1 COMPARISON OF AT&T & VERIZON Running head: COMPARISON OF AT&T & VERIZON 3 Times Corporate Comparison of AT&T Verizon Financial Management 360 April 17, 2014Corporate Comparison of AT&T and Verizon As cellular phones became more common and as technology emerged that combined the ability to send data as well as voice via this infrastructure, telephone companies expanded their product offerings to include content as well as infrastructure. Today, telecommunication giants such as AT&T and Verizon have a global reach in Internet, cellular communications and other technologies, but they are increasingly operating in mature markets that should be characterized by declining profit margins and slower revenue growth. This research considers financial performance for both of these companies over the past three years as well as evaluating both companies in terms of investing attractiveness and their effectiveness in operating in a mature market.About AT&T AT&T is a holding company that offers telecommunication products and services throughout the world. These include wireless communications, local landline service (exchanges), long distance service, Internet/broadband service, equipment, video service and wholesale services. The company is organized into three business segments: wireless, wire line and other. The wireless subsidiaries provide service in the United States as well as in a significant number of other countries. The wire line business segment includes the company's U-verse television and high-speed broadband service as well as its landline offerings. Other includes operator services as well as miscellaneous corporate services. At the end of 2012, AT&T had more than 107 million wireless subscribers using contract as well as prepaid service options. More than half of the company's revenues come from its wireless operations(Reuters, 2013). In September 2013, AT&T purchased unused spectrum from Verizon, one of its main competitors (Musil, 2013).About Verizon Like AT&T, Verizon is a holding company that operates through subsidiaries. It also operates both wireless and wire line business segments, but does not provide operator services. Verizon provides wireless devices, wireless infrastructure, broadband services, Internet services, and other services to both consumer and business customers. The company has operations in more than 150 countries around the world. The company has formed strategic partnerships with a number of different companies, including General Motors. It operates the technology infrastructure for OnStar provided on cars from General Motors. Verizon has one of the largest 4G LTE networks as well as a large fiber optic network (Reuters, 2013).AT&T Financial Data Following is key financial data for AT&T for 2010-2012. The company has seen a decline in equity as its liabilities have increased significantly during that time. There was a year-to-year increase of 5 percent in the company's liabilities from.

1. 1
COMPARISON OF AT&T & VERIZON
Running head: COMPARISON OF AT&T & VERIZON
3
Times Corporate Comparison of AT&T Verizon
Financial Management 360
April 17, 2014Corporate Comparison of AT&T and Verizon
As cellular phones became more common and as technology
emerged that combined the ability to send data as well as voice
via this infrastructure, telephone companies expanded their
product offerings to include content as well as infrastructure.
Today, telecommunication giants such as AT&T and Verizon
have a global reach in Internet, cellular communications and
other technologies, but they are increasingly operating in
mature markets that should be characterized by declining profit
margins and slower revenue growth. This research considers
financial performance for both of these companies over the past
three years as well as evaluating both companies in terms of
investing attractiveness and their effectiveness in operating in a
mature market.About AT&T
AT&T is a holding company that offers telecommunication
products and services throughout the world. These include
wireless communications, local landline service (exchanges),
long distance service, Internet/broadband service, equipment,
video service and wholesale services. The company is
organized into three business segments: wireless, wire line and
other. The wireless subsidiaries provide service in the United
States as well as in a significant number of other countries. The
wire line business segment includes the company's U-verse
television and high-speed broadband service as well as its
landline offerings. Other includes operator services as well as
miscellaneous corporate services. At the end of 2012, AT&T

