Bill Comes Due at Verizon

The two-pronged expansion is costly, and analysts and investors say they are concerned that Verizon's spending increases have been rapidly outpacing sales growth. Revenue for 2005 is expected to grow about 3.5% over last year. Meanwhile, with the new budget forecast, capital spending will grow by 15% over 2004.

Verizon is in a delicate spot and investors aren't exactly in the mood to be patient.

"In our view, the increased investment is clearly a smart long-term strategy," writes CIBC analyst Tim Horan in a research note. But, says Horan, who gives Verizon a neutral rating, "over the next 12 months the declining free cash flow coupled with accelerating line losses will keep a cap on Verizon's stock price."

Some investors say they can't afford to wait it out.

"I think the stock is cheap," says one hedge fund manager, "but I had to sell at $32."

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