Paper Topic:

Verizon Communications Inc.: Valuation

Verizon Communications Inc

The market capitalization of Verizon Communications Inc (VZ ) for has been decreasing materially for the past two years , as follows

Exhibit I : Computation of VZ 's Market Value

Particulars

July 10 , 2009

2008 2007

Year-end Closing Market Prices (in

28 .62 33 .18 43 .69

End of period Common Shares (CS ) issued and outstanding

2 ,967 ,610 ,119 2 ,967 ,610 ,119 2 ,967 ,610 ,119 84 ,933 ,001 ,606 98 ,465 ,303 ,748 129 ,654 ,886 ,099

The year-end closing market prices were taken from

the Yahoo ! Finance website

The common shares outstanding as of 12 /31 /08 07 were taken from the company 's 2008 Annual Report

The common shares outstanding as of 7 /10 /09 was taken from the Yahoo Finance website

The table above shows that a lot of significant adverse events happened during these past two years . While VZ has maintained the same number of outstanding common shares (2 ,967 ,610 ,119 , its capitalization has decreased by 13 ,532 ,302 ,142 or 14 from December 2008 to July 2009 and then by 31 ,189 ,582 ,351 or 24 from December 2007 to December 2008

Meanwhile , one way to determine the approximate value of a company 's stock is by computing its Weighted Average Cost of Capital (WACC . It is the weighted average of the component costs of debt , stock and common equity . The weights assigned for the debt , shares and common equity are...

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