Topic: Growth Stocks

Wall Street Stock Forecaster Hotline – Friday, August 30, 2013

Article Excerpt

VERIZON COMMUNICATIONS INC., $47.38, New York symbol VZ, is negotiating with U.K.-based Vodafone Group plc (Nasdaq symbol VOD) to buy the 45% of Verizon Wireless that it doesn’t already own. Verizon Wireless is a joint venture that sells wireless services to 100.1 million subscribers in the U.S. In the second quarter of 2013, it supplied 67% of Verizon’s revenue and 80% of its earnings. Buying full control could cost Verizon as much as $130 billion. That’s almost equal to the company’s $135.6 billion market cap (or the total value of all its outstanding shares). However, interest rates are still near historic lows, so now is a good time to borrow money. Verizon would also likely issue shares to Vodafone shareholders, which would dilute the holdings of its current investors. Owning 100% of its wireless business would help Verizon compete with other U.S. carriers, which are aggressively cutting prices to improve their market share. However, the high cost could prompt the company to delay…