Verizon Communications Inc. (VZ) entered into an alliance with Intuit Inc. (INTU) to help small businesses expand their foothold by marketing online. Intuit is a leading provider of small-business software, including website services.
 
The alliance between the two companies’ will power small businesses with both Internet connectivity and Web marketing tools. Verizon Websites will be available with Intuit and its Web Listings services, which will help small businesses to gain access to a large number of prospective customers online.
 
Verizon offers communication services in the form of local phone service, long distance, wireless and data services. In the second quarter of 2010, the company delivered adjusted earnings per share of 58 cents, which exceeded the Zacks Consensus Estimate of 56 cents.
 
GAAP net loss narrowed drastically to $198 million compared with $1,483 million in the year-ago quarter. However, considering the top line, results were weak with revenues falling 0.3% year over year to $26,773 million and also short of Zacks Consensus Estimate of $27,042 million.  
 
For FY10, the carrier targets capital expenditure in the range of $16.8 billion to $17.2 billion; pension and retiree benefit costs to affect EPS by approximately $0.04 to $0.06; effective tax rate to be 33% to 35% and net debt-to-EBITDA ratio to be within 1.4-1.5x range.
 
We currently maintain an Underperform recommendation on the stock as persistent erosion in access lines will continue to hurt the company’s wireline revenues and margins on the backdrop of rising competition from cable companies and other alternative services providers.
 
Moreover, high promotional and restructuring expenses might drag earnings and margins going forward. Moreover, returns from 3G wireless and wireline FiOS network remains uncertain. The fourth-generation (4G) infrastructure may be an obstacle if other service providers shift to different generation technologies.
 
INTUIT INC (INTU): Free Stock Analysis Report
 
VERIZON COMM (VZ): Free Stock Analysis Report
 
Zacks Investment Research