PM, wahoo1953 wrote:

  What, Verizon going bankrupt, Alex needs help. This power house telecom is destined to have a great future.

• Report this Comment On February 03, 2009, at 7:21 PM, lkhrt wrote:

  Sprint carries 22.2 billion of debt. VZ shows 51.95 billion of debt. Does anyone know if that number includes the 22 billion of debt that they assumed when they bougth Alltel? I hope so, if not the number is closer to 74 billion. Ironically that number is closer to AT&T's wopping 76.77 billion of debt.

  The question that I have is how do three telco's rack up 161-183 billion of debt? What do they think they are, automakers?

• Report this Comment On February 03, 2009, at 8:13 PM, minnjim1 wrote:

  That z-score is very interesting. Is there any place one the web where you can look up a company's z-score? I didn't see it on the Fool's CAPS ratios page, and I don't see it on Yahoo Finance. (Yes, there are formulas on the web, even some calculators, but isn't there some place that shows the company's current z-score?)

• Report this Comment On February 03, 2009, at 8:40 PM, Rasbold wrote:

  I think Ford is going to pull through. Yes, they took the rest of their money today and yes, their sales sucked. All things considered Ford sales sucked the least, however, of all American Auto. Besides, nothing says America like the Blue Oval, and I really don't think we'll let it go down.

  I hope. I got quite a bit riding on it.

  What Would Warren Do?

  www.whatwouldwarrendo.com

• Report this Comment On February 03, 2009, at 9:06 PM, johnmerch wrote:

  telecoms used landline as cash cow to build wireless. Now landline is liability because of legacy issues?

• Report this Comment On February 03, 2009, at 9:08 PM, TMFMarathonMan wrote:

  wahoo1953 --

  Thanks for your comment. Note that nowhere did I state that Verizon was going bankrupt.

• Report this Comment On February 04, 2009, at 2:01 AM, glfor wrote:

  Great article and right on the mark. I use Z scores of the companies I represent as a selling tool in this market. Solid companies want solid vendors.

  As a side note, the AMD rating is not surprising. And, it strengthens the MFPro read on Intel as they have a significant lead and wide moat.

• Report this Comment On February 04, 2009, at 11:38 AM, Shar54 wrote:

  The Z score sounds like a load of bunk to me. Ford and GM make sense because they are not well run and no-one is buying cars. Verizon being on this list is absolutely ludicrous. No-one is giving up their cell phones, not even my sister who lost her house or my son who is out of a job. It's become a necessity of life and Verizon is the number one carrier. Verizon is also poised to take advantage of new technology that increases web access speed for cell phones. PLEAAASSSE, Z score indeed. Listen to this at your peril. I will keep my verizon stock and laugh all the way to the bank.

• Report this Comment On February 04, 2009, at 4:38 PM, motleyanimal wrote:

  I can't find a ready made list of low Z-score rated stocks, but there are numerous calculators online that will make the process easy to determine scores on any company, so long as you have current information. Try this one:

  http://www.cellspark.com/zscore.html

• Report this Comment On February 04, 2009, at 4:55 PM, Seano67 wrote:

  "Listen to this at your peril. I will keep my verizon stock and laugh all the way to the bank."

  Well, to be accurate and fair, the author *never* advocated Verizon shareholders selling their stock, nor did he intimate that bankruptcy is imminent or even a very realistic threat. All he did was point out that within this one metric of a 'Z-score', Verizon *could* be considered at least somewhat at risk for problems due to their overwhelming amounts of corporate debt, and that obviously companies leveraged to the gills and up to their eyeballs in debt right now are in a much more precarious position than they would have been just a year or two ago, back when credit was still flowing freely as water.

  I found the article very interesting, and had absolutely no idea Verizon was operating under that burdensome a debt-load. And as a Verizon shareholder, IMO the author did you a service by pointing these things out. This gives you another tool to evaluate your investment, and it's a heads-up that you'd probably be well-served to monitor that debt situation pretty carefully.

• Report this Comment On February 04, 2009, at 8:17 PM, TMFMarathonMan wrote:

  Sean067 --

  Thanks for your comment -- you have aptly summed up the spirit in which the article was written. I could not give a better description of what I had hoped readers would take away from the article. I hope that readers that are prone to panic will read what you have written as a follow-up to the article.

  Thanks again!

• Report this Comment On February 05, 2009, at 3:22 AM, fastman01 wrote:

  Can't we all just get along? Look, I am a physical golden boy for at least a decade now (don't eveybody yell at me at the same time..) simply due to the fact that I ain't very bright in picking stocks.

  Back in the late '90's I was into a couple of IRA's that were "moderate risk" deals, and all invested in mutual funds.

  Sweet it was to see my "un realized" gains go up, and up...and then, well and then a train started coming.

  Gains were less and less (realized/un realized), whatever) and I knew I didn't have a clue as to what was going on.

  Broker said that I shouldn't worry, it was a minor correction, and stuff like that.

  I'm not smart, and I'm not rich, BUT, when I start losing money, I pay attention.

  In 2000 I dumped both IRA's, took all the hits, and swore I'd never ever get involved in the smoke & mirrors, Wall Street, shell game.

  I took my proceeds, added another US$50k, and bought physical gold.

  Within no time, not only had I recovered ALL my losses & penalties, but I also had made a profit.

  I was hooked. Since then that's all I have done is buy physical gold, palladium, and silver.

  In 2007 I dumped the palladium, tossed in another US$84k, and bought more gold.

  A few weeks ago I had some spare $'s, and decided to try and learn about the stock market.

  I'm not smart, and I'm not rich, but by god I DO have an ego, and the fact that all the smart, rich guys, knew something I didn't, really pissed me off.

  I bought a few this & thats, made a buck, on some, and lost a buck on others.

  Along the way I subscribed to several newsletters, touter's blogs, and the rest of it

  I paid for some of them, and opted out of others rather than pay them for their BS.

  .

  I am learning, bit by bit, what's real, and what's not.

  I'm 61, self employed, and have no family.

  I can spend 24/7 reading obscure information about all sorts of stuff if it is necessary.

  I paid a hefty fee to join the MF Pro service, and so far haven't taken any of its advice.

  BUT, no matter the source, IF I learn that company XYZ is not looking all that healthy, I pay attention.

  I can google with the best of them.

  So the MF author said something about Verizon stock..and some people got hasty with their replies.

  I don't own Verizon, so it's all just another chance for me to learn.

  If some people disagree with what the author wrote, fine, it's no skin off of my knuckles.

  It's facts, one way or the other, that I care about.

  Even then, I wouldn't buy Verizon because it's too expensive for my tastes.

  I'm into cheap stocks. Get in, get out, and move on, or hold on for a while.

  BAC, GE, CDE. SIRI, and like that.

  I'm 99% invested in physical gold & silver, and I am not concerned about my few stocks.

  I'm positioning myself in reality, not panic & hype.

  Heck, I don't care abouth the fact that my 2k shares of SIRI have gone from over US$5.60 in 2006.

  SIRI I purchased in 01/2006, and in 12/08, I sold 1k shares for something like US$0.11.

  My CPA can take US$3,000 this year, and the other US$3,000, actual loss, off of my tax returns

  How sweet is that? NOT SWEET AT ALL, dammit!

  So, now that I have stated my bonafid e's...not smart, not rich, 61, self employed, etceteras, you all know me.

  I'm thinking about buying a few shares in GILD, ABT, CAT, TSI, as well as a few other reality based companies.

  I'm looking into my myopic crystal ball, and am getting into the alternative energy, and bio tech, gold mining, and infrastructure rebuilding sectors.

  I should start my own advisory service, allah, L. Ron Hubbard, but the FOOL would then say mean things about me, and I don't want that to happen.

  Heck, if they booted me, then where would I get to learn more about the Stock Market?

  So calm down, the lot of you, and don't take things too personally.

  Life is a dance, once you learn the steps.

  Exciting times are afoot.

  --=Fastman01=--

• Report this Comment On February 10, 2009, at 6:55 PM, rgperrin wrote:

  Dear Fastman:

  One of the first rules of investing is diversification, not becoming another Goldfinger.

  Over the centuries, the trend in the price of hard metals such as gold as silver is up. In the short term, anything can happen. At 61, you are living in and for the short term. Gold pays no interest, and just holding it involves costs and risks.

  But good luck!

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