Professional Documents
Culture Documents
Tony Gauvin
All images from www22.verizon.com
Overview
Existing Condition
SWOT Matrix
SPACE
BCG
IE matrix
Grand Strategy Matrix
QSPM
Possible strategies
Recommendations
IFE
Analysis
CPM
EFE
Industry overview
Evaluation Procedure
Wednesday,
March 23, 2005
Verizon Overview
Domestic Telecom
Domestic Wireless
Domestic Wireless products and services include wireless voice and data services
and equipment sales across the United States.
Information Services
International
The International segment has wireline and wireless communications operations and
investments primarily in the Americas, as well as investments in Europe.
Wednesday,
March 23, 2005
History
GTE
Bell Atlantic
Trades as VZ on NTSE
Wednesday,
March 23, 2005
Wednesday,
March 23, 2005
More than 40 percent of long-distance telephone use and more than a third of local
telephone use has been supplanted by new technologies.
By 2004 the number of long-distance calls made over wireless networks exceeded
those made over wireline networks. Wireless minutes of use exceeded 1 trillion in
2004.
More than 180 million Americans have wireless phones - approximately one in five of
whom use their mobile phones as their main communications device.
More than 70 percent of American households are connected to the Internet, and by
2010 an estimated 62 percent will use broadband access.
80 percent of American adults under age 50 use the Internet.
Instant messages, which already outnumber e-mails, are not only becoming the
principal means of communication for young people, but have evolved beyond text to
voice and video.
Nationwide wireless networks and Internet-based communications have changed
traditional distinctions between "local" and "long-distance" services.
Wednesday,
March 23, 2005
Compare to Industry
Wednesday,
March 23, 2005
A Global Market
Wednesday,
March 23, 2005
Key Facts
Wednesday,
March 23, 2005
Wednesday,
March 23, 2005
Wednesday,
March 23, 2005
Verizon had no published Mission and Vision, The following is from 2004
Annual report
Wednesday,
March 23, 2005
Proposed Vision
Wednesday,
March 23, 2005
Proposed Mission
Wednesday,
March 23, 2005
141millionpossiblecustomersinEurope,UK,andGermany
Strengtheningforeigncurrenciesvs.dollarEuroadvantages
Increasedusageofwirelessservices
Smallwirelessprovidersareconsolidatingwithlargerprovidersdueto
increasedcompetition
Increaseddesireforhighspeedinternetservice
Threats
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Wednesday,
March 23, 2005
Newregulatorycomplaints(newphone#portability)
Risingcostsofhealthcare
Globalunresteconomicmonetaryandfinancial
Consumerprivacyrightsunderattack
Weakconsumerspending
Decreasingdemandfortraditionalvoicelinesandfixedlines
Increasingoverlapoftelecommunicationterritories
Increasingcompetitionforprovidersofwebsearchdirectories
Increasingprovidersofwirelessservices
Brandrecognition
EFE
EFE Matrix
1.
2.
3.
4.
5.
Opportunities
Weight Rating WeightedScore
141millionpossiblecustomersinEurope,UK,andGermany
0.06
1
0.06
Strengtheningforeigncurrenciesvs.dollarEuroadvantages
0.06
1
0.06
Increasedusageofwirelessservices
0.02
4
0.08
Smallwirelessprovidersareconsolidatingwithlargerprovidersdue
0.06
2
0.12
toincreasedcompetition
Increaseddesireforhighspeedinternetservice
0.10
4
0.40
Threats
1. Newregulatorycomplaints(newphone#portability)
2. Risingcostsofhealthcare
3. Globalunresteconomicmonetaryandfinancial
4. Consumerprivacyrightsunderattack
5. Weakconsumerspending
6. Decreasingdemandfortraditionalvoicelinesandfixedlines
7. Increasingoverlapoftelecommunicationterritories
8. Increasingcompetitionforprovidersofwebsearchdirectories
9. Increasingprovidersofwirelessservices
10. Brandrecognition
TOTALS
Wednesday,
March 23, 2005
CPM
Competitive Profile Matrix
Verizon
Critical Success
Factors
Alltel
SBC
(Cingular)
Weight
Rating
Weighted
Score
Rating
Weighted
Score
Rating
Weighted
Score
Market Share
Price
Financial Position
Consumer Loyalty
Brand Awareness
0.10
0.25
0.20
0.30
0.15
4
3
2
2
4
0.40
0.75
0.40
0.40
0.60
2
4
3
3
3
0.20
1.00
0.60
0.90
0.45
3
2
4
3
3
0.30
0.50
0.80
0.90
0.45
Total
1.00
Wednesday,
March 23, 2005
2.55
3.15
2.95
TopwirelessproviderintheU.S.serving49ofthetop50markets
Highspeeddatanetworkinallmajormarkets
Largestprovideroflocal,longdistance,data,andbroadbandservicesin2/3of
thetop100marketsintheU.S.
Leadingprintandonlinedirectorypublisherwith2100inU.S.and13other
countries
Verizoninvested$12billionin2002in400,000milesoffiberopticcable.
Marketingcampaignbrandawareness
Weaknesses
1.
2.
3.
Wednesday,
March 23, 2005
$49billioninlongtermdebt
Lackofinternationalpresence
Revenueonlyincreased4percentsinceyearend2000.
IFE
IFE Matrix
1.
2.
3.
4.
5.
6.
Strengths
Weight Rating WeightedScore
TopwirelessproviderintheU.S.serving49ofthetop50markets
0.17
4
0.68
Highspeeddatanetworkinallmajormarkets
0.13
3
0.39
Largestprovideroflocal,longdistance,data,andbroadbandservices
0.10
4
0.40
in2/3ofthetop100marketsintheU.S.
Leadingprintandonlinedirectorypublisherwith2100inU.S.and
0.10
3
0.30
13othercountries
Verizoninvested$12billionin2002in400,000milesoffiberoptic
0.15
4
0.60
cable.
Marketingcampaignbrandawareness
0.10
4
0.40
Weaknesses
1. $49billioninlongtermdebt
2. Lackofinternationalpresence
3. Revenueonlyincreased4percentsinceyearend2000.
TOTALS
Wednesday,
March 23, 2005
1.00
3.07
Key Ratios
Verizon
Industry
Sector
S&P 500
Valuation Ratios
P/E Ratio (TTM)
P/E High - Last 5 Yrs
P/E Low - Last 5 Yrs
Beta
Price to Sales (TTM)
Price to Book (MRQ)
Price to Tangible Book (MRQ)
Price to Cash Flow (TTM)
Price to Free Cash Flow (TTM)
% Owned Institutions
28.99
NA
9.04
0.97
1.5
3.03
N/A
5.94
16
54.54
27.9
36.84
10.16
1.28
1.93
2.59
4.36
6.92
16.18
38.23
28.9
48.47
16.09
0.96
2.8
3.89
6.6
17.03
33.11
50.48
24.01
45.41
16.26
1
3.33
4.29
7.56
17.32
28.97
64.19
Wednesday,
March 23, 2005
Key Ratios
Dividends
Dividend Yield
Dividend Yield - 5 Yr Avg
Dividend 5 Yr Growth Rate
Payout Ratio (TTM)
Growth Rates %
Sales (MRQ) vs Qtr 1 Yr Ago
Sales (TTM) vs TTM 1 Yr Ago
Sales - 5 Yr Growth Rate
EPS (MRQ) vs Qtr 1 Yr Ago
EPS (TTM) vs TTM 1 Yr Ago
EPS - 5 Yr Growth Rate
Capital Spending - 5 Yr Growth
Rate
Wednesday,
March 23, 2005
Verizon
Industry
Sector
S&P 500
4.21
3.4
0
120.6
Verizon
4.2
2.34
-0.87
33.73
Industry
2.14
1.43
-0.89
15.54
Sector
2.04
1.48
6.48
26.78
S&P 500
0.72
0.67
3.49
N/A
-25.06
-7.98
2.36
3.55
12.49
-17.21
-4.84
-1.81
14.39
15.92
17.25
15.43
16.37
15.23
13.4
11.9
9.3
28.69
21.92
12.15
-1.5
-2.37
2.61
4.06
Key ratios
Financial Strength
Quick Ratio (MRQ)
Current Ratio (MRQ)
LT Debt to Equity (MRQ)
Total Debt to Equity (MRQ)
Interest Coverage (TTM)
Profitability Ratios %
Gross Margin (TTM)
Gross Margin - 5 Yr Avg
EBITD Margin (TTM)
EBITD - 5 Yr Avg
Operating Margin (TTM)
Operating Margin - 5 Yr Avg
Pre-Tax Margin (TTM)
Pre-Tax Margin - 5 Yr Avg
Net Profit Margin (TTM)
Net Profit Margin - 5 Yr Avg
Effective Tax Rate (TTM)
Effective Tax Rate - 5 Yr Avg
Wednesday,
March 23, 2005
Verizon
Industry
Sector
S&P 500
0.48
0.69
1.18
1.36
2.68
Verizon
1.01
1.22
0.84
0.95
3.18
Industry
0.93
1.47
0.74
0.82
7.84
Sector
1.26
1.76
0.68
0.85
11.86
S&P 500
67.85
57.39
31.16
39.98
11.06
20.77
7.03
14.12
5.18
8.79
26.3
41.35
60.97
54.17
31.75
30.7
12.99
13.72
10.68
10.56
7.03
5.18
29.08
35.99
42.84
42.06
22.32
21.97
12.9
11.21
10.37
11.77
7.54
7.62
32.18
36.04
47.32
47.01
20.79
20.82
20.33
18.35
17.27
17.54
13.12
11.59
31.31
34.2
Key Ratios
Verizon
Industry
Sector
S&P 500
Management Effectiveness %
Return on Assets (TTM)
Return on Assets - 5 Yr Avg
Return on Investment (TTM)
2.09
4.17
2.51
3.21
2.87
3.84
5.91
5.49
7.98
6.4
6.79
9.97
5.37
10.25
19.36
3.7
13.28
9.79
7.59
13.51
13.18
10.93
18.71
19.22
333,589
17,277
6.28
15.92
0.4
405,314
102,467
7.39
21.63
0.47
479,338
90,606
17.23
17.53
1.17
622,866
81,707
9.76
10.46
0.92
Efficiency
Revenue/Employee (TTM)
Net Income/Employee (TTM)
Receivable Turnover (TTM)
Inventory Turnover (TTM)
Asset Turnover (TTM)
www.investor.stockpoint.com
Wednesday,
March 23, 2005
SWOT Matrix
1.Top wireless provider in the U.S. serving 49 of the top 50 markets
2.High-speed data network in all major markets
3.Largest provider of local, long distance, data, and broadband services
S-O Strategies
W-O Strategies
1.Expand
1.Purchase
S-T Strategies
W-T Strategies
1.Enter into a joint venture with MCI to offer a package deal (S1, T12)
2.Proceed with legal battles to serve local markets to increase traditional
1.141
1.New
Wednesday,
March 23, 2005
3.Revenue
international wireless
providers such as MMO2 (W2, O4)
2.Offer services to people in Europe to
increase revenue due to the difference
in foreign currency (W1, O2)
Space Matrix
SPACE Matrix
Y axis
Financial strength
Environmental stability
X axis Industry strength
Competitive advantage
+4
-2
5
-1
+1 worst to + 6 best
-1 best to -6 worst
+6 best to +1 worst
-6 worst to 1 best
Conservative
Aggressive
(2, 4)
Defensive
Wednesday,
March 23, 2005
Competitive
Y axis: 4 + (-2) = 2
X axis: 5 + (-1) = 4
BCG
High +20
RelativeMarketSharePosition
HighMediumLow
1.0.500.0
Star
QuestionMark
Wireless
30%
70%
Industry
Sales
Medium 0
Growth
Rate
(Percentage)
CashCow
Dog
Telecom
30%
70%
Low
Wednesday,
March 23, 2005
-20
IE Matrix
The Total IFE Weighted Scores
Strong
4.0 to 3.0
4.0
Average
2.99 to 2.0
II
3.0
IV
Weak
1.99 to 1.0
III
VI
High
The
EFE
Total
Medium
Weighted
Scores
30%
30%
70%
Wireless
70%
Verizon
Telecom
2.0
Wednesday,
Low
March 23, 2005
1.0
VII
VIII
IX
GSM
Wednesday,
March 23, 2005
IE
SPACE
GRAND
COUNT
Forward Integration
Backward Integration
Horizontal Integration
Market Penetration
Market Development
Product Development
Concentric Diversification
Conglomerate Diversification
Horizontal Diversification
1
X
2
1
Joint Venture
Retrenchment
Divestiture
Liquidation
Wednesday,
March 23, 2005
Possible Strategies
Wireless
High Speed Internet
QSPM
Enterintoa
jointventure
Investcapital
withMCIto
infiberoptic
offerabundled
cable
wireless
package
AS
2
0
4
TAS
0.12
0.00
0.08
AS
4
0
2
TAS
0.24
0.00
0.04
0.00
0.00
5.
Opportunities
Weight
141millionpossiblecustomersinEurope,UK,andGermany
0.06
Strengtheningforeigncurrenciesvs.dollarEuroadvantages
0.06
Increasedusageofwirelessservices
0.02
Smallwirelessprovidersareconsolidatingwithlargerprovidersdue
0.06
toincreasedcompetition
Increaseddesireforhighspeedinternetservice
0.10
0.00
0.00
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Threats
Newregulatorycomplaints(newphone#portability)
Risingcostsofhealthcare
Globalunresteconomicmonetaryandfinancial
Consumerprivacyrightsunderattack
Weakconsumerspending
Decreasingdemandfortraditionalvoicelinesandfixedlines
Increasingoverlapoftelecommunicationterritories
Increasingcompetitionforprovidersofwebsearchdirectories
Increasingprovidersofwirelessservices
Brandrecognition
AS
0
0
0
3
0
0
0
2
0
0
TAS
0.00
0.00
0.00
0.06
0.00
0.00
0.00
0.04
0.00
0.00
AS
0
0
0
2
0
0
0
3
0
0
TAS
0.00
0.00
0.00
0.04
0.00
0.00
0.00
0.06
0.00
0.00
1.
2.
3.
4.
Wednesday,
March 23, 2005
Weight
0.10
0.07
0.12
0.02
0.10
0.05
0.06
0.02
0.06
0.10
QSPM
Invest capital in
fiber optic cable
1.
2.
3.
4.
5.
6.
Strengths
Top wireless provider in the U.S. serving 49 of the top 50 markets
High-speed data network in all major markets
Largest provider of local, long distance, data, and broadband services
in 2/3 of the top 100 markets in the U.S.
Leading print and on-line directory publisher with 2100 in U.S. and
13 other countries
Verizon invested $12 billion in 2002 in 400,000 miles of fiber-optic
cable.
Marketing campaign brand awareness
Weaknesses
1. $49 billion in long term debt
2. Lack of international presence
3. Revenue only increased 4 percent since year end 2000.
Weight
0.17
0.13
AS
2
2
TAS
0.34
0.26
AS
3
4
TAS
0.51
0.52
0.10
0.20
0.30
0.10
0.40
0.20
0.15
0.60
0.30
0.10
0.20
0.30
Weight
0.10
0.05
0.10
AS
4
3
1
TAS
0.40
0.15
0.10
AS
3
4
2
TAS
0.30
0.20
0.20
TOTALS
Wednesday,
March 23, 2005
2.95
3.21
Decisions
Primary
Alternatives
Wednesday,
March 23, 2005
1,000M
5%
35%
$25
2,765M
Wednesday,
March 23, 2005
CommonStockFinancing
Recession
Normal
Boom
EBIT
5,000,000,000 10,000,000,000 15,000,000,000
Interest
0
0
0
EBT
5,000,000,000 10,000,000,000 15,000,000,000
Taxes
1,750,000,000 3,500,000,000 5,250,000,000
EAT
3,250,000,000 6,500,000,000 9,750,000,000
#Shares 2,805,000,000 2,805,000,000 2,805,000,000
EPS
1.16
2.32
3.48
DebtFinancing
Recession
Normal
Boom
5,000,000,000 10,000,000,000 15,000,000,000
50,000,000
50,000,000
50,000,000
4,950,000,000 9,950,000,000 14,950,000,000
1,732,500,000 3,482,500,000 5,232,500,000
3,217,500,000 6,467,500,000 9,717,500,000
2,765,000,000 2,765,000,000 2,765,000,000
1.16
2.34
3.51
70PercentStock30PercentDebt
Recession
Normal
Boom
EBIT
5,000,000,000 10,000,000,000 15,000,000,000
Interest 15,000,000
15,000,000
15,000,000
EBT
4,985,000,000 9,985,000,000 14,985,000,000
Taxes
1,744,750,000 3,494,750,000 5,244,750,000
EAT
3,240,250,000 6,490,250,000 9,740,250,000
#Shares 2,793,000,000 2,793,000,000 2,793,000,000
EPS
1.16
2.32
3.49
70PercentDebt30PercentStock
Recession
Normal
Boom
5,000,000,000 10,000,000,000 15,000,000,000
35,000,000
35,000,000
35,000,000
4,965,000,000 9,965,000,000 14,965,000,000
1,737,750,000 3,487,750,000 5,237,750,000
3,227,250,000 6,477,250,000 9,727,250,000
2,777,000,000 2,777,000,000 2,777,000,000
1.16
2.33
3.50
Implementation
Objectives
Wednesday,
March 23, 2005
Telecom division
Wireless
Wednesday,
March 23, 2005
Evaluations
Wednesday,
March 23, 2005
Operating Revenues
Net Income
EPS (diluted basis)
Capital Expenditures
Total Debt
Cash Flow from Operating Activities
Weighted Average Shares Outstanding
Shareowners
Wednesday,
March 23, 2005
$71.3 billion
$7.0 billion
$2.51
$13.3 billion
$39.3 billion
$21.8 billion
$2.77 billion
2.7 million
Operating Revenues
Net Income
EPS (diluted basis)
Capital Expenditures
Total Debt
Cash Flow from Operating Activities
Weighted Average Shares Outstanding
Shareowners
Wednesday,
March 23, 2005
$75.1 billion
$7.4 billion
$2.65
$13.3 billion
$39 billion
$22 billion
$2.9 billion
2.7 million
Press Releases
January 8, 2004
Wednesday,
March 23, 2005