I guess it shouldn't come as a surprise that another telecom services company reported weak first-quarter earnings. The latest telecom to underwhelm the investment community was Verizon Communications (NYSE:VZ), which reported first-quarter earnings today.
My reaction to Verizon's $0.43 earnings per share (EPS), versus the $0.88 earned last year, and its paltry 3.9% revenue growth was similar to AT&T (NYSE:T) earnings announced a few days ago. What else is new? I last followed the telecom services companies a few years ago as an equity analyst, and it seems that the companies in this industry have been frozen in time.
The story for most has remained the same. On the one hand, you have stodgy old businesses like local and long-distance services that are as dry as the desert. Then you have the newer businesses such as wireless, Internet, and foreign holdings that are witnessing close to double-digit growth.
In Verizon's case, it has seen significant growth in its long-distance operations. The main reason for this progression is that Verizon's roots are firmly planted in the local (Eastern) market, and it has only entered the coast-to-coast market in recent years.
How do Verizon and competitors AT&T, SBC Communications (NYSE:SBC), Qwest Communications (NYSE:Q), Sprint (NYSE:FON), Sprint PCS (NYSE:PCS), BellSouth (NYSE:BLS), and AT&T Wireless (NYSE:AWE) differentiate themselves from each other? The answer is more a riddle in history than a process. The fact is that you are dealing with companies that do not like change or anything it stands for. They yearn for the good old days when local was local monopoly and long-distance was something that AT&T handled.
It's no real shock that when you're an industry made of rigid companies, these companies wind up offering the same group of products. In the 1990s, they all promised an age of bundling products when the consumer would be able to pick and choose the services they required.
While pricing has been extremely competitive in the newer wireless and Internet services, I'll be a bearded lady if I can figure out my monthly local and long-distance bills. The telecom companies have made it easier to use more services with their package pricing, but I still feel like a kid in a dunce cap when I glance through the additional charges to my bill each month.
Instead of struggling with the snail-like growth of the majority of these telecom companies, I would suggest focusing on where the growth is. Wireless players might be good sources to leverage the available growth in this industry. I'd rather watch grass grow than wait for the good old wireline-based telecoms to change their ways.
Check out more views on Verizon on the Fool's Verizon Communications discussion board.
Fool contributor Phil Wohl spent over 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.
