Business / Verizon
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Autor: anton 22 December 2010
Words: 3538 | Pages: 15
History of the company
Verizon Communications Inc., based in New York and incorporated in Delaware, was formed on June 30, 2000, with the merger of Bell Atlantic Corp. and GTE Corp. Verizon began trading on the New York Stock Exchange (NYSE) under the VZ symbol on Monday, July 3, 2000.
The symbol was selected because it uses the two letters of the Verizon logo that graphically portray speed, while also echoing the genesis of the company name: veritas, the Latin word connoting certainty and reliability, and horizon, signifying forward-looking and visionary.
While Verizon is truly a 21st century company, the mergers that formed Verizon were many years in the making, involving companies with roots that can be traced to the beginnings of the telephone business in the late 19th century.
Government regulation largely shaped the evolution of the industry throughout most of the 20th century. Then, with the signing of the Telecommunications Act on Feb. 8, 1996, federal law directed a shift to more market-based policies. This promise of a new competitive marketplace was a driving force behind Verizon's formation.
The Bell Atlantic - GTE Merger
The mergers that formed Verizon were among the largest in U.S. business history, culminating in a definitive merger agreement, dated July 27, 1998, between Bell Atlantic, based in New York City, and GTE, which was in the process of moving its headquarters from Stamford, Conn., to Irving, Texas.
GTE and Bell Atlantic had each evolved and grown through years of mergers, acquisitions and divestitures. Each had proven track records in successfully integrating business operations.
Prior to the merger, GTE was one of the world's largest telecommunications companies, with 1999 revenues of more than $25 billion. GTE's National and International Operations served approximately 35 million access lines through subsidiaries in the United States, Canada and the Dominican Republic, and through affiliates in Canada, Puerto Rico and Venezuela. (Access lines are the individual connections from a customer's premises to the phone network.) GTE was a leading wireless operator in the United States, with more than 7.1 million wireless customers and the opportunity to serve 72.5 million potential wireless customers.
Outside the 50 states, GTE operated wireless networks serving approximately 6.7 million customers with 34.8 million potential wireless customers through subsidiaries in Argentina, Canada and the Dominican Republic, and affiliates in Canada, Puerto Rico, Venezuela and Taiwan. GTE provided internetworking services, ranging from dial-up Internet access for residential and small-business consumers to Web-based applications for Fortune 500 companies. GTE was also a leader in directories and telecommunications-based information services and systems.
Bell Atlantic was even larger than GTE, with 1999 revenues of more than $33 billion. Its Domestic Telecom unit served 43 million access lines, including 22 million households and more than 2 million business customers. Its Global Wireless unit managed one of the world's largest and most successful wireless companies, with 7.7 million Bell Atlantic Mobile customers in the United States, and international wireless investments in Latin America, Europe and the Pacific Rim.
Bell Atlantic's Directory Services was already the world's largest publisher of directory information, including operations in Europe. Bell Atlantic's International unit included a mix of mature and start-up wireline telecommunications investments in Europe and the Pacific Rim.
The Bell Atlantic - GTE transaction -- valued at more than $52 billion at the time of the announcement -- was designed to join Bell Atlantic's sophisticated network serving its densely-packed, data-intensive customer base in 13 states from Maine to the Virginias with GTE's national footprint, advanced data communications capabilities and long-distance expertise. The purpose was to create a combined company with the scale and scope to compete as one of the telecommunications industry's top-tier companies. This combined company would be able to provide long-distance and data services nationwide as part of a full package of other communications services (subject to regulatory restrictions).
The merger closed nearly two years later, following review and approvals by Bell Atlantic and GTE shareowners, 27 state regulatory commissions and the Federal Communications Commission (FCC), and clearance from the U.S. Department of Justice (DOJ) and various international agencies.
In the meantime, on Sept. 21, 1999, Bell Atlantic and London-based Vodafone AirTouch Plc (now Vodafone Group Plc) announced that they had agreed to create a new wireless business -- with a national footprint, a single brand and a common digital technology -- composed of Bell Atlantic's and Vodafone's U.S. wireless assets (Bell Atlantic Mobile, AirTouch Cellular, PrimeCo Personal Communications and AirTouch Paging).
This wireless joint venture received regulatory approval in six months. The new "Verizon" brand was launched on April 3, 2000, and the wireless joint venture began operations as Verizon Wireless on April 4. GTE's wireless operations became part of Verizon Wireless -- creating the nation's largest wireless company -- when the Bell Atlantic - GTE merger closed nearly three months later. Verizon then became the majority owner (55 percent) of Verizon Wireless, with management control of the joint venture.
