The Street reacts negatively to acquiring land line or Long Distance companies.
In today's WSJ article, Dionne Searcey (subscription required), writes about the Street's reactions to Verizon's and AT&T (formerly SBC)'s acquisitions of long distance companies: POORLY. Verizon is down 21%, AT&T is flat. Meanwhile Alltel, which is trying to dispose of the landline operation and invest in wireless is growing in appreciation by 14% or so.
Now that Verizon sold off their Hawaii operation (was a GTE territory) to the Carlyle Group (private equity), you'd think they'd do more, but no. It's not clear where-else the company plans to go. Even AT&T stopped the sale of their west Texas and Michigan Upper Peninsula properties. Hmmm.
Appropriately, investors are concerned about the huge bucks these landline providers will have to spend to put fibre in the ground, and do Internet and TV and telephone service on the glass, but what's the holdback?
