Verizon Buying Alltel, Stock Drop Short Lived

When CNBC’s David Faber broke the news that Verizon (VZ) was in discussions to purchase Alltel for north of $27 billion, Verizon shares tumbled to $36 on Wednesday. I was getting ready to write that such a drop looked to be a good entry point for fans of the deal (count me as one). Wall Street acts fast though, and today the deal was officially announced and Verizon is up $2 to around $39 per share. Quite the change in sentiment.

The buying opportunity is less attractive now, but Verizon remains an excellent large-cap telecommunications investment on similar pullbacks in the future. They are arguably the most well-run telco and consumers continually rank their wireless network the best in the country.

As for other stocks that have gotten cheap recently, I’ll have more details on two other large caps shortly.

Full Disclosure: Peridot clients were long shares of VZ at the time of writing

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3 Thoughts on “Verizon Buying Alltel, Stock Drop Short Lived

  1. Anonymous on June 5, 2008 at 8:00 PM said:

    well-run telco? That is an oxymoron. Seriously, their service sucks. They have been able to expand due to the monopolistic advantage of the last mile.

  2. Bobby Kolev on June 17, 2008 at 7:32 AM said:

    While waiting on the phone with VZ, now for 45 minutes straight, for someone to take a payment , I eventually remembered about this article and decided I can chime in.

    A company that loses customer’s payment information, then from within user profile page on the corporate site says the system is in progress of update and redirects to a different one, which does not recognize the user…then company which holds the user on hold for 45 minutes…bounces him/her to different departmens…not to mention the unannounced over 50% price increase…THAT is not a well run company.

    I would not be commenting on the quality of their service.

    I would just say if personal experience is anything I’d be heavily selling them right now.

  3. Chad Brand on June 17, 2008 at 11:06 AM said:

    Well, I guess luckily for Verizon they are competing against other wireless carriers, so it’s all a relative comparison. Customer service in the U.S. generally has gotten worse over the years, but Verizon does well in the industry…

    From JD Power:

    J.D. Power and Associates Reports:

    Verizon Wireless Ranks Highest in Wireless Contract Customer Satisfaction in Four Regions;
    Alltel and T-Mobile Each Rank Highest in a Region

    WESTLAKE VILLAGE, Calif.: 24 April 2008 —Wireless customers who subscribe to plans that offer additional services such as in-network calling and unlimited text and picture messaging are typically more satisfied and exhibit greater loyalty than subscribers without unlimited plans, according to the J.D. Power and Associates 2008 U.S. Wireless Contract Regional Customer Satisfaction Index (CSI) StudySM–Volume 1 released today.

    The semiannual study measures customer satisfaction based on six key factors that impact overall wireless carrier performance. In order of importance, they are: call quality (32%); brand image (17%); cost of service (14%); service plan options (14%); billing (12%); and customer service (11%). Carriers are ranked across six regions in the United States: Northeast, Mid-Atlantic, Southeast, North Central, Southwest and West.

    Verizon Wireless ranks highest in four regions—Northeast, Mid-Atlantic, North Central and West—and performs particularly well in call quality and brand image in each of these regions. T-Mobile ranks highest in the Southwest region, while Alltel ranks highest in the Southeast region.

    Study results by region are:

    Northeast Region: Verizon Wireless ranks highest for a second consecutive time, performing particularly well in brand image and call quality.

    Mid-Atlantic Region: Verizon Wireless ranks highest for a sixth consecutive time, performing well in call quality and brand image.

    Southeast Region: Alltel ranks highest in the region for a third consecutive time, performing well in all six factors contributing to satisfaction and performing particularly well in service plan options.

    North Central Region: Verizon Wireless ranks highest for a sixth consecutive time, performing particularly well in brand image, call quality and customer service.

    Southwest Region: T-Mobile ranks highest for a seventh consecutive time, performing well in all six factors driving overall satisfaction. T-Mobile performs particularly well in cost of service, billing and customer care.

    West Region: Verizon Wireless ranks highest, performing particularly well in billing, call quality, customer care and brand image.

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