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A misguided spending trip?
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In 2015, Verizon had announced the purchase of AOL and its $ 4.4 billion online content and advertising business, and two years later bought $ 4.5 billion worth of Yahoo .. Although both companies were Internet pioneers, they are both shells of the old. Alphabet Incof (NASDAQ: GOOG)(NASDAQ: GOOGL) Google and Facebook. Nevertheless, AOL and Yahoo! still gather hundreds of millions of unique users each year. The goal of the merger of the two media companies with Oath, their new parent company, was to help reduce expenses and increase profitability. "Data-reactid =" 13 "> In 2015, Verizon had announced the purchase of its online advertising and online content business $ 4.4 billion.Two years later, it acquired Yahoo! for $ 4.5 billion, although both companies were the pioneers of the Internet, they are both a shell of their own lives, having been upset by Alphabet Incof (NASDAQ: GOOG)(NASDAQ: GOOGL) Google and Facebook. Nevertheless, AOL and Yahoo! still gather hundreds of millions of unique users each year. The merger of the two media companies into the new parent company Oath was intended to help eliminate costs and improve profitability.
Verizon does not break down his profits from Oath, but he expects the new company to compete better with the duopoly Google-Facebook. This has not been resolved as earnings continued to contract over the past year.
|
Quarter |
Oath income |
|---|---|
| Q3 2017 |
$ 2.0 billion |
| Q4 2017 |
$ 2.2 billion |
| Q1 2018 |
$ 1.9 billion |
| Q2 2018 |
$ 1.9 billion |
| Q3 2018 |
$ 1.8 billion |
Data Source: Verizon Quarterly Earnings.
Management is now expecting the turnover of Oath to be relatively stable, bringing annualized sales to $ 7.8 billion, based on the results of the last 12 months of Oath. Verizon also announced at the call of the third quarter results that it was once again reducing its forecast capital expenditures for 2018 – to a new range of $ 16.6 to $ 17.0 billion -, which would seem to indicate that cost savings are now the name of the game for Verizon. But there is more and more reason to believe that Oath could continue its slow downward spiral.
The new teammate of Verizon?
It has been years since Google gave its name to device makers, but last year, it bought out Pixel's Pixel phone design team and integrated it into its business. Although Google's hardware efforts, including new Pixel phones, have been well received, they still represent only a small fraction of the Alphabet empire. On the contrary, it seems that the company uses the material to show and promote its software suite, the real black bread of Alphabet.
It may be surprising that Verizon is the exclusive sales partner of the Google Pixel phone in the telecommunications sector. In addition, Verizon and Google are promoting the Pixel range with aggressive sales contracts. This does not make sense because Google hardware sales favor the use of Google's software, media and search services, which would be bad news for Oath. Oath revenue of $ 10 billion by 2021 seems completely out of the question
The business agreement makes perfect sense for Google, but what exactly is the angle of Verizon?
Four young people using their smartphone standing against a red wall.
Source of the image: Getty Images.
Why Serment is of secondary importance, even tertiary
It looks like Verizon is pulling out of his old media empire. Instead, the leading wireless service company in America doubles its network and address to its subscribers, especially those of the next generation.
Ensuring 4G wireless subscribers demonstrate telephone business is a winning strategy that has allowed Verizon to increase revenues over the past two years. Over the next decade, the 5G network will be Verizon's next big effort. The new CEO, Hans Vestberg, said that investment in telecommunications is now at the center of his concerns.
Initially, 5G will be offered as a high-speed broadband Internet service. In the next two years, a wireless version will be launched for smartphones. Over time, however, 5G will be the backbone of many other devices connected to the Internet: industrial equipment, cars and smart cities, as well as existing consumer devices.
The revenues generated by Verizon's wireless network connections are where the real money is. Verizon focuses on investing in new network technologies and increasing the number and type of devices that use it. If that means dropping the oath while making the most of it while on the road, so be it.
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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Suzanne Frey, a member of the Alphabet Executive, is a member of The Motley Fool's board of directors. Nicholas Rossolillo and his clients own shares in Alphabet (C shares), Facebook and Verizon Communications. The Motley Fool owns shares and recommends Alphabet (A Shares), Alphabet (C Shares) and Facebook. The Motley Fool is short November 2018 $ 155 calls on Facebook and November 2018 long $ 135 puts on Facebook. The Motley Fool recommends Verizon Communications. Motley Fool has a disclosure policy."data-reactid =" 52 ">Suzanne Frey, a member of the Alphabet Executive, is a member of The Motley Fool's board of directors. Nicholas Rossolillo and his clients own shares in Alphabet (C shares), Facebook and Verizon Communications. The Motley Fool owns shares and recommends Alphabet (A Shares), Alphabet (C Shares) and Facebook. The Motley Fool is short November 2018 $ 155 calls on Facebook and November 2018 long $ 135 puts on Facebook. The Motley Fool recommends Verizon Communications. Motley Fool has a disclosure policy.
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