This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Verizon made an ad this summer showing a guy scaling a junkyard fence to get his hands on an LG Dare phone, only to run into two junkyard dogs -- chained and snarling pit bulls. Pit bull lovers didn't like the casual depiction of animal neglect and cruelty. Animal rights groups have been working for a long time to stop people from chaining up dogs in their yard, abusing them and generally using them as a street weapon.
Verizon at first insisted that it would keep running the ad. Then concerned dog owners got the People for the Ethical Treatment of Animals involved. PETA first tried to talk with Verizon and explain why the ad annoyed people: the dogs in the commercial had ears docked in a "fight crop" and pit bulls are the most abused breed of dogs.
Verizon refused to meet to discuss the situation, PETA says. So they put out an action alert. After Verizon got 7,000 e-mails from angry animal lovers, they took down the ad.
Sprint Nextel Corp. (NYSE: S) seems to be on the mend from a perception standpoint. CEO Dan Hesse is still running television advertisements with his direct email address and a personal message to potential Sprint subscribers. The cellular carrier has a refined, electric image and has a decent competitor to Apple, Inc.'s (NASDAQ: AAPL) iPhone. Is it still in bad financial shape? That answer would be yes, as it continues to lose customers every single quarter.
While a Sprint/T-Mobile partnership was rumored this summer, the technology used between the two companies is incompatible. From a layman's perspective, it's precisely the problem that doomed the Sprint acquisition of Nextel. To this day, the brands still operate independently in many ways. That's been a death knell for the company, while larger competitor AT&T, Inc. (NYSE: T) perfectly merged its network with the now-gone Cingular over a few years. Still, would T-Mobile really want to team up with Sprint? Only if Sprint jettisons the Nextel brand and network sometime in 2008.
Analyst Christopher Larsen with Credit Suisse makes a decent argument for Sprint and Nextel parting ways as soon as possible, citing the recent $3 billion fund raiser Sprint announced. Could an impending corporate divorce be in the works? Sprint has already written off tens of billions in the bungled Nextel merger, but it could raise over $7.5 billion by selling Nextel.
Still, with the third- and fourth-largest wireless players (Sprint and T-Mobile, respectively) ripe for consolidation, combining two very different networks better work if there's even a hint of a future combination between the two. But right now, that may be the only choice: Verizon Wireless and AT&T are kicking butt in the wireless market in the U.S.
Google's (NASDAQ: GOOG) success over the next decade depends, to some extent, on moving its search products from PCs to the new generation of mobile devices. It will go a long way toward getting a head start on that in a deal with Verizon (NYSE: VZ).
According toThe Wall Street Journal, "The deal under discussion, which would make Google the default search provider on Verizon devices and give it a share of ad revenue, is aimed at dramatically simplifying what is now a confusing set of search options for cellphone users."
The news is not good for Microsoft (NASDAQ: MSFT) or Yahoo! (NASDAQ: YHOO). After losing the PC search battle, their next, and perhaps last, option to pick up substantial business is on mobile handsets. Because Verizon has about 70 million subscribers in the U.S., a large opportunity to gain share from Google is gone.
Deals with cellular carriers are overrated. Even if the default search engine is on a handset, users can still access any other search company through the phone's web browser.
If PC habits carry over to the wireless world, Google has already won the new war. Few people are likely to change search preferences from device to device.
Douglas A. McIntyre is an editor at 247wallst.com.
Verizon's (NYSE: VZ) talks with labor have gone past their deadline. It is clearly good news that there has been no strike. The bad news is that one could still happen. At least 65,000 telecommunications employees are covered under the agreement being negotiated.
According to Reuters, "Verizon, which has not commented on issues under negotiation, has about 103,000 workers in its telecom unit, which covers residential and small business telephone, broadband and video services."
If the workers walk, Verizon's non-cellular businesses go to hell. Installations of broadband and TV service could come close to being suspended. That means the company's ability to compete with cable TV operations practically goes away. Verizon's customer service would also suffer.
This is probably a fine time to a stay away from the company's stock. It trades at $34, near a 52-week low. A prolonged strike could push the shares below $30.
Douglas A. McIntyre is an editor at 247wallst.com.
Until recently, I believed that shares of Comcast Corp. (NASDAQ: CMCSA) had been unfairly punished by investors who were too skeptical about the company's prospects. Now, I am changing my tune because I have come to realize that the future of the company will be filled with endless pricing battles, which will force the Philadelphia-based cable giant to sacrifice the needs of shareholder to retain customers.
To be fair, Comcast reported a decent quarter Wednesday and was able to hold the line on capital expenditures. Net income was $632 million, or 21 cents a share, versus $588 million, or 19 cents, a year earlier. Sales jumped 11% to $8.55 billion. Results were short of the 23-cent forecast of analysts surveyed by Bloomberg but beat the $8.57 billion sales forecast.
Now, ordinarily missing the profit forecast would cause the shares to tank. Instead, they are trading up slightly because investors found much about the earnings report to like. For one thing, Comcast's free cash flow was $1.17 billion, more than triple from a year earlier. This beat the forecast of veteran cable industry watchers such as Craig Moffett of Sanford C. Bernstein. It also reaffirmed its earnings guidance for the year, countering worries that it would be hurt by cash-strapped customers falling behind in their bills.
So the earnings crunch continues, and here's a look at some companies scheduled to report results this week that are anticipated to be big winners and losers in terms of earnings growth.
Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.
Apache Corp. (NYSE: APA): $4.10 EPS (+53.9%) on revenue of $3.8 billion (+54.6%)
EOG Resources Inc. (NYSE: EOG): $2.34 EPS (+50.0%) on revenue of $1.7 billion (+62.2%)
Avon Products Inc. (NYSE: AVP): $0.47 EPS (+44.7%) on revenue of $2.6 billion (+11.5%)
AT&T (NYSE: T) closed at $31.83 Monday. T is scheduled to report Q2 EPS on July 23. T August option implied volatility of 36 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Verizon (NYSE: VZ) is scheduled to report Q2 EPS on July 28. VZ announced second quarter wireless net customer additions of 1.5 million. At the end of the quarter VZ had 68.7 million customers. VZ August option implied volatility of 31 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Dark Knight, the Batman movie starring Heath Ledger, did boffo box office: $158.3 million, according to Defamer. But this blockbuster will not just benefit Warner Brothers and DC Comics, which share parent Time Warner Inc. (NYSE: TWX) with BloggingStocks. There are at least six companies that will benefit from Dark Knight's success. According to Seeking Alpha, these companies include:
Time Warner -- through its Warner Brothers and DC Comics subsidiaries are profiting most directly.
Comcast Corporation (NYSE: CMCSA) partnered with Warner Bros. to offer "behind-the-scenes footage, trailers, and mini movies on demand"
Verizon Communications, Inc. (NYSE: VZ) and Nokia Corporation (NYSE: NOK) collaborated in creating the Nokia6205 The Dark Knight Edition. Seeking Alpha reports that "This batphone targets superfans, with bat wallpaper, voice tones, screensavers, and the film's trailer pre-loaded."
This post is part of a series on celebrity spokespeople who ended up doing serious harm to the brands they were hired to promote, or vice versa. See how we rank the 20 top spokesperson fiascos.
Hip-hop/R&B artist Akon is the only person to have twice held both the first and second spots on the Billboard Hot 100 simultaneously. Winner of a Grammy for his hit "Smack That", he has expanded his repertoire to include producing music and founding his own music production and distribution companies. Such a popular entertainer and entrepreneur would obviously be attractive to a company such as Verizon (NSYE:VZ), looking to hook into the cell-addicted young American.
Akon brought strong ties to the world market, too. Born in Senegal, and raised in New Jersey, a Muslim rumored to have wed multiple women, his exotic background added to his appeal.
Unfortunately, for Verizon, his background failed to properly prepare him to control his on-stage antics or properly estimate the age of his audience. In April of 2007, during a set in Trinidad and Tobago, Akon invited a young lady onto the stage to join him in a simulated sex routine. Unfortunately, the lady proved to be the 15-year-old daughter of a minister. Even more unfortunately, for Akon and Verizon, Akon's film crew recorded the incident and uploaded it to the web, where it drew great public censure. Shortly thereafter, Verizon pulled its sponsorship of Akon's Sweet Escape tour and quit offering his music as ring tones.
Akon's song "Sorry, Blame it On Me," is an apology to the young lady at the center of the scandal. Verizon is still waiting for its song of apology.
Verizon Wirless Thursday agreed to pay $21 million to settle a lawsuit filed by California customers upset with the company's early termination fees, the Associated Press reported.
Details are still pending, but Alan Plutzik, Alameda County (California) Superior Court judge said "we are recovering cash" that would "be available" to Verizon mobile phone subscribers who paid fees to end their contracts early, AP reported.
