Trouble in the Verizon : FiOS Plugged
Posted by tggokul on December 14, 2006
Verizon can have a cheery public face related to its Fibre Optics project (FiOS) but it looks like it is running deep into trouble. The signs are looming with the unexpected announcement on Monday about the departure (they say it is retirement. Is it a Peanut Butter Manifesto case here?) of its Vice President Larry Babbio, who championed the entire FiOS initiative.The stock market hasn’t been kind to the telecom giant and stocks have gone down by nearly 7% from last October. Verizon is already informing its customers about a possible hike from next year beginning of close to maybe 8%.
But what most analysts have missed is the forecast of ADC Technologies (which was presented last Tuesday) which is the main supplier of FiOS to Verizon. They have slashed their sales outlook citing ‘order delays from its telco customers’. I went ahead and checked the recent forecasts of other Fiber vendor companies and surprise, Corning has a similar observation. An analyst when reporting about this says it is because of excess inventory that Verizon has accumulated over the days.
Tough times for Verizon and its Fiber initiative. But honestly though, they were cornered by the cable companies and FiOS was the only way they could compete against the triple-play features the cable companies were providing. All said and done, a risky move which so far has not paid dividends.