When Verizon Communications began operations in mid-2000, the leaders of Bell Atlantic and GTE shared management responsibility for the company. Former GTE Chairman and CEO Charles R. "Chuck" Lee became Verizon's founding Chairman of the Board and co-CEO, while former Bell Atlantic CEO Ivan Seidenberg became Verizon's founding President and co-CEO. In accordance with a leadership transition plan announced at the time of the merger, Lee retired from Verizon in 2002. Seidenberg is currently Chairman and CEO.
A bellwether for the industry, Verizon Communications was added to the Dow Jones Industrial Average in April 2004. Verizon continues to have a nationwide presence in wireline and wireless markets, with more than 100 million Americans connecting to a Verizon network daily.
As of year-end 2005, Verizon's wireline network included more than 48 million wireline access lines and more than 5 million broadband connections nationwide. Over 1.5 billion phone calls and trillions of bits of data were being carried over this nationwide network on an average business day, with a reliability factor of over 99.999 percent. Verizon's wireline network also included approximately 9.3 million miles of local, inter-city and long-distance fiber-optic systems -- more than any U.S. local or long-distance company and more than enough to circle the Earth 390 times.
Meanwhile, Verizon Wireless owned and operated the nation's most reliable wireless network. By year-end 2005, Verizon Wireless served more than 51 million customers in 49 of the top 50 U.S. markets. Verizon's wireless network is 100 percent digital, with more than 160 switching facilities and 23,000 cell sites nationwide.
In its first five years, from mid-2000 to mid-2005, Verizon invested a total of more than $72 billion to maintain, upgrade and expand its technology infrastructure. Verizon's strong cash flow from operating activities ($22 billion in 2005) has enabled the company to maintain a healthy level of investment in growth areas - particularly broadband and wireless -- even as the company has reduced total debt by more than $20 billion since 2002. At the same time, Verizon has shed non-strategic assets and investments. For example, Verizon sold wireline access lines in Alabama, Missouri and Kentucky in 2002 and in Hawaii in 2005.
In early 2004, Verizon began major initiatives, which continue today, to bring next-generation broadband services (wireless EV-DO and fiber-optic-based FiOS services) to wireline and wireless customers in the United States. In September 2005, Verizon unveiled FiOS TV -- a new video service that harnesses the speed and capacity of broadband with the power of broadcast to offer consumer choice in TV. By year-end, Verizon had franchises covering 1 million households for FiOS TV services.
Marketing and sales
Verizon Communications Inc. (Verizon) is one of the worldâ€™s leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States. Verizon is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. verizon have four reportable segments, which they operate and manage as strategic business units: Domestic Telecom, Domestic Wireless, Information Services and International.
Verizon method of accounting applied to investments, whether consolidated, equity or cost, involves an evaluation of all significant terms of the investments that explicitly grant or suggest evidence of control or influence over the operations of the investment. The consolidated financial statements include our controlled subsidiaries. Investments in businesses which we do not control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. Investments in which we do not have the ability to exercise significant influence over operating and financial policies are accounted for under the cost method. Equity and cost method investments are included in Investments in Unconsolidated Businesses in their
consolidated balance sheets. Certain of our cost method investments are classified as available-for-sale securities and adjusted to fair value pursuant to Statement of Financial Accounting Standards (SFAS) No. 115, â€œAccounting for Certain Investments in Debt and Equity Securities.â€
All significant inter company accounts and transactions have been eliminated. Verizon have reclassified prior year amounts to confirm to the current year presentation. Discontinued operations and sales of business and minvestmens classify as discontinued operations any component of our business that we hold for sale or dispose of that has operations and cash flows that are clearly distinguishable operationally and for financial reporting purposes from the rest of Verizon. For those components, Verizon has no significant continuing involvement after disposal and their operations and cash flows are eliminated from Verizonâ€™s ongoing operations. Sales not classified as discontinued operations are reported as either Sales of Businesses, Net, Equity in Earnings (Loss) of Unconsolidated Businesses or Income (Loss) From Other Unconsolidated Businesses in our consolidated statements of income.
verizon prepare their
financial statements using generally accepted accounting principles (GAAP), which require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
Examples of significant estimates include the allowance for doubtful accounts, the recoverability of intangibles and other long-lived assets, valuation allowances on tax assets and pension and postretirement benefit assumptions.
Verizon Communications (NYSE: VZ) is one of the world's leading providers of communications services, with approximately $67 billion in revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States, with more than 139 million access line equivalents and 36 million Verizon Wireless customers. Verizon is the third largest long-distance carrier for U.S. consumers, with nearly 16 million long-distance lines. The company is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe.