Shares of Verizon Wireless' parent Verizon (NYSE: VZ) were virtually unchanged on the news, dipping just 8 cents $34.58 in mid-day Thursday trading. Warranted reimbursement or California dreamin'?
Stock analyst C. Leonard Bauer told BloggingStocks Thursday that, while he abhors cell phone / PDA termination fees as many others do, thinking that mobile phone / phone service providers can eliminate the $100-$250 fee without increasing charges elsewhere does not represent clear thinking.
During the challenging market conditions over the past year, the telecom sector has felt its fair share of the pain. BusinessWeek brings Standard & Poor's Todd Rosenbluth who suggests that some of these telecommunication stocks could now be good investments for traders as they have a safe dividend.
Despite worries tied to the slowing U.S. economy and increased competition, "we think that some of the concerns are overdone and believe selective stocks are attractively valued," Rosenbluth stated. Rosenbluth also noted that telecom stocks have started showing signs of recovery for the past few weeks, helped by the launch of new handsets and merger and acquisition agreements.
Some of investors' favorite companies are AT&T Co. (NYSE: T) and Citizens Communications Co. (NYSE: CZN). Rosenbluth believes that the launch of Apple (NASDAQ: AAPL)'s new iPhone, 3G iPhone, will stir increased demand for smartphones, helping such companies, while putting pricing pressure on some of their competitors.
Verizon (NYSE: VZ) had decided that customers do not have to be landline clients to get the company's new fiber broadband and TV service. In other words, it is willing to walk away from its core business to move into the future.
According to the AP, "Surveys point to about one in seven U.S. households now lacking landlines." More people are using their cellphones instead of the traditional home phone connection.
The announcement points to the lengths to which Verizon will go to get customers away from cable companies like Comcast (NASDAQ: CMCSA). Cable does not require that people use its voice system, VoIP, to get cable television or broadband connections. If Verizon wants to match cable packages, it has to do the same.
To a large extent, the news is an indication that Verizon is not really a traditional "phone company" any more. The revenue from that part of its operations is shrinking. Its growth comes from cellular customers, home fiber subscribers, and DSL.
Alexander Graham Bell is turning in his grave.
Douglas A. McIntyre is an editor at 247wallst.com.
For every person who had to wait forever for Time Warner Cable, Inc. (NYSE: TWC) to pick up the phone, for every customer who had to slog through an automated voice menu, then stew waiting to talk to a person, for every family that went days without TV or internet, Los Angeles City Attorney Rocky Delgadillo struck a blow Friday. On behalf of the city of Los Angeles, Delgadillo sued the top cable provider for southern California, saying its service was so bad it constituted fraud and deceptive advertising.
The city wants $2,500 for each instance, double if the victim was old or disabled. Part of the problem in Los Angeles stemmed from the company's complicated task of absorbing Comcast and Adelphia customers, not everyday business. Consumers had filed their own civil suit a while back.
Time Warner Cable stock dropped $1.23, or about 4%, Friday on somewhat heavy trading. The damages could add up to potentially millions of dollars. Or it could be one of those lame settlements that give customers useless coupons.
The direct impact of the civil suit isn't as much of a big deal -- yet -- as the broader implications. What if other cities or customers sue? How is this suit going to influence the opinion of someone who's deciding between Time Warner and Dish Network or DirecTV? Between Roadrunner and wireless broadband? For a long time, cable providers could offer lousy service because there was basically no competition. Now, they have to behave better or lose customers. Now that could be real money.
Since its IPO last year, the shares of Virgin Mobile USA Inc. (NYSE: VM) have imploded -- going from $15.69 to a low of $1.90. The stock has lifted somewhat lately though, and is now trading at $3.43.
Actually, the company has confirmed that it is talking with Helio -- majority owned by SK Telecom (NYSE: SKM) -- about a possible merger.
Both companies are known as mobile virtual network operators (MVNOs), which means that they provide cell services by using another carrier's infrastructure. Unfortunately, the MVNO model has been extremely difficult to pull off (in fact, there have been several high-profile blow-ups in the space, such as Amp'd).
So will a combination help things?
To get some perspective on things, I had a chance to interview Frank Dickson, who is the Chief Research Officer at MultiMedia Intelligence. According to him:
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Here are some highlights from this past week's 
Until recently, I believed that shares of 
AT&T
Hip-hop/R&B artist 
During the challenging market conditions over the past year, the telecom sector has felt its fair share of the pain. 
Since its IPO last year, the shares of 
Analyst sees oil dropping to $50 on global economic slowdown
Lehman screws workers out of severance payments
No Cramer, now is not the time to panic!
