Camelot One
Premium,MVM
join:2001-11-21
Sarasota, FL
clubs:
 ·VoicePulse
| reply to TK Junk Mail
Re: Capital expenditures as % of revenues is the key
The problem is that we are comparing two companies that don't compete with each other. Verizon is expanding FIOS rollouts, but their new customers are coming from Cable, not from AT&T. So AT&T really has nothing to fear from Verizon offering a better/faster/cheaper product, and their earnings are in no way effected by it.
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TK Junk Mail
Go ahead, make my day
Premium
join:2002-03-03
Margate City, NJ
clubs:
 ·Comcast
| said by Camelot One  :The problem is that we are comparing two companies that don't compete with each other. But they do compete with each other(and many others) in the stock market when looking for sources of investment money. Mutual funds, institutional investor companies, & brokerages look to invest their money in various sectors and when balancing their portfolios and looking to invest a piece in the communications sector, AT&T and Verizon are very definitely competitors.
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Camelot One
Premium,MVM
join:2001-11-21
Sarasota, FL
clubs:
·VoicePulse
| Right, but that was my point. Verizon is spending money, and thus turning a lower return, so that they can beef up their network. AT&T is sitting back doing nothing (or little to nothing) and thus showing better returns. If the two companies competed for sales, to where the money VZ was spending would eat into the customer base of AT&T, it might balance out.
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TK Junk Mail
Go ahead, make my day
Premium
join:2002-03-03
Margate City, NJ
clubs:
·Comcast
| said by Camelot One :Verizon is spending money, and thus turning a lower return, so that they can beef up their network. AT&T is sitting back doing nothing (or little to nothing) and thus showing better returns. The main thing that matters to investors is EPS. And Verizon is still beating AT&T there.
Verizon EPS - 51 to 56 cents/share depending on special items
AT&T EPS - 45 to 46 cents/share depending on special items
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morbo
Complete Your Transaction
join:2002-01-22
00000
clubs:
·Charter Pipeline
 ·AT&T Southwest
| reply to Camelot One
said by Camelot One :So AT&T really has nothing to fear from Verizon offering a better/faster/cheaper product, and their earnings are in no way effected by it. i think the AT&T and Verizon comparison is a great comparison of different strategies for running a company: short term profits vs. long term viability.
cable will eat AT&T's lunch in a few years. waiting... |
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Ahrenl
join:2004-10-26
North Andover, MA
 ·Verizon FIOS
edit:
April 30th, @01:07PM
| reply to TK Junk Mail
Another thing to consider is what will be the need of either company to raise money in the equity markets in the near to mid future. I'd say, not very great, since further acquisitions will be legislative & political minefields.
This means they only need to be able to re-finance their unsecured debt, where EPS is secondary to interest coverage and cash flow. As long as they can maintain their credit ratings/metrics then neither company will have short term worries.
Long term, AT&T will be in trouble, unless they see a game changing technology coming down the pipes (some type of wireless) that they're going to leap frog the entire wired network paradigm with. Somehow I think whitacre hasn't been interested in looking that far, seeing as how he's not going to be there. |
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cwh
join:2006-05-14
San Antonio, TX
| That all depends. Verizon made the correct technological decision without a doubt, however ATT may have very well have made the correct economical decision. IF ATT gets similar take rates for u-verse as verizon get for fios, the winner is going to be ATT by a large margin as they spent far less. |
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batterup
I Can Not Tell A Lie.
Premium
join:2003-02-06
Netcong, NJ
clubs:
·Verizon Online DSL
| said by cwh :That all depends. Verizon made the correct technological decision without a doubt, however ATT may have very well have made the correct economical decision. IF ATT gets similar take rates for u-verse as verizon get for fios, the winner is going to be ATT by a large margin as they spent far less. at&t has a similar set up as their competitors CATV. If at&t had to compete with Verizon they would be in deep doo doo. |
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Ahrenl
join:2004-10-26
North Andover, MA
·Verizon FIOS
| reply to cwh
You're still thinking in the next 1-5 years time frame. It can take 20 years to rebuild a national network. Once people are used to streaming 50 different HD streams at the same time they're not going to sign up for a copper based network.
AT&T's only hope is that Fiber becomes 2nd generation before copper becomes obsolete. Or they'll completely change their strategy with their CEO. |
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