Verizon Communications Inc. (NYSE:VZ) announcement that it is to give consumers more power in selecting what they want to pay for continues to elicit mixed reaction especially on the impact it will have on the stock, in the long run. Speaking on Fox Business KPMG chief economist, Constance Hunter reiterated her skepticism on whether the a la carte access will have a big impact on the stock. Compared to the impressive gains the company continues to enjoy on the Internet of Things front.
Verizon Communications Inc. (NYSE:VZ) may be trying to appeal to the crowd that has been cutting the cord with the new offer but at the same time it is receiving unexpected backlash from ESPN which continues to air resentment to the unprecedented move.
“This is an important part of their business, but there is another important part of their business that does not get talked enough about which is this Internet of things or machine to machine technology. This is something that all the phone companies are big in here and in Europe and around the world,” said Mrs. Hunter.
Hunter expects Internet of Things ambitions to contribute a big chunk of Verizon earnings going forward having been growing by 45% year over year. There is no doubt that Verizon Communications Inc. (NYSE:VZ) was prompted to do the unthinkable and break the bundle because of the pressing wave of competition from video on demand services offered by the likes of Netflix, Inc. (NASDAQ:NFLX) and HBO Now.
However, a lot of skepticism still hangs in the air as the offer does not offer internet services meaning consumers will have to pay a lot more to have both services. Penn Financials Matt McCall remains skeptical on whether the unbundling effect will have any major impact, in the long run, the stock having soared by 26% over the past two years year.
“The internet of things I agree is going to be a blockbuster but it is a small portion of their business right now. If a small portion is going 45% but the meat potatoes of their business is going away, it is not going to make up for me. [..]This whole $55 thing once you throw in taxes and fees you get $70, and you have to add internet you are back to $100,” said Mr. McCall.
Capital Strategies President, Cheri Jacobus, believes the unbundling should be a hit among the older consumers who are used to traditional TV and would be more than willing to jump on an opportunity of selecting their own channels.
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