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Craig Moffett Still Busily Predicting Doom For Verizon
Though his previously predicted FiOS implosion never quite materialized...
by Karl Bode 01:01PM Wednesday Jul 07 2010
Sanford Bernstein analyst Craig Moffett has never been particularly fond of FiOS, given that as an investment analyst he likes his telcos (like Qwest) to shun network upgrades at the cost of the company's future so investors can get more immediate returns. As such, Moffett's been predicting doom and gloom for FiOS for several years now, insisting that Verizon's $24 billion investment in last mile fiber would shove Verizon into a huge operational hole because Verizon was "giving people a Maserati at the price of a Volkswagen."

That didn't happen.

While Verizon's not quite seeing the adoption they'd like in deployed markets yet, their install cost per home continues to drop, they're eliminating contracts to lure users, and they've all but frozen deployment to focusing on marketing. They're also of course selling off huge swaths of rural markets (like the ones they just offloaded to Frontier) they deem unprofitable, and are in the best position to compete with cable of all the telcos moving forward. So Moffett should be happier, right? Not so much. Moffett's now insisting the Frontier deal was a mistake:
"Without these access lines, we project that the wireline segment – which still accounts for ~70% of Verizon's asset base (proportionate for VZ's 55% ownership of VZW) – will produce negative operating income going forward," the analysts said in their research report, adding that while “the divested properties accounted for just 8.8% of Verizon's wireline revenues in 2009, they contributed an incredible 53.7% of wireline's pre-tax operating free cash flow [EBITDA less capex]."
Then again, had Verizon listened to Moffett -- they'd be stuck fighting cable DOCSIS 3.0 upgrades, the VoIP triple play, and the continuing death of landline with aging last-generation copper and crossed fingers.

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