UNIVERSITY OF OREGON
INVESTMENT GROUP

April 29, 2011
Technology

Verizon Communications Inc.
RECOMMENDATION: HOLD
Stock Data
Price (52 weeks)
Symbol/Exchange
Beta
Shares Outstanding
Average daily volume
(3 month average)
Current market cap
Current Price
Dividend
Dividend Yield
Valuation (per share)
DCF Analysis
Comparables Analysis
Target Price
Current Price

$25.99 – $38.95
VZ / NYSE
.68
2,833 M
$16.5 M
$104,792.7 M
$36.99
$1.95
5.27%

$49.65 (70%)
$60.93 (30%)
$47.19
$36.99

Summary Financials
Revenue
Net Income

(2010)
$106,600 M
$3,730 M

BUSINESS OVERVIEW
Verizon Communications (VZ), formerly known as Bell Atlantic Corporation is a global provider of various telecommunications, internet and media entertainment services. They were incorporated in 1983 from a subsidiary that resulted from the breakup of the parent telecommunications company AT&T. They began doing business as
Verizon Communications after merging with CTE Corporation on June 30, 2000. Through strategic mergers and
Covering Analyst: Armando Perez
Email: armando@uoregon.edu

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Member students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be.
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Verizon Communications Inc.

university of oregon investment group http://uoig.uoregon.edu acquisitions which were complemented by organic growth, VZ has become one of the largest players in the domestic wireless and broadband industry.
Verizon seeks to improve the way people collaborate by integrating the most advanced technology into their networks and offering the latest in communication devices. Even in the recent distressed environment, VZ’s business model has allowed them to remain profitable and continue to grow revenue. VZ operates in various industries and has a diverse customer base with no single customer making up a material percent of their sales.
Verizon divides its services by network infrastructure resulting in two segments: wireless and wired. These segments are further divided into sub-segments that include related services.
Wireless Segment
$63.4 Billion in Revenue, 60% of Total 2010 Revenue
The majority of VZ wireless revenues are realized through its subsidiary Cellco Partnership which does business as
Verizon Wireless. Verizon Communications owns 55% of this subsidiary while Vodafone owns the remaining 45%.
Currently, Cellco is one of the largest providers of wireless communications in terms of customers and revenues in the U. S. and is the largest 3G provider. Cellco ended 2010 with over 94.1 million customers, a 5.5% increase from
89.2 million in 2009.
Products and Services:
Cellco offers an array of wireless products and services to accommodate customer type and specific needs.
Voice Services:
Wireless voice services are used with devices that are capable of receiving and sending voice airwaves. VZ offers a selection of voice service plans that are categorized by customer type and differ in terms of available minutes outside of the network. The plans require a two year agreement and can be packaged with wireless data services by adding additional charges. Customers can use the network to make calls beyond their minute allowance but are subject to additional charges.
VZ does their best to provide customers with the ability to make changes to their plans without being penalized. A few benefits include providing customers with the option to change their service plan at any time to any qualifying plan without paying switching fees and placing an early termination fee that decreases after each month that a customer remains on their contract.
Subcategories in voice plans are as follows:


Individual Plans: