Can you hear Verizon Communications (NYSE:VZ) now? The company will report earnings July 30, but we'll call ahead to see what's up with the company.

What analysts say:

  • Buy, sell, or waffle? Verizon has 28 analysts doing the buy-sell-hold thang. A total of 10 recommend buying, 16 encourage holding, and two suggest selling. Based on more than 1,000 opinions, Verizon also holds a three-star rating in the Motley Fool CAPS community.
  • Revenues. On average, analysts predict that revenue will rise a modest 1% to $23 billion this quarter.
  • Earnings. Earnings are expected to drop 9% to $0.58 per share.

What management says:
Just like all the commercials say, Verizon continues to invest heavily in its networks, both wireless and wired (though I haven't seen anyone following me around when making calls). In terms of laying new fiber optics cables, Verizon commented last quarter that its "FiOS TV is now offered in more than 400 communities in 10 states." The rapid spread of active premises (those that have fiber available) was complemented by double-digit penetration rates for both Internet and TV service, so Verizon appears to be doing a good job at capturing subscribers to stave off cable competition from the likes of Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC).

The company also "pre-reported" some details about its progress in wireless to coincide with partner Vodafone's (NYSE:VOD) earnings preview. Verizon Wireless noted that it added a net 1.3 million new wireless subscribers in the quarter, a little shy of the iPhone-bolstered AT&T (NYSE:T) number of 1.5 million.

What management does:
As expected, Verizon's margins have continued to be constrained, as the telecom giant invests heavily in plumbing fiber optics to homes (and paying the "Verizon Guy's" salary). If management is right about the infrastructure investments though, we should see margins start to tick up in the next few quarters.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

65.2%

63.4%

62.1%

61.1%

60.3%

60.5%

Operating

18.7%

17.8%

17.4%

17.1%

17.0%

17.3%

Net

10.6%

10.0%

8.7%

8.3%

7.0%

6.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Verizon Wireless held a "conference call before the conference call" earlier this week to discuss a recent licensing agreement with chipmaker Broadcom (NASDAQ:BRCM). Verizon opted to pay Broadcom royalties -- a maximum of $200 million over the life of the agreement -- for the unfettered use of several patents at the center of litigation with Qualcomm (NASDAQ:QCOM). What this means is that Verizon is removed from the uncertainty of having its most prized, feature-rich handset offerings banned from U.S. shelves as we ramp up to the busiest buying period of the year.

If the ban on Qualcomm goes into effect and competing carriers are not under similar agreement, Verizon could be sitting in the wireless catbird seat during the holidays. It's far more likely that the problem will somehow be mitigated by then, but Verizon doesn't want to take any chances. It wants to let its wireless horse run at full gallop.

Giddy up with the Foolish 411 on telecom:

Vodafone was selected by the Motley Fool Inside Value team for its great prospects at a bargain price. To see the full list of companies, take a free 30-day trial.

Fool contributor Dave Mock can trot in place, but gets awfully winded doing so. He owns shares of Qualcomm and is the author of The Qualcomm Equation. The Fool's disclosure policy doesn't have to count by stamping a hoof.