Through TheFLY's Eyes: YouTube and Verizon

from Joseph Lazzaro of Theflyonthewall.com















The World Just Got Smaller, Again

Soon, you may not have to miss a moment of your kid acting in his/her first play at school, even if you’re at work.

The convergence of digital age technologies continued Tuesday with the marriage of a Web video service and a mobile phone carrier.

Web video service YouTube, a unit of Google (GOOG), and mobile phone giant Verizon (VZ) announced Tuesday a deal that will enable Verizon’s (VZ) cell phone subscribers across the nation to access YouTube’s videos. The deal is part of YouTube’s mobile service, expected to be launched later this year.

YouTube will deliver a sample of the most popular videos to Verizon Wireless' V CAST subscribers in the United States. As of November 2006, YouTube had amassed the largest community for online video entertainment. Verizon has 57M mobile phone subscribers.

Wall Street’s initial response to the deal was favorable, as it will expand each company’s service area and brand awareness, which should provide increased opportunities for revenue. Verizon was up 20c to $34.45 on the news, while Google (GOOG) was down 40c to $484.20 in early afternoon trading Tuesday.

Investment Analysis: Are YouTube, via Google (GOOG), and Verizon (VZ) suitable for the typical investor? Yes, if you can tolerate a low amount of risk. Consider buying GOOG in stages, 25% of your position for each of the next four weeks. For VZ, buy half your position today, then wait to see if holds $34. If it does, buy the other half of your position. If it doesn’t hold $34, delay your remaining 50% purchase until VZ shows signs of resuming its ascent.