Fran Shammo, the chief financial officer of leading U.S. wireless carrier Verizon Communications Inc. VZ, recently stated that the company might turn to advertising for revenue from its online video service.
In order to increase data consumption on mobile devices and boost revenues, Verizon intends to deliver online video to customers. Moreover, young viewers prefer watching shows on portable devices over traditional media sources. Thus, the idea of catering to the younger generation through the creation of original TV content will certainly boost data revenues for Verizon.
Recently, Verizon announced that its Internet TV offerings will include channels for AwesomenessTV and DreamWorksTV with more than 200 hours of original programming. The company further stated that it will target the young population who largely depend on mobile video offerings.
Verizon currently has a Zacks Rank #3 (Hold). Consistent market share gain, strong LTE (Long Term Evolution) sales and the rollout of FiOS Internet are key contributors to the company’s growth. Further, robust addition of tablets and Wi-Fi devices are increasing the number of gadgets per customer, which is in turn driving revenues. However, a saturated wireless market, intensifying competition, negative impact of wireless handset subsidies, heavy capital spending, and regulatory risks may pose near-term threats to Verizon.
Stocks to Consider
Better-ranked stocks in this sector include Chunghwa Telecom Co., Ltd. CHT, Vonage Holdings Corporation VG and CenturyLink, Inc. CTL. Chunghwa Telecom and Vonage Holdings sport a Zacks Rank #1 (Strong Buy) while CenturyLink holds a Zacks Rank #2.
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