Line Losses Vex Verizon
Verizon's (VZ) growth grab stung shareholders Monday.
Shares of the New York phone giant dipped 4% as investors grew concerned about the quickening pace of erosion at its core business, along with the higher costs of its fiber-optic-network expansion effort.
Verizon posted solid overall numbers for the third quarter. That was mostly thanks to the wireless unit, which captured strong subscriber growth and wider-than-expected margins.
But the glitter in wireless wasn't enough to overcome the latest round of dull results for the company's wireline business.For the third quarter, Verizon's total-access line count fell 7.5% from year-ago levels -- exceeding the industry's 6% shrinkage rate. Perhaps even more alarming was the 9.8% year-over-year decline in residential lines. "If you lose 9% of your lines a year, life isn't much fun," says one investor who was selling Verizon. "Free cash flow is intrinsically tied to the number of lines you have," says the money manager. "If you are losing lines, and this trend continues, you have a problem." The increased line loss has a lot to do with competition from wireless telcos and cable companies, such as Comcast (CMCSA) that have had success combining phone service with a bundle of Internet and video offerings. On a conference call with analysts, Verizon said some of the line loss also came from its own customers, who are taking the broadband service and canceling second lines.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV