Stock Option Advisory

Verizon (VZ) up Nearly 10% on First Quarter Earnings

Verizon Communications (VZ) announced a first quarter profit rise of 9.8 percent during its first quarter of 2008, compared to the same quarter last year. This amounted to earnings of $1.64 billion for the period that ended March 31. The company credited a gain of 1.5 million new wireless subscribers with much of the impact on profit. The strong earnings gave the company’s stock help.

The company’s earnings amounted to 57 cents per share. Last year’s first quarter saw earnings of $1.5 billion, or 51 cents per share. After excluding items, earnings per share were 61 cents, which equaled analyst expectations. Some long-term stock trading strategies rely on meeting or exceeding analysts estimates in order for the trader to feel secure with the stock in their trading portfolio.

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Revenue for the quarter was just slightly below analyst expectations at $23.8 billion. This was a 5.5% growth from the first quarter of 2007. Stock investing in the wireless sector has picked up recently, as AT&T also reported strong earnings. Many stock market research gurus have suggested technology sectors may help indicate the direction of the economy. Thus far, many companies seem to be weathering the storm from the US economic situation. Verizon’s growth in new subscribers actually bested AT&T’s by 200,000.

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Verizon’s share price rose nearly 2.5% in anticipation of and in response to the earnings announcement. Stock trading community members were apparently optimistic the company could sustain its positive results into the future. Analysts seem confident too, as several leading stock research sites reported upgrades on their share ratings.

One reason many investors get excited about certain stock symbols is the potential for ongoing income from owning the stock. Verizon offers an incredible $1.72 annual dividend, which is roughly 4.7 percent of its current share price. This offers a great value for long-term traders.

Covered call investing or covered calls may normally be in line for a stock like Verizon. After all, it is only about $6 off its one-year price target of $44.67. It currently sits just above $38 per share. However, because of the strong in recent months in subscribers, many traders may be reluctant to play a short-term flat position.

Verizon has been in price wars in recent months with leading competitors. This is normally not seen as a positive from an industry perspective. However, wireless products and services continue to evolve and expand in technological capability, which creates new and broader sources of revenue for all telecommunications companies.

The company is currently preparing to raise prices broadly on many of its products and services. It has also worked hard to control some of its costs in line with operations requirements. This has produced some workforce layoffs in recent months. Between effective cost control and continued revenue sources, the company seems to be strong.

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[tags] US, VZ, Verizon Wireless, covered call strategies, investing in stock options, poweroptions, stock help, stock investing, stock market help, stock market investment strategies, stock market research, stock options, stock research, stock symbols, stock trading [/tags]

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