Top telecommunications provider Verizon Communications (NYSE: VZ) will start your week off by announcing first-quarter earnings Monday before the bell. Will it be a good week? Let's see.
What analysts say:
- Buy, sell, or waffle? Out of 27 analysts following Verizon, 11 have buy ratings, while 16 suggest holding. In the Motley Fool CAPS community, 2,123 investors rating the company give it a collective four-star rating (out of five possible).
- Revenue. On average, analysts expect revenue of $23.86 billion this quarter, up 6% from last year.
- Earnings. The average analyst sees earnings of $0.62 per share.
What management says:
Coming off a strong 2007, Verizon CEO Ivan Seidenberg looked ahead, envisioning "significant opportunities to grow revenues and expand our leadership in wireless and broadband markets, while reducing operating expenses." The company then jumped out of the 2008 gate early with its launch of new unlimited wireless plans that were quickly matched by industry peers AT&T (NYSE: T) and Sprint Nextel (NYSE: S).
Verizon also put big money where its mouth was by plopping down $9.6 billion in the recent 700MHz spectrum auctions. And by taking the C-Block of licenses, Verizon relieved Google (Nasdaq: GOOG) from having to manage a network itself at the same time Verizon committed to offer open access services on the block.
What management does:
Now that Verizon has spent billions rolling out its FiOS network over several quarters, the broadband services and other bundles are being realized from these capital investments as seen in the recent rise of operating margins.
|
9/06 |
12/06 |
3/07 |
6/07 |
9/07 |
12/07 | |
|---|---|---|---|---|---|---|
|
Gross |
60.5% |
60% |
60.5% |
60.5% |
60.4% |
59.9% |
|
Operating |
15.6% |
16.1% |
16.5% |
16.8% |
17.2% |
17.7% |
|
Net |
8.4% |
7% |
6.8% |
6.7% |
5.9% |
5.9% |
One Fool says:
Verizon's wireless group is starting to show itself as a harbinger of change in the space. By pushing ahead with reforming its wireless service plans and embracing -- after previously shunning -- open-network policies, the company is showing that it will do what it takes to be a leader. This even includes paying royalties -- something carriers traditionally leave to device manufacturers like Nokia (NYSE: NOK) and Motorola (NYSE: MOT) -- to use Broadcom's patents and keep products using Qualcomm's (Nasdaq: QCOM) technology on its shelves.
Verizon is also making great headway with its fiber optics-based FiOS services and already talks glowingly about investing heavily in its next generation of wireless services. Based upon the margin expansion seen already, it looks like these investments are worth it and an even bigger payoff should be realized in the next decade.
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