Indust Ry Analysis

Current Performance:

Verizon Communications Inc. is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 140.3 million access line equivalents and 37.5 million wireless customers. Verizon is the third largest long distance carrier

for U.S. consumers, with 16.6 million long distance lines, and the company is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence extends primarily to the Americas, as well as investments in Europe. Stressing diversity and commitment to the communities in

which they operate, Verizon has a highly diverse workforce of over 200,000 employees.

Mission:

Verizon's mission is to bring the benefits of communications to everybody by creating the most respected brand in communications. They want to establish themselves as an "industry pacesetter" in the communication sector.

Objectives:

Verizon would like to increase the operating performance by decreasing their long term debt periodically. However some of the other objectives they would like to achieve are:

Maintain at least 3% sales growth in domestic sector within next year.

Maintain at least 10% sales growth in the wireless sector by next year.

Increase market share at least 5% by the end of year.

Strategies:

Verizon results of operations, financial position and sources and uses of cash in the current and future periods reflect Verizon management's focus on the following four key areas:

* Revenue Growth - their emphasis is on revenue transformation, devoting more resources, including capital spending, from traditional services to the higher growth markets such as wireless, digital subscriber lines (DSL), long distance and other data services as well as expanded services to enterprise markets.

* Operational Efficiency - While focusing resources on growth markets, they are continually challenging their management team to lower expenses through technology-assisted productivity improvements.

* Capital Allocation - Capital spending has been, and will continue to be directed toward growth markets.

* Cash Flow Generation - The financial statements reflect the emphasis of management in not only directing resources to growth markets, but also using cash provided by their operating and investing activities for significant repayments of debt in addition to providing a stable dividend to our shareowners.

Policies:

Verizon policy includes widely communicated statements of policies and business practices, which are designed to require all employees to maintain high ethical standards in the conduct of their business. The internal controls are augmented by organizational arrangements that provide for appropriate delegation of authority and division of responsibility and by a program of internal audits.

Strategic Management:

Verizon strategic management consists of Ivan G. Seidenberg, who is the Chairman and Chief Executive Officer of the board of directors. The board consists of 22 other directors. The Board of Directors is expressly authorized from time to time to make, alter or repeal the Bylaws of the Corporation in the manner set forth in the Bylaws from time to time. The Board of Directors is charged with the general oversight of Verizon's officers and employees to ensure that they perform in the long term best interests of their shareholders.

Societal Environment

Economic

Telecommunication sector operate in industries that have been and continue to be subject to consolidation and dynamic change. Though the economy has experienced a reversionary trend, telecommunication sales continue to steadily increase, specially the wireless sector. Total spending in the U.S. telecommunications industry rose 4.7 percent in 2003 to an estimated $720.5 billion .

The nation's GDP is expected to increase at about 4% at the first quarter in 2004 as well as personal income has grown by 0.6% . The unemployment rate has been locked between 5%-5.5% but expecting to drop by next year as jobs are adding in the economy. The interest rate is not expecting to increase in near future as the federal government has increased it this year. As disposable income has been slowly increasing, consumers are also becoming more cost-conscious and demanding more for their dollar.

Political/Legal

Political and legal forces also have an important role in the sector. Federal Communications Commission (FCC) provides the guideline of how to regulate their operations in the USA. Recently the Bush Administration makes the decision to move industry to market based competition that will drive investment . Income-tax cuts will increase consumers' disposable income and encourage them to spend more. Tax breaks for businesses will free up resources for businesses to expand and create new jobs. Also the sales tax exemption on telecommunications will expand the telecommunications machinery and equipment consumed in upgrading cable television systems to allow for the receiving, processing or transmission of telecommunications services. Similar equipment for telephone companies providing Internet access services is also provided an exemption . Positive relations also exist with foreign companies, especially with the outsourcing company who is providing research and development support.

Socio-cultural

Socio-cultural forces have a significant impact in telecommunication industries. Historically consumers are shifting towards sophisticated technological oriented telecommunication products. Also the next period of telecom competition will be characterized by a fundamental transformation in consumer behavior. In place of the "one-size-fits-all" product set, consumers will be able to choose multiple product sets that fit their individual needs more closely. Moreover increasing usage of computers and Internet will require faster broadband service. Also consumers and business will shift more towards wireless technology.

Technological

Technology