Verizon Communications SWOT & PESTLE Analysis

Strengths

1. Good Financial Performance: Verizon shows good financial performance with revenue of $131 Billion and Operating income of $33 Billion. The acquisition will help Verizon gain financial advantage and help suppress the negative income as faced by Yahoo. Together, the three companies under one umbrella can obtain good profits.

2. Complementary Ad Technologies, Potential Cost Synergies: With its 2015 acquisition of AOL, Verizon gained access to a robust programmatic and video advertising platform. With Yahoo acquisition, Verizon can now venture into the search engine and native advertising market (native ads are typically formatted to resemble the content that they are placed around). Gemini (part of Yahoo advertising division) – blends search and native ads for superior results – and BrightRoll, which offers programmatic buying and selling tools for video, display and native advertising. This effectively gives Verizon a broad spectrum of ad tech assets ranging from programmatic video and display to native advertising and search. The Yahoo acquisition also brings about cost synergies for Verizon, as there is likely to be an overlap with AOL’s operations, particularly in areas such as sales, administration and product development. Verizon has got top engineers, good designers, marketing team and new clients from the resulting acquisitions.

Weaknesses

1. Late entry in unlimited data space: Verizon entered very late in the Unlimited data plan space, as a result of which it lost many of its customers to its competitors. Wireless market is highly mature and doesn’t have much scope for expansion. Wireline, TV (down 26% YOY) and high-speed internet (down 60% YOY) business is declining.

2. Less emphasis on R&D and innovation: Less emphasis on R&D and less innovation: While Amazon, Facebook, Quora redefined the platform for content sharing, Verizon has not done much research or innovation in this domain so far. Organic growth is also as important as all the mergers and acquisitions that Verizon focuses on.

3. Higher price compared to other players: Verizon positions itself as a premium service provider and as a consequence commands a higher price compared to other players. The problem here is with the emergence of 4g and VoIP, the services are getting inherently cheaper, and the competition is getting ahead by leading in cost. Verizon must also compete on price.

4. User Inconvenience: Managing a Verizon account is not user friendly, although number portability services are available, it is very difficult and inconvenient for the users to actually avail it. Lesser number of customer care centres compared to competitors.

Opportunities

1. Potential in Emerging Markets: Verizon can now use AOL to enter the vast untapped regional market of the US. This can enable to use high localization to offer services at door step. Increasing kiosks and door-to-door agents for rural and far off areas would increase their presence and brand association.

2. Diversify: there is a vast opportunity to diversify into all the complementary businesses such as Cloud services, Voice over internet, partnering with cell phone manufacturers (analogous to Jio Phone), offer better services than Netflix and Amazon Prime.

3. Marketing Platform: Verizon owns a superb marketing platform. Yahoo has developed a global data grid around users to deliver highly targeted advertising. Yahoo has sentimental analysis capability to analyse their users, demographics, and usage patterns. Yahoo can deliver local search, and semantics-based advertising. The set of products that Yahoo manages uploads everyday information to this data grid. It’s a unified marketing platform that Verizon can now make use of.

4. Inbound marketing: Google, Facebook and even Hubspot are doing a good job at changing the way users consume information and how advertising content is delivered to them. With some tweaks, Yahoo could build an advertising offering, and tap into the revenue from advertising.

5. Corporate Services: Verizon has a huge corporate client base (mass market, business, and government). Who would need enterprise solutions services, similar to those offered by Google through Google Apps. Microsoft itself has also a huge business offer. Yahoo has a highly interconnected suite of well operated and managed services that would directly translate to immediate business entry with a sufficient market share for Enterprise Solutions. Yahoo has suit adapted to various international markets. Verizon could expand the offering into Latin America, Europe, Asia-Pacific. In some markets, Verizon already has the clients, and with Yahoo now they have the product. In other markets, they are to launch the product and the ability to enter and establish their presence. Verizon already has cloud networking, and security services through Verizon Enterprise Solutions.

The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.