Verizon (NYSE: VZ) has been the cock of the walk, but that has changed. Yesterday, the shares hit a 52-week low at $35.19.
The large run-up in Verizon’s stock last year was based on two things. The first was that its new fiber-to-the-home TV and broadband service was picking up customers from cable companies like Comcast (NASDAQ: CMCSA). That sent Comcast shares to multi-year lows. Comcast’s latest earning showed that the impact of Verizon’s initiative was less than expected. More recently the phone company said that it could not get HD set-top boxes to many of its new fiber customers. Motorola (NYSE: MOT) had fallen behind in making them. All of a sudden, the $23 billion that Verizon put into the fiber project did not look quite so good.
Then the market was hit with news of a cellular price war between Verizon Wireless and AT&T (NYSE: T). T-Mobile got in on the action just or fun. Cellular revenue is what has driven Verizon’s revenue and operating income over the last several years as it has lost landline business to VoIP.
Six months ago, Comcast looked like it was down and out, perhaps for a very long time. Two significant problems at Verizon have forced it to replace the cable company in Wall St’s dog house.
Douglas A. McIntyre