Hughes Telematics a Big Growth Move for Verizon
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Innovation is key to the success of any company, but it may be even more important for tech companies trying to keep up with rapid progress in the industry. Verizon (NYSE: VZ) is one company that has certainly responded well to this requirement. Recent news stories continue to back this up, and as a result, I believe Verizon stock will be on the rise in the near future.
As the world becomes increasingly wireless, Verizon is adapting its company accordingly. It is currently offering buyouts to 1,700 wireline employees, as the company continues to shift its focus away from this aspect of its business. If not enough employees accept the buyouts, this may lead to future layoffs. I do not really view this as bad news for Verizon stock, however, as most people realize that wireline business is declining. An increasing number of customers are choosing to use their cell phones as their only phone. While this will not have a major impact on the company at the moment, I think Verizon is only demonstrating its ability to respond to a modern business environment. At least in the long run, I believe this will benefit the company and the stock.
Again with its eye on growth, Verizon will expand by acquiring Hughes Telematics for $612 million. This will allow Verizon to focus more on machine-to-machine (M2M) services and telematics. The company believes this move will "drive significant growth" and "accelerate solutions that will unlock more opportunities for existing and new HTI and Verizon customers." Once again, therefore, the company is actively focusing on moving forward. I believe this will also have a positive effect on Verizon stock.
Not only is Verizon continuing to progress and expand, but it is receiving recognition for its innovation. CIO magazine has selected Verizon Wireless as the recipient of a CIO 100 award. This award acknowledges the "Iconic Sales Portal" that the company has developed. The company also won a CIO 100 award in 2010, showing that Verizon is consistent in its innovation. This creates a positive image for the company, and I believe that the stock will benefit.
Another notable accomplishment for Verizon is that its FiOS TV has become the top Spanish-language television provider in the United States. It recently announced the introduction of ten new HD Spanish channels, bringing the total to as many as 75, depending on location. This demonstrates the company responding to a large customer base in the United States. In several different areas of the technology industry, Verizon continues to expand and establish itself as a leader.
Verizon is not only focused on broad, nation-wide changes, however, as it continues to develop its service in local settings as well. For example, it recently improved its 4G LTE coverage in Windsor Locks, Connecticut. The company, furthermore, has invested $3 billion in the New England network since 2000, showing how consistently dedicated Verizon is to local service. As a result, this company will likely remain a major force as a wireless carrier.
A number of companies will benefit from the Samsung Galaxy S3, set to be launched this month. While Verizon will be a carrier, it will also be launched with T-Mobile, AT&T (NYSE: T), Sprint Nextel, and United States Cellular. Samsung believes this is the "most anticipated launch of the year." It will also give the product major publicity as the "Official Smartphone Partner" of the 2012 Olympics in London. This release will bring positive results to all five wireless carriers, and with the launch nearing, it will also have immediate positive effects on these stocks.
AT&T may be able to benefit the most from Samsung's new smartphone, as it offers the largest 4G network. The Samsung Galaxy S3 will be available for pre-order from AT&T on June 6, which means the company will soon be benefiting from the release. I still believe all the carriers will reap the benefits, but AT&T may be the most certain bet in this case.
Smaller competitors may gain importance as well though, especially in how they impact companies like Verizon. Recently, Clearwire (NASDAQ: CLWR) has joined the Rural Cellular Association (RCA). This organization includes most major carriers, but Verizon and AT&T are still not members of the RCA. This is not surprising, as the RCA has been working to get more spectrum for smaller carriers and prevent Verizon from buying $3.9 billion of AWS spectrum. Clearwire's entrance into the RCA may be important, because the company has large spectrum holdings and offers potential benefits to smaller carriers. The fight will therefore continue, but the RCA may be gaining strength with the addition of its newest member.
This is only a minor speed-bump for the company, however, and investors can rest assured that wireless carriers appear to be immune to the difficult economic times. The entire industry seems to be doing fairly well, and while Verizon continues to grow and progress, it continues to be a very strong stock.
A variety of companies will benefit from the anticipated release of the Samsung Galaxy 3S, but Verizon has many other things going for it. It is expanding, focusing on its wireless services, developing more Spanish channels through FiOS, and it is receiving recognition for its innovations. The RCA may provide some opposition to Verizon, but it will be relatively minor in comparison to the strength of the industry. As a result, I believe that Verizon is a solid investment.
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