Sources have indicated that one of the largest telecommunications companies could be looking to sell a big part of its business.
Verizon Communications Inc. (VZ) has been one of the communication services sector’s great success stories.
Since It’s IPO on the NYSE on July 3, 2000 has grown to become the world’s second largest telecommunications company in 2020.
Verizon began as a merger between Bell Atlantic Corp. and GTE Corp. – one of the largest mergers in U.S. history.
And through a series of strategic acquisitions over the last decade, Verizon grew to become a major player in communications, cybersecurity, media, and more.
But as the times change, rumors are swirling that Verizon is planning a major shakeup – one that could have a big impact for investors.
Where’s the money?
Reports began to surface yesterday that Verizon is exploring the possibility of selling the media arm of its business.
The assets up for sale would include high-profile names like Yahoo and AOL – companies that Verizon paid nearly $9 billion to acquire, but which have been a drag on the bottom line.
Verizon has written off more than $4 billion from its media wing since 2018, and has recently made moves to divest itself from the industry.
Sources say that Verizon is currently in talks with Apollo Global Management on a deal for its media segment worth up to $5 billion.
While it is still very much up in the air at this point, the move would allow Verizon to recoup some of its losses while freeing the company up to focus on the future of its core business.
Verizon appears poised to become one of the early leaders in the rollout of 5G technology, and will look to concentrate its efforts on the telecommunications business.
Verizon stock traded more than 1.7% higher yesterday after news of the potential sale broke. The move follows a rough month for the stock – having fallen as much as 4.9% since early April.
The question now is whether VZ is worth buying.
Here’s what I think…
How do I get some?
In my opinion, Verizon is a great long-term play for two reasons.
First, Verizon is one of the best dividend stocks in the market. Currently, VZ pays a quarterly dividend of $0.6275 per share – or $2.51 per share annually. That amounts to a yield of over 4.3%. And with Verizon’s history of approving dividend increases – with an annual increase for the last 15 years – those figures are poised to get even better.
Verizon’s strong financials support the belief that dividend payouts will continue to grow.
My second reason is 5G growth. Verizon has already laid the groundwork to become one of the first nationwide providers of the revolutionary 5G service. And with estimates that more than 525 million 5G capable smartphones will be sold in 2021, with another 700 million in 2022, the outlook for Verizon is bright.
On top of that, my scanners have recently been picking up unusually high buying activity for Verizon calls. I think with the call buying and the other tailwinds working in its favor, Verizon stock is a buy and will go higher.
The 20 Best 5G Stocks to Buy Now
The American economy is about to go through a projected $1.4 trillion transformation over the next couple years…
All thanks to the shift to 5G that’s been years in the making.
As this new technology makes its way across the country, every industry – and every company – will be impacted.
Michael A. Robinson, a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today, has uncovered 20 tiny companies that belong to entirely different sectors of the market…
Yet, thanks to this new technological shift, each could see 1,000% gains within eight months.
In the Spotlight: IBM is making big moves of its own…
Yesterday also saw news breaking on another big name, as International Business Machines Corporation (IBM) announced a deal to acquire Turbonomic.
The terms of the sale are reportedly somewhere between $1.5 billion and $2 billion for Turbonomic, a software provider that assists companies in monitoring and improving the performance of their business applications.
The deal is yet another move to strengthen IBM’s position in the uber-competitive cloud computing space – and it marks the 11th acquisition IBM has made since last year.
With the market size of the cloud computing industry projected to more than double by 2025, I’ll be keeping tabs on the biggest news in the space. And as always, I’ll be back with further developments right here at Profit Pregame.