2. had more than 107 million wireless subscribers using contract
as well as prepaid service options. More than half of the
company's revenues come from its wireless operations(Reuters,
2013). In September 2013, AT&T purchased unused spectrum
from Verizon, one of its main competitors (Musil, 2013).About
Verizon
Like AT&T, Verizon is a holding company that operates
through subsidiaries. It also operates both wireless and wire
line business segments, but does not provide operator services.
Verizon provides wireless devices, wireless infrastructure,
broadband services, Internet services, and other services to both
consumer and business customers. The company has operations
in more than 150 countries around the world. The company has
formed strategic partnerships with a number of different
companies, including General Motors. It operates the
technology infrastructure for OnStar provided on cars from
General Motors. Verizon has one of the largest 4G LTE
networks as well as a large fiber optic network (Reuters,
2013).AT&T Financial Data
Following is key financial data for AT&T for 2010-2012. The
company has seen a decline in equity as its liabilities have
increased significantly during that time. There was a year-to-
year increase of 5 percent in the company's liabilities from 2010
to 2011, and of 9 percent from 2011 to 2012. AT&T had a
significant decline in net income from 2010 to 2011, but picked
up again in 2012, but not to the 2010 levels. As expected in a
mature industry, the company's sales have increased only
slightly during the last three years, but the cost of goods sold
increased significantly from 2010 to 2011. This resulted in a
decline in the companies after tax income in 2011, although this
increased again in 2012. Earnings per share also fell
dramatically from 2010 to 2011. AT&T had the same number of
shares outstanding during that time, so shareholder equity has
also fallen over the three-year period, meaning that shareholders
are worse off when considered from this perspective compared
to 2010 (2012 AT&T Annual Report, 2013).

3. Item
2012
2011
2010
11-12 Change
10-11 Change
Sales
127,434
126,723
124,280
1%
2%
Cost of Goods Sold
55,215
54,836
50,257
1%
9%
Income After Tax
7,539
4,184
20,179
80%
-79%
Earnings Per Share
1.25
0.66
3.35
47%
-408%
# Of Outstanding Shares
6,495
6,495
6,495
--
--

4. Equity
92,695
105,797
111,950
-14%
-6%
High Stock Price
36.51
28.29
25.40
23%
10%
Low Stock Price
27.04
23.93
20.17
12%
16%
While shareholders may be worse off in terms of the book value
of their investment, the stock price increased 81 percent from
its 2010 low to its 2012 high, with movement of 10 percent and
23 percent in the stock's high price in 2010-2011 and 2011-
2012, respectively. On October 1, the stock closed at 34, down
almost 10 percent from its 2012 high, but still higher than its
2011 high and its 2012 low. When considered as an investment,
the stock has performed adequately over the past three years.
The stock performance reflects the market's perception that the
downturn in profits may well be due to the write-off that AT&T
had to take when its proposed merger with TMobile fell through
(Svensson, 2012). Failure to merge resulted in the company
having to take a significant loss as its paid money to T-Mobile,
but this was a one-time event that investors seemed to have
accepted in their pricing of the stock since that time.
Verizon Financial Data
Following is financial data for Verizon for 2010-2012. The
company has seen a slight decline in equity but not to the same

5. degree as AT&T during the same period. Sales increased year-
to-year at a rate of four percent each year, and net income
increased from 2011 to 2012 at a rate of four percent, as well.
An initial review of the financials puts Verizon slightly ahead
of AT&T; the ratio analysis (below) provides greater insight
(Verizon, 2013).
Verizon saw stronger increases in sales over the last three years
and also had equity that remained almost unchanged. Verizon's
stock, however, outpaced AT&T's during the three year period
although both had 2010 low prices that were very close to each
other. Verizon has seen much greater price appreciation than
AT&T during that time. On October 1, Verizon closed at 46.99,
above its 2012 high price. Note that in the following list of
data, earnings per share excludes earnings that go to the no
controlling interest and includes only earnings attributable
directly to Verizon.
Item
2012
2011
2010
11-12 Change
10-11 Change
Sales
115,846
110,875
106,565
4%
4%
Cost of Goods Sold
46,275
45,875
44,149
1%
4%
Income After Tax
10,557

6. 10,198
10,217
4%
0%
Earnings Per Share
0.31
0.85
0.90
-174%
-6%
# of Outstanding Shares
2853
2833
2830
--
--
Equity
85,533
85,908
86,912
0%
-1%
High Stock Price
45.56
37.02
31.33
19%
15%
Low Stock Price
34.78
30.14
21.40
13%
29%
Ratio Analysis
Liquidity ratios provide insight into a company's ability to meet

