Article: Verizon’s Spin-off Offensive

Author: Spencer Ante

URL Address: http://www.businessweek.com/technology/content/jan2007/tc20070116_170265.htm?chan=search

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Synopsis: The Verizon Company has engaged in a merger that includes Charlotte-based FairPoint Communications. The New York telecommunications giant proposed a deal that will result to spin-off operations in a number of New England states. Verizon is omitting services of 1.5 million access lines in major rural areas such as Vermont, Maine, and New Hampshire. Trading it for FairPoint’s $1 billion stock, which includes a 60% stake in the newly-formed firm. One of the significant repercussions from Verizon’s move is it relieves itself from the $1.7 billion debt in tow, an issued debt that will be automatically assumed by the new firm. Researchers are not surprised with mergers from Verizon since the firm is adamant on emphasizing and choosing its consumer base. Unlike AT;T, Verizon is applying a “Jenny Craig” approach, which is reducing and slimming down in order to sustain its operations.  Mergers like this is not new for the telecommunications firm, considering that Verizon is a result of the GTE and Bell Atlantic merger in 2000 (Ante, 2007).

Analysis: Investors are always anticipating increased shares on their companies. This is why AT;T is favored instead of Verizon. It should be noted that AT ;T’s stock has catapulted with a 31% edge over a close 24% increased shared of Verizon. Investors are optimistic that AT&T is capable of generating revenues and increase its profit margins through its merger-driven cost savings. On the other hand, things look a bit uncertain due to the fact that it has yet to prove a return of investment from its fiber-to-the-home investment. Industry pundits anticipate Verizon to earn $6.6 billion on $90 billion in revenues, compared with $10 billion of net income on $110 billion in sales for AT&T. It should be noted that Verizon has relieved itself with debt amounting to $17 billion in the last five years in order to increase profit margins. AT&T is more adamant in generating its returns within a year, which is why I suggest that investors should buy stocks at AT&T instead of Verizon. Judging from the figures above, it’s a no-brainer which firm will investors buy stocks from.

Article: Sierra Wireless’ Uphill Climb

Author: Alan Hughes

URL Address: http://www.businessweek.com/investor/content/jul2001/pi2001079_182.htm?chan=search

Date: July 9, 2001

Synopsis: “Wireless telecom company Sierra Wireless has prompted analysts to downgrade ratings on its stock. Sierra’s shares shed $5.40, or 28%, closing at $14. Obviously, Sierra was one of the casualties that the 2001 economic letdown has not spared. The purveyor of PC cards, modems, and software is anticipating an $18 million to $20 million second quarter revenue after a previously forecast $24 million. The firm expects to declare a report for a second quarter loss between $11.8 million and $12.5 million, which is one of the repercussions of a one-time charge for excess invetory amounting to $8 million. Revenues are expected to come in at $21 million, with net earnings of $100,000 in tow” (Hughes, 2007).

Analysis: Most end-user clients are in the enterprise or government space, and its seeing some review their capital-spending plans and their operating-spending plans in light of the overall economy. this results to further delays in purchasing prerogatives, as well as shortening the order lead time. It should be made known that 90% of all Sierra’s sales are made through indirect distribution channels. Furthermore, a number of indirect distribution channels carry Sierra’s products, and due to erratic economic situations distributors tend to reduce inventories causing distributors not to order from Sierra Media Reviews-Wireless communication right away. It is a fact that distributors are adjusting inventories in order to make to with what they have in tow. Companies are affected including the entirety of the distribution supply chain. Sierra has declared that it has rigid transaction with its inventories, their distribution channels, and suppliers causing consumers to return the favor. As inventories are place in a rigid situation, I suggest that investors should take a keener look whether to acquire shares from Sierra Wireless before proceeding in purchasing stocks. As Sierra copes with the economic letdown, it is not advisable to purchase stocks from the said company. Forecasting alone doesn’t bring a lot to an investor table. However, Sierra Wireless is anticipating that it would bounce back in a couple of years as it reduces its operating expenses in order to generate revenues and increase profit margins.

Article: AT;T Wireless: Ma Bell’s Other Gem

Author: Olga Kharif

URL Address: http://www.businessweek.com/bwdaily/dnflash/jul2001/nf20010724_900.htm?chan=search

Date: July 24, 2001

Synopsis: “Comcast declared a $ 40 billion bid to buy AT&T Broadband. Industry pundits are speculating that it is the linchpin for the apparent bidding war for Mike Armstrong’s cable television assets and shareholders. Analysts are expecting stocks of AT;T Wireless to catapult in the next 12 months. At present, shares now are at $ 17. However, Morgan Stanley has a 52-week target of $26 on the stock. Morgan Stanley estimates that shares will be traded at a 41% discount to their fair value. The AT;T Company owes its big upside to its healthy balance sheet of any public wireless company, with $ 10.6 billion in cash to $ 8.4 billion in debt. Recent deals have augmented the organization of AT;T Wireless. Deals with American Online such as placing AOL Online services will certainly bolster its services. With this in mind, AOL and AT;T Wireless users will make both companies complement each other. Analysts predict that online services, which AOL will provide is deemed to generate high rates of demand” (Kharif, 2007).

Analysis: AT;T believes that it will really profit from its AOL collaboration in a move that has hints of possible mergers for a wireless-market expansion. The firm is expected to generate $ 3.2 billion worth of revenues as the AOL deal pushes through. It seems that a bevy of investors are speculating that the AOL deal is the linchpin in the possible bidding war over the AT;T Company. Adventis tech consultancy speculates that France Telecom and NTT DoCoMo are among the probable suitors to buy the firm. It should be noted that cellphone company NTT holds a 16% stake in AT;T Wireless, which suggests that it would be not a surprised if the company will purchase AT;T. On the other hand, France Telecom buying AT;T would be an apt entry to the U.S. market. Other possible suitors are Cingular Wireless and VoiceStream Wireless. Industry pundits are anticipating the firm to continue its growth with such collaborations in order to augment its operations. I suggest that it would be safe for investors to buy stocks for AT;T as long as they keep track on the firm’s latest collaborations with other companies in order to push through with company expansions.

Article: Nokia: Wired for Profits

Author: Mark Scott

URL: http://www.businessweek.com/globalbiz/content/aug2007/gb2007082_507291.htm?chan=search

Date: August 2, 2007

Synopsis: Nokia’s global dominance in the vast cellphone market seems unlikely to diminish. Rivals of the cellphone giant have declared consecutive losses in a span of a year. Nokia has recently announced a 57% increase in its operating profits to $ 3.2 billion; the firm increased its worldwide market share by four percentage points to 38%. The Finnish cellphone company has proliferated over 100 models in a plethora of regional markets, resulting to a significant sales increase of 29% in the second quarter of 2007. The firm’s recent forays to emerging markets in Asian and India has augmented its primary European sales. Nokia anticipates an increase in volumes by 10% at the end of the year (Scott, 2007).

Analysis: Nokia owes its success in the global cellphone industry to its comparative advantage over its competitors, which is its vast product range. However, this is not possible without Nokia’s outstanding brand management by its successful expansions in emerging markets. Its successful forays into emerging markets have been the keys to its proliferation of its brand. The Nokia label has become the “Coke” of the cellphone industry. The firm has generated substantial revenues by offering handsets that sells for a measly $45; Nokia has sold 23.7 million units in the Asia Pacific region alone during the second quarter. The firm holds a 56% share of markets in Africa and Middle East. It should be noted that Nokia is the first cellphone company to enter Africa’s raw cellphone industry. Industry pundits see a lot of potential to generate revenues from the African market. However, Nokia still needs to focus and augment its distribution networks in order to proliferate the product the way the company promotes its product. Its imminent partnership with German electronics giant Siemens has given Nokia an edge over industry rivals namely Ericsson and Alcatel-Lucent. It’s a no-brainer if more investors dive in to buy stocks of Nokia.

Article: Inside iPod Touch

Author: Arik Hesseldahl

URL: http://www.businessweek.com/technology/content/dec2007/tc20071217_113525.htm?chan=search

Date: December 18, 2007

Synopsis: Recently, Apple unveiled its newest innovative product – The Ipod touch is a state of the art widescreen media player, It shares the similar multitouch screen to that of the Ipod touch. Yet the term media player doesn’t end the description there. The sleek iPod touch costs $300 for the introductory model. Apple’s newest innovation is set to outlast its competitors with similar gadgets to that of the Ipod Touch. In order to this, Apple is considering a massive advertising campaign that will outlast Ipod Touch’s predecessor – The Iphone. The massive advertising campaign will contradict the fact that the Ipod touch is scarce and stores only carry a handful of units that they can sell to consumers (Hesseldahl, 2007).

Analysis: Apple plans to market the Ipod Touch not only to Apple gadget afficionados but to other techies that adhere to other gadgets of its competitors. Apple wants to build a market niche for the Ipod Touch for it to garner sales on its first year of release. The thrust of this mission is to showcase the Apple brand state of the art technology. With the entry of Apple’s Ipod touch, Apple’s competitors would strive to make innovations that will outlast Apple newest gadget. Market analysts speculate that Apple is already investing on the research and development plan of the Ipod this early. This shows how Apple is very adamant to improve their revenues with their newest product. My initial view of the Ipod touch was very optimistic. I knew it had almost all the features I had been searching for in a mobile device; large capacity, beautiful touch screen, and most importantly an interface that didn’t lag. Many devices to date have been able to hit a few of those key points, but either they failed on some parts, or the price was so high my pocket book wouldn’t consider it.

References

Ante,S. (2007). Verizon’s Spin-off Offensive. Retrieved July 25, 2007, from             http://www.businessweek.com/technology/content/jan2007/tc20070116_170265.htm?chan=search

Hughes,A. (2001). Sierra Wireless’ Uphill Climb. Retrieved July 25, 2007, from             http://www.businessweek.com/investor/content/jul2001/pi2001079_182.htm?chan=search

Kharif,O. (2001).  AT;T Wireless: Ma Bell’s Other Gem. Retrieved July 25, 2007, from             http://www.businessweek.com/bwdaily/dnflash/jul2001/nf20010724_900.htm?chan=search

Scott,M.(2007).Nokia: Wired for Profits. Retrieved July 25, 2007, from             http://www.businessweek.com/globalbiz/content/aug2007/gb2007082_507291.htm?chan=search

Hesseldahl,A. (2007). Inside iPod Touch. Retrieved July 25, 2007, from             http://www.businessweek.com/technology/content/dec2007/tc20071217_113525.htm?chan=search

 

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