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

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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.

Read the entire series

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Oil at $200 and a Two-Year Recession
The predictions of $200 oil have made it to the front page of The Wall S Journal. They have been hanging around in less prominent places, but now they gain some further legitimacy. The Journal predicts this would push gas prices to $6 a gallon. Oil at $200 would seize up the economy to the extent that virtually no industry would me immune. Fixing the problem could take a year, and, perhaps, much longer.
24/7 Wall St.: Oil At $200 And A Two-Year Recession

Sales Tax Holidays
The sales-tax holiday season is upon us. Here's where to shop to land the best deals.
Some States Extend Sales-Tax Holidays This Summer - SmartMoney

One Grandmother's Mortgage Nightmare
The nation's housing meltdown is disrupting lives and devastating families. One New York grandmother is trying to put the pieces back together.
Life after losing your home - CNNmoney

Shhh! Museum Secrets
American museums will greet some 850 million visitors this year; that's more than the turnout for major-league sporting events and theme parks combined, according to the American Association of Museums. They increasingly can't handle the crowds and are especially concerned about having to evacuate visitors quickly in the event of an emergency. Before you visit your next museum you should read this first.
10 Things Museums Won't Tell You (- SmartMoney.com

Buffy Won't Die
The Vampire Slayer has been off the air for five years, but she lives on-profitably-in comic books and compilations. Is a total resurrection next?
Buffy the Vampire Slayer is Back - Portfolio.com In Pictures: Buffy Products

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TheStreet.com's Jim Cramer says this is a crucial moment for the dividend-payers, which should be getting support here.

You can't even find protection in yields these days. It just went away. Perhaps we will get it if Sen. Obama gets elected. Perhaps with higher rates. Perhaps with the downfall of the high-yielding American financials. (Nice discussion of the lack of dividend safety courtesy of the man who knows more about dividends than anyone, Dave Peltier, in the Columnist Conversation last week.)

For ages, it seemed you could get to a magic number, typically 4% yield, where stocks would bounce, or at least be given a parachute that opened for a gentle landing.

Last week that parachute failed. You have stocks like Con Ed (NYSE: ED) (Cramer's Take) just getting trashed here, pushing the yield to 6%. You have stocks like Weyerhauser (NYSE: WY) (Cramer's Take), Carnival Cruise (NYSE: CCL) (Cramer's Take), Gannett (NYSE: GCI) (Cramer's Take), just slicing through the protection. The former's got cyclicality, the middle's got consumer and fuel worries, and the latter is in secular. But they all have no trouble paying the dividend.

Or consider Verizon (NYSE: VZ) (Cramer's Take) and AT&T (NYSE: T) (Cramer's Take). The first is at a 5% yield, the other is almost there. No one questions their ability to support that dividend.

I am not counting ANY of the 7-8-9-10 percenters in the financials. Anything north of 4% in that group has turned toxic.

I am saying that it is clear from these declines that something's about to give: bond yields going through the roof? A recession so severe that it threatens outfits like Con Edison? Or perhaps just a simple reversion to the old tax code, something that Obama wants that could easily be passed by a Democratic Congress.

One of these three, if not all three, is the culprit. If it is one, it might be possible to handle a decline of only about 5% from here. If it is all three, then the decline will not stop there.

Of all the things I see out there other than the collapse of almost all of the major banks, I think it is the sudden change in defense -- these stocks just don't hold up despite how much they are paying you to hold them -- that is most worrisome.

Because if these yields don't stop these stocks from going down as fast as they have been, I don't know what will!

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Verizon (NYSE: VZ) is making a fairly concerted effort to get Vodafone (NYSE: VOD) out of its equity position in Verizon Wireless. The question is, why would Vodafone get out? Verizon Wireless makes a lot of money.

According to the FT, the head of Verizon, Ivan Seidenberg said, "Would I like to have 100 per cent of the earnings given we're doing 100 per cent of the work? Yeah, I would."

Verizon Wireless does not pay dividends to Vodafone, so it does not get much of a cash benefit from its piece of the pie, but the FT points out that the British company's stake is worth about $60 billion.

Reflecting on the debate, it would probably be in the best interests of Vodafone shareholders to sell out to Verizon. Their benefits of ownership are limited. Vodafone could use the cash for expansion in Europe, Asia, and the Middle East.

Perhaps the greatest reason for Vodafone to make a graceful exit is the US market itself. Growth of wireless subscribers is slowing as the market reaches a point of saturation. Competition is tough, especially with AT&T (NYSE: T) having about the same number of subscribers as Verizon Wireless. A price war could take down margins at both companies.

Vodafone's stake may never be worth more than it is now.

Douglas A. McIntyre is an editor at 247wallst.com.

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Another big event that could change the course of events in the telecom sector might be Verizon Wireless (NYSE: VZ)'s acquisition of Alltel. This could lead to lower roaming costs and consolidation of back-office expenses. In addition, there is always enough room for other unexpected merger deals that could have a major impact on the sector.

On the negative side, telecom service providers have been facing challenges from wireless substitution and cable competition. However, Rosenbluth is confident that companies like AT&T and Verizon will be able to successfully surpass such obstacles by posting significant broadband and video gains.

