Verizon Vibes Turn Negative

Updated from 7:15 a.m.

Verizon's (VZ Quote) costly fiber-expansion plan is once again weighing on investors' minds.

Several recent developments have fans and skeptics alike wondering if all is well with the so-called FiOS effort. Verizon shares have been in retreat since hitting a one-year high in October.

On Tuesday, FiOS supplier ADC (ADCT Quote) slashed its sales outlook, citing order delays from its telco customers. Verizon's excess inventory was fingered by one analyst as part of the problem. This echoes recent observations from Corning (GLW Quote), another Verizon fiber vendor.

The news comes as Verizon has started notifying customers that it is hiking its monthly TV rates by about 8% -- a sign, perhaps, that the company is trying harder to boost revenue as bills from a costly growth plan come due.

Probably the week's most intriguing development was Monday's unexpected departure of Verizon's FiOS cheerleader-in-chief. Larry Babbio called it quits, saying he'll retire by March.

One industry observer says the Babbio departure is a clear sign of trouble ahead.

"This is the beginning of the end for FiOS," says the Washington, D.C.-based telecom investment veteran, who has no position in Verizon.

Some observers aren't convinced that Babbio's retirement has a lot to do with the FiOS performance.

"This wasn't really shocking," said one analyst. "Babbio has been stepping back for months."