A strong company like Verizon (VZ) has done very well this first quarter and will continue to grow. It is highly favored by investors and offers a healthy dividend that has averaged 5.3% over the previous five years.
This last quarter, the stock increased revenue while adding 501,000 contract customers in the quarter, roughly in line with the average expectation for just over 511,000 but also down from the 1.2 million from the last quarter. Verizon is usually the first big operator to report, so as it goes, the market tends to follow. Since its growth was a bit sluggish, the industry might see fewer people coming onto wireless as much as it sees upgrades.
One particular venture could make this company stand out even more.
Verizon is looking at an alliance (or experiment) with Microsoft (MSFT) that developed as a result of Verizon and Apple (AAPL) working together on the iPhones. Verizon has profited from working with Apple. Profits are up 17% in the first quarter but it has come with a huge price. Carriers pay around $400 to subsidize the cost of each iPhone and keep them affordable for consumers, a burden that has weighed on margins.
The company is looking for alternatives and has possibly found it in Microsoft Windows 8 phone. With a third alternative (if it works) Apple won't be able to call all the shots like it does now. With 37 million iPhones sold [and the best sellers for both Verizon and AT&T (T)] Apple is currently outselling Android and could get a foot hold on the U.S. market. The big carriers are not too thrilled about this.
Microsoft will give more leeway to the carrier. Some of Verizon's will be able to be preloaded on the new phones as they are on the Windows 7 phones now. Other aps with its partners from the app store will be featured. Thus we have a good reason for Verizon revealing its plans to aggressively promote Windows Phone 8.
This move could keep the company profitable for years to come as it develops a new clientele base for the Microsoft Windows 8 phone. A good long-term investment.