Apr 27 2009
A Power Play: Verizon Communications
The wireless industry is on the move. Bigger wireless companies are gobbling up smaller wireless companies as fast as they can afford them. The transition is not always easier for the customer in the short term, but generally provides a greater market share for the larger wireless company.
A good example of this is the smaller company, Unicel, which just recently was bought out by Verizon. Consider that this small wireless company was started out of the back of the car of a gentleman who just felt that he could own his own wireless company. Now he has sold out and his customers are part of the largest wireless network in the nation.
Verizon’s numbers look good. Like most companies, the recent market drop put their stock at rock bottom prices. In the past couple of weeks, however, it has been heading upward and is now trading at $31.00. It’s profits have grown substantially in the past ten years. It has a wonderful P/E of 13, and insiders are buying like crazy.
Why all of the promise? Two words: mobile connectivity . This powerful change in communications will change the world of telephone and internet as we know it, and the result will be very profitable for investors. Basically, it allows you to connect your laptop or computer from anywhere in the world via the wireless communication network. People in cities, who have the best connection, can drop their land lines and go strictly wireless with the same kind of results as if they were on a hard line connection.
The result has been devastating to local providers. A salesman at a Best Buy in Fargo, ND said that while he was selling these subscriptions at a rate of 4-6 in the past year, he now sells them at rate of 40-60 a year. Altel, Sprint, Verizon and other wireless networks offer these, and the result for the local phone companies will be devastating. Unless local telephone companies offer wireless as their network, this mobile connectivity will leave them in the dirt. It is critical as an investor that you pull any money you might have invested in local telephone companies NOW.
Verizon stands to make their profits skyrocket, which is why this is the time to get on board. Sprint and others are not the giant of the industry, and some of them are simply in the red financially. Verizon’s books are good and they haven’t gotten to where they are now without some sensible leadership. All in all, VZ is the future of the wireless network.
