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Verizon Communications Inc. (NYSE:VZ) Shareholders Don’t Want Change

Verizon Wireless (NYSE:VZ)
Verizon Communications Inc. held its annual meeting of shareholders yesterday. All 13 directors were elected for one more year. As per the firm, its chairman and CEO Lowell McAdam received over 95 percent of the votes. The firm added that its shareholders overwhelmingly approved the compensation of its executive officers as described in the 2016 proxy statement, with more than 92 percent of the votes.
Verizon Wireless (NYSE:VZ)

Verizon Communications Inc. Proves Unions’ Claim Hollow

The firm indicated that despite the recent threat from unions that the major shareholders were ready for change, all six proposals from the latter were defeated in the meeting. It has become a matter of routine affairs that the lobbying activities vote gets defeated with 66.1% votes against and 33.9% favoring it. Also, another proposal in respect of an improved executive stock retention policy promoted by a shareholder of Pension Benefit fund was defeated with only 7.4% voting for it.Verizon said that 91.6% of the shareholders voted against the renewable energy targets while 8.4% favored them. Similarly, a proposal of indirect political spending was defeated with 69.9% votes against and 30.1% votes in favor of it.

It also said that its $4.4 bn purchase of AOL was led by its desire to tap into AOL’s programmatic ad technology. At the same time, many people wondered if AOL’s media business — which includes properties like the Huffington Post, TechCrunch, Engadget, Makers and AutoBlog — could fit in with the firm’s plans. Currently, investors seem to be upbeat about the stock because of the firm’s strong outlook for advertising and video. AOL’s mobile video and advertising are one of the most rewarding. The firm had stated at the end of 2015 that it has 112.1 mn wireless customers, which were surely higher than most of the other carriers. Online ad sales have a huge potential for profitability. In the US, online ad sales surged to $59.6 bn, which is a huge number.

Vendor Sees Uptake for 100G in Metros

Lumentum Holdings Inc is a vendor for Verizon Communications Inc. for fiber optics. JPMorgan’s Rod Hall feels that the former should show higher revenue growth later this year on better optical datapoint momentum. ‘We expect the firm to gain traction in the web 2.0 vertical as well as 100G upgrade cycle continues. We expect Lasers business to improve in FY17 as the firm fixes execution issue with its key customer,’ Hall explained. He said that Lumentum’s new multi-million dollar QSFP28 deal with a new large web 2.0 customer in the datacom segment could further boost growth in FY17.

Meanwhile, the firm reported a ‘beat and raise quarter’ on strong demand from China where Lumentum expects ROADM deployments to accelerate in 2017. Lumentum’s revenue from HongKong grew 73 percent to $151 mn, while US revenue is expected to rebound in FY17 from Verizon’s 100G metro deployments as well as new Web 2.0 customer deployments.

In addition, Lumentum said that they don’t yet expect any impact from the Verizon strike, with deployments still expected in the second half of 2016. ‘We believe one way that Verizon could deal with an extended strike would be to begin deployment outside of the affected north-east corridor of the US,’ Hall noted.

Verizon and union leaders have met many times for bargaining over worker issues. But no major conclusions have come out. Also, the union has asked the FCC to investigate copper to fiber upgrades.

As per Verizon Communications Inc. , such complaints are just publicity stunts. The firm believes that the incident of the upgrades has coincided with the workers’ strike, which is creating more problems.

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