So, the sector still has its risk, but according to S&P the time could be right to start to include the sector in your stock screens.

What are your thoughts on the overall sector? Have you been seeing some buying opportunities out there, or are you staying away all together? Let us hear your thoughts, we are curious what our readers think about this sector!

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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MOST NOTEWORTHY:

• UBS downgraded Verizon (NYSE: VZ) and AT&T (NYSE: T) to Neutral from Buy citing the weak economy and increased wireless competition.
  
• Banc of America downgraded shares of Invitrogen (NASDAQ: IVGN) to Neutral from Buy as the company's acquisition of Applied Biosystems (NYSE: ABI) alters their investment thesis. The company's target was cut to $38 from $50.
  
• JP Morgan downgraded General Electric (NYSE: GE) to Neutral from Overweight citing further risk to earnings and dislocation from necessary portfolio management in 2009.

• Office Max (NYSE: OMX) was cut to Neutral from Outperform at Credit Suisse.
  
• Goldman lowered Ryanair (NASDAQ: RYAAY) to Sell from Buy.
  
• WebMD Health (NASDAQ: WBMD) was downgraded to Sell from Source of Funds at ThinkPanmure.

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UBS downgraded Verizon (NYSE:VZ) from "buy" to "neutral" and took the same action with AT&T (NSYE:T) according to Briefing.com. The news service also reports that JMP upgraded Sandisk (NASDAQ:SNDK) to "market perform" from "underperform".

General Electric (NYSE: GE) was cut to Neutral from Outperform at JPMorgan, according to 24/7 Wall St. The financial website also reports that Wendy's (NYSE: WEN) waised to Equal Weight from Underweight at Morgan Stanley.

Douglas A. McIntyre

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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.

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This post is part of a series on some of the most memorable companies that have disappeared.

Ah WorldCom. Aside from its storied history as one of the world's biggest accounting frauds, I remember it as my first cell phone company. My husband bought me a WorldCom phone as a gift and it turned out to not only have terrible service, but ridiculous billing practices, and we ended up paying to get out of the contract as I recall. I remember thinking that there was something really wrong with that company and later wishing I had pursued it as an investigative story, since I was then a writer at BusinessWeek Online and WorldCom was a hot stock.

But no, I never got onto such a story. In fact, I followed WorldCom's stock with interest since I had picked it in an office stock-picking contest years earlier and felt some satisfaction at its meteoric rise through the 1990s (even though I never actually owned the shares; it was just part of a fantasy portfolio).

But here's the WorldCom history that is worth remembering now: WorldCom started as Long Distance Discount Services (LDDS) in 1983. It changed its name to WorldCom in 1995. A series of mega-mergers transformed the company, culminating in its $40 billion deal for MCI. It was rechristened MCI WorldCom in 1998, the second largest long-distance calling company. The following year, just as it announced a deal with Sprint (now Sprint Nextel (NYSE: S)) that never came to fruition, the telecom industry started a prolonged downturn.

As WorldCom merged itself into hugeness, its charismatic founder and CEO, Bernard Ebbers (known as the telecom cowboy), gained great riches and notoriety. But as the company flailed in the telecom downturn, management resorted to accounting tricks to try to keep the stock afloat. By 2002, an elaborate accounting fraud was revealed, WorldCom admitted to $3.85 billion in misstatements and filed for bankruptcy. The accounting fraud tally ultimately grew to a shocking $11 billion.

Ebbers was convicted of securities fraud and conspiracy in 2005 and is currently serving a 25-year prison sentence in Louisiana.

In bankruptcy, WorldCom changed its name back to MCI, reorganized and began an effort to pay back creditors. Bondholders got about 36 cents on the dollar. The once high-flying stock became worthless. In 2006 Verizon Communications (NYSE: VZ) purchased MCI, and most of its remaining operations became what is now called Verizon Business. There, is where the WorldCom story ends.

Let us know in the comments what you remember about WorldCom. And be sure to check out other Companies That Have Vanished.

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Last year, the Chinese government invested a cool $3 billion into The Blackstone Group LLP (NYSE: BX). It was before the IPO and seemed to be a good bet.

Of course, it wasn't. The shares of Blackstone have plunged since.

Despite this, China is still hungry for private equity. In fact, according to a report in the Financial Times, the State Administration of Foreign Exchange of China has agreed to invest $2.5 billion in TPG's latest fund (which may reach as much as $20 billion).

Simply put, China is overflowing with cash, so why not seek out higher returns?

True, private equity is ailing right now, but then again, the investment horizon is for the long-term. And with lower valuations, private equity firms are positioned nicely to pick up some attractive buyouts.

Something else: TPG has a strong track record. And, by all accounts, the firm is continuing its winning ways, such as with its latest score in selling Alltel to Verizon Wireless, a joint venture of Verizon (NYSE: VZ) and Vodafone (NYSE: VOD).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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ADC Telecommunications (NASDAQ: ADCT) provides infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.

The firm surprised the Street last week, when it reported Q2 EPS of 39 cents and revenues of $403.4 million. Analysts had been looking for 30 cents and $384.8 million. Management also guided Q3 revenues to about $403.4 million ($395.70 million consensus), FY08