Verizon Communications Inc.

Pat McKeough responds to many personal questions on investing in stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for the Inner Circle. This week, a question from an Inner Circle member asked about one of the technology stocks that has been on an upward trend. Pat looks at whether this wireless company can keep growing in a competitive market with new smartphone initiatives....

TERADATA CORP. $73 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.6 million; Market cap: $12.3 billion; Price-to-sales ratio: 4.9; No dividends paid; TSINetwork Rating: Average; ww.teradata.com) continues to see strong demand for its analytics services, which help businesses gather and analyze large amounts of data, including customer purchasing patterns. The company’s revenue rose 14.5% in the three months ended June 30, 2012, to $665 million from $581 million a year earlier. Earnings per share rose 28.3%, to $0.77 from $0.60. However, the company is facing stronger competition from bigger companies like IBM and Oracle. That could force it to lower its prices, which would hurt its profit margins. Teradata is a hold....

Sprint Nextel, $5.70, symbol S on New York (Shares outstanding: 3.0 billion; Market cap: $17.1 billion; www.sprint.com), offers a wide range of wireless and wireline communications products and services. The company’s clients include individuals, businesses, governments and resellers. It has subscribers in all 50 states, Puerto Rico and the U.S. Virgin Islands. Sprint continues to benefit from the Apple iPhone, which the company launched on its network earlier this year. In the first quarter of 2012, it sold over 1.5 million iPhones. Of that total, 44% were new customers for Sprint. The company now has over 56 million subscribers, and almost 70% have smartphones. That’s a big plus for Sprint, because smartphones generate significantly higher revenue per customer than regular cellphones....

ATLANTIC TELE-NETWORK $42.74 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million;Market cap: $666.7 million; Yield: 2.3%) sells telecommunications services, mainly in rural areas in the U.S., Bermuda and the Caribbean region. In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12....

VERIZON COMMUNICATIONS INC. $46 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $133.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 4.5%; TSINetwork Rating: Average; www.verizon.com) is close to completing its $3.9- billion purchase of wireless spectrum from a group of cable companies. This will help Verizon profit from rising wireless data use: the Federal Communications Commission estimates mobile data demand will be 25 to 50 times greater by 2015 than it was in 2010.

The company also increased its quarterly dividend by 3.0%, to $0.515 a share from $0.50. The new annual rate of $2.06 yields 4.5%.

Verizon is a buy.

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ATLANTIC TELE-NETWORK $42.74 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340- 777-8000; www.atni.com; Shares outstanding: 15.6 million;Market cap: $666.7 million; Yield: 2.3%) sells telecommunications services, mainly in rural areas in the U.S., Bermuda
and the Caribbean region.

In the three months ended June 30, 2012, Atlantic’s revenue fell 4.4%, to $185.3 million from $193.8 million a year ago. However, earnings jumped to $10.5 million, or $0.67 a share, from $1.8 million, or $0.12.

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Vodafone Group plc (ADRs), $29.29, symbol VOD on Nasdaq (ADRs outstanding: 4.9 billion; Market cap: $143.5 billion; www.vodafone.com), is a leading provider of mobile telecommunications services, including cellular phones and paging. The company has 448.8 million subscribers and operates in 26 countries. Vodafone also owns 45% of Verizon Wireless, which provides mobile-phone services in the U.S. Verizon Communications Inc., symbol VZ on New York, owns the remaining 55%. Verizon Communications is a recommendation of our Wall Street Stock Forecaster newsletter. In July 2012, Vodafone completed its purchase of Cable & Wireless Worldwide, a U.K.-based firm that sells telephone and Internet services to corporations and governments. Cable & Wireless’s extensive fibre optic networks look like a good fit with Vodafone’s mainly wireless businesses. The deal also lowers Vodafone’s reliance on consumers....

Many of AT&T’s customers are switching from traditional phones (or land lines) to its more profitable wireless services. The company is also attracting more new subscribers thanks to its recent wireless-network upgrades. At the same time, recent improvements to its fibre optic networks are spurring sales of its Internet and TV services. Competition for new wireless customers is driving down prices. But even so, AT&T’s long-term outlook remains bright. That’s partly because new smartphones are pushing up demand for advanced and highly profitable wireless services, such as video calling. These new services should continue to generate the cash flow AT&T needs to keep upgrading its networks, buying back shares and raising its dividend....

AT&T INC. $35 (New York symbol T; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 5.8 billion; Market cap: $203.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.0%; TSINetwork Rating: Average; www.att.com) has 105.2 million wireless subscribers across the U.S. That makes it the country’s second-largest wireless-service provider, after Verizon Wireless. AT&T gets 52% of its revenue and 70% of its earnings from its wireless business.

The wireline division supplies most of the company’s remaining revenue and earnings. This business sells land line services, TV packages and high-speed Internet access to 40.2 million customers.

AT&T’s revenue rose 3.5%, from $119.8 billion in 2007 to $124.0 billion in 2008. Revenue fell 0.8% in 2009, to $123.0 billion, due to weaker demand for traditional phone services. Revenue rebounded to $124.4 billion in 2010, and to $126.7 billion in 2011.

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Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. Our Inner Circle Q&A frequently features questions on tech stocks. This past week, one Inner Circle member asked about a tech stock that has recently had a surge in its share price. Its unique software for submarine networks has helped this stock rise and Pat assesses whether it can sustain its momentum. ...