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Thursday, September 28, 2006

Verizon At The World Series Of Poker (VZ)(TWX)(CMCSA)

Verizon is travelling to Las Vegas for the World Series of Poker. The company will put every chip it has into the fiber-to-the-home pot. And, it will either walk away as champion or be forced to leave the game.

Verizon will spend almost $23 billion on its fiber network. The program will eventually pass 18 million homes.

The big phone company is betting that it can take a large chunk of the "'triple play" revenue from the cable giants like Time Warner Cable and Comcast. The ability to bundle TV, broadband, and phone service into on offering for consumers is viewed by many telecom and cable firms as the Holy Grail of services for residential customers. Billions of dollars of revenue are at stake.

Unlike some of its sister phone companies, Verizon is not taking a gradual approack to installing fiber.

Verizon is a big company. Last year it has operating income of $14.8 billion on revenue of $83.1 billion. But, the company already has $32 billion in long-term debt.

Investors were concerned about the plans and drove Verizon's shares down 3% to $36.78. Like most US phone companies, Verizon stock has been rising. It has a 52-week high/low of $38.00/$29.13.

While the market digests Verizon's huge commitment to its new strategy, its shares may take a long breather.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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