7. its short-term obligations. The current ratio is the company's
current assets divided by current liabilities. The two companies
have similar abilities to meet their obligations, suggesting that
as two of the largest companies in the industry, they are setting
the benchmark for the current ratio.
An account receivable turn is sales divided by accounts
receivable and indicates how well the company is able to realize
revenue from its receivables. Both AT&T and Verizon are
within a day of each other with turns of 9 days for Verizon and
10 days for AT&T, and both have remained steady for the last
three years, although AT&T has seen a slight increase.
Solvency can be measured by the debt to equity ratio. Verizon's
debt to equity ratio has remained relatively steady from 2010 to
2012, while AT&T increased somewhat, indicating that AT&T
is taking on more debt, slightly, than Verizon.
Return on equity is a profitability ratio. Verizon's is
significantly lower than AT&T's return on equity ratio ranging
from 2.9 percent to 1 percent compared to AT&T's 17 percent
falling to 7 percent.
2010
2011
2012
Measure
Verizon
AT&T
Verizon
AT&T
Verizon
AT&T
Current Ratio
.788:1
.714:1
1.006:1
.744:1
.730:1

8. .598:1
Accounts Receivable Turns
9.212
10.068
9.415
9.578
9.045
9.132
Debt to Equity
1.633:1
1.938:1
1.683:1
1.556:1
1.531:1
1.406:1
Return on Equity
1%
7.8%
2.8%
3.7%
2.9%
17.7%
Evaluation of Performance / Stock Pick
Both companies are strong competitors and compete with each
other through their various subsidiaries. Both provide wire line
and wireless services with broadband capabilities as well as
content, and both companies must invest in their infrastructure
on a regular basis in order to maintain their competitive
position. Both companies also compete in what is a mature
market with little opportunity to find entirely new customers.
In terms of wireless users, new customers come from existing
carriers rather than from customers new to the wireless market,
which is different from the strong growth years of the market.
There continues to be potential for stronger growth in the
international markets, but competition can be intense there, as

9. well. While both are strong companies with strong revenues,
both have low profit margins and lower profitability measures.
Because of the ongoing investment required to maintain the
companies' infrastructure and the high level of competition in
this field, as well as the relative maturity of the market,
investors who are seeking strong returns may do well to invest
in different technology companies rather than one of these two.
If someone were to invest in one of these, Verizon seems to be
the slightly better investment based on the information provided
above, and the fact that it has the technological advantage that
gave it the ability to sell some of its spectrum to AT&T.
It is interesting to note that both companies' stock prices reflect
a far greater price appreciation than their financials would seem
to support. Both companies have seen only slight increases in
their revenues, and their profit margins are relatively low. Yet
the stock prices have gone up significantly over the past three
years. There may be some speculative interest in these
companies, or there may be an indication that the price cannot
be supported much longer with the underlying financial
performance.
References
2012 AT&T Annual Report. (2013). Annual Report. Retrieved
September 30, 2013, from AT&T:
http://www.att.com/gen/investor-relations?pid=9186
Musil, S. (2013, September 10). AT&T Completes Acquisition
of Verizon Wireless Spectrum. Retrieved September 30, 2013,
from CNet: http://news.cnet.com/8301-1035_3-57602346-94/at-
t-completes-acquisition-of-verizon-wireless-spectrum/
Reuters. (2013). AT&T Inc. Retrieved September 30, 2013,
from Reuters (US):
http://www.reuters.com/finance/stocks/companyProfile?symbol
=T.N
Reuters. (2013). Verizon Communications Inc. Retrieved
September 30, 2013, from Reuters (US):
http://www.reuters.com/finance/stocks/companyProfile?symbol
=VZ.N

10. Svensson, P. (2012, January 26). Massive $6.68 Billion Loss On
T-Mobile Deal Collapse, iPhone Subsidies, Pension
Adjustments. Retrieved October 7, 2013, from Huffington Post:
http://www.huffingtonpost.com/2012/01/26/att-q4-
2011_n_1233533.html
Verizon. (2013). 2012 Verizon Annual Report. Retrieved
September 30, 2013, from Verizon:
http://www.verizon.com/investor/DocServlet?doc=vz_ar_2012.p
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