Truly wireless sales volumes appear healthy for 2Q06, with Verizon Wireless continuing to take share across the board. Cingular is executing well. Alltel appears to have gained momentum. However, they believe that T-Mobile is likely to come up short on net additions during the quarter.
Merrill Lynch estimates that subscriber growth will slow in US wireless, from 25.5 million net additions in 2005 to 23 million in 2006, for an ending subscriber growth rate of about 11% YoY and 77% penetration.
Merrill Lynch found that Verizon still has an edge with regard to customer perception of network quality, and it is using that advantage to gain market share. Verizon stores are extremely busy, particularly in markets where a competitor's service is not up to par. Indeed, so busy are the stores, that it was commented that a number of stores the analysts visited could use additional sales reps in order to help meet the customer demand.
The analysts report that Sprint continues to struggle with its marketing message and many customers and some sales reps still do not understand the value added associated with the Sprint Nextel merger. Contrasting the problems at Sprint, operations at Cingular have consistently been improving, based on their store visits over the past several quarters. There are still some areas where customers remain unhappy with Cingular's network coverage, but in general customers are seeing an improvement.
As a result, Cingular and the former AT&T Wireless business are being mentioned less frequently by competitors as being ported from than had been the case throughout last year.
Cingular is also now firmly entrenched at RadioShack in terms of sales personnel knowledge and phone selection. Interestingly, customer credit quality still remains the primary way a carrier is chosen at RadioShack, based on the analysts checks. If the customer has good credit, the choice is Cingular. If the customer credit is questionable, they generally get the Sprint service.
Merrill Lynch is lowering its estimate for T-Mobile USA's net additions in 2Q06 from 900,000 to 650,000. T-Mobile USA moved primarily to 2-year contracts in April and lost momentum in its indirect channel during that month, although it seems to have recovered somewhat since then. T-Mobile has become the last national carrier to switch to two-year service plans, and while the operator is still offering one-year plans with more expensive phone prices, most customers are signing up for two-year plans in order to get the better discount on their handset.
Ownership & people
1-Verizon Communications 120 Commerce Dr, Hauppauge, NY
2-Verizon Enterprize Solutions 400 Airpark Dr, Rochester, NY
3-Verizon Communications 410 Broadway St # 1, Coraopolis, PA
4-Verizon Communications 1420 Benner Pike, State College, PA
5-Verizon Communications 900 Jefferson Ave, Eagleville, PA
6-Verizon Directory Graphics 2500 Monroe Blvd, Norristown, PA
7Â¬-Verizon Communications 3400 Horizon Dr, King of Prussia, PA
8-Verizon Directories Corp 1 Oakwood Blvd, Hollywood, FL
9-Verizon Communications 12400 N Dale Mabry Hwy, Tampa, FL
10-Verizon Phone Mart 913 1st Ave N, St Petersburg, FL
Trend of the stock
The MCI Merger
On Feb. 14, 2005, Verizon announced that it had agreed to acquire MCI, Inc., in a move to enhance Verizon's ability to deliver the benefits of converged communications, information and entertainment across the country and around the world.
Qwest Communications announced a separate bid for MCI on Feb. 25, but the MCI Board in May endorsed an amended bid by Verizon. MCI shareholders approved the merger with Verizon on Oct. 6, and state, federal and international regulatory approvals were obtained by year-end 2005. The merger closed on Jan. 6, 2006, in a transaction valued at approximately $8.5 billion.
Following this transaction, Verizon has approximately $90 billion in annual total consolidated operating revenues and approximately 250,000 employees, serving customers in more than 140 countries. Verizon now operates three network-based businesses: Verizon Wireless, operator of America's most reliable wireless network; Verizon's landline segment (Domestic Telecom), which is deploying the most advanced wireline broadband and video network in America today; and Verizon Business, which includes many former MCI operations and serves medium and large businesses and government customers.
The acquisition of MCI gives Verizon an international long-distance network and several large corporate customers. A new division called Verizon Business has been created to house the new network assets. Verizon Business will combine Verizon's existing corporate and government customers with MCI's customers.
"This milestone for Verizon creates a new competitive force with the power of the global MCI network and the reach of Verizon's broadband and wireless networks in the U.S.," Verizon Chairman and CEO Ivan Seidenberg said in a statement. "Our added network capabilities and strong customer relationships provide a solid foundation for innovative and integrated wireless, wireline and multimedia services designed to meet customer demands for speed, mobility and control."
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