Comcast Corp.’s value on Wall Street — now almost $200 billion — has zoomed past that of Verizon Communications Inc., a stunning surge in recent months as investors are viewing the Philadelphia cable giant more favorably than the nation’s largest wireless carrier.
On Friday morning, Comcast was trading with a market capitalization, or what it would take to purchase all of its outstanding stock, of $199.5 billion, nosing ahead of Verizon, trading with a $189.7 billion market capitalization.
A decade ago, Verizon had a value roughly double that of Comcast.
But investor sentiment has soured on Verizon, which derives about 80 percent of its profits in the highly competitive wireless sector, with itand AT&T, T-Mobile, and Sprint locked in a four-way battle for consumers, analysts say. Verizon also has pulled the plug on expanding its Fios brand after it became exorbitantly expensive to roll out the fiber-based TV and internet services.
“People have been predicting cable’s demise for more than 10 years,” Kevin Werbach, an associate professor of legal studies at the Wharton School of the University of Pennsylvania, said Thursday. “But there is a counter view that cable has the best infrastructure for broadband, and that means that ultimately cable wins.”
Comcast has retained, for the most part, a monopoly on high-capacity broadband connections into tens of millions of homes over its cable lines in large parts of the nation. Comcast had no comment on Friday. Verizon was not immediately available for comment.
“It’s an extraordinary turn of events,” said telecom analyst Craig Moffett of MoffettNathanson LLC. “This milestone speaks to the company’s decades-long consistency of vision, perseverance, and success as a deal-maker. And, of course, it doesn’t hurt that cable has turned out to be a very good business.”
The only telecom company with a higher market capitalization than Comcast is AT&T Inc., with $239.7 billion on Friday morning.
Tom Eagan, an equity analyst with Telsey Advisory Group, said that “when satellite got into the video business, everyone thought that cable was in trouble. When the telcos got into the video business, everyone thought that cable was in trouble. Now with [online streamers], everyone thinks that cable is in trouble.”
But cable companies keep finding ways to maintain their profit margins and grow their broadband businesses, Eagan said. Comcast also has grown its TV business over the last year after years of declines, he added.
Neil Begley, senior vice president with Moody’s Investors Service who covers Comcast, said, “It’s pretty simple. The only ubiquitous network out there that has consistent broadband capacity and speed is the cable network.”
Verizon’s valuation on Wall Street also has been clouded by uncertainty over its next strategic steps. AT&T acquired DirecTV — the nation’s largest satellite-TV provider — and now has a deal to buy HBO owner Time Warner Inc., both diversifying moves.
AT&T’s deal follows Comcast’s acquisition in 2011 of NBCUniversal, which diversified the Philadelphia company into entertainment.
Analysts and industry observers have speculated that Verizon could attempt to acquire Comcast itself, Charter Communications, CBS Inc., or satellite-TV provider Dish Network.
“I wouldn’t count them out,” said Mark Stodden, senior vice president of Moody’s Investors Service, who covers Verizon. “It is a talented management team and they still have levers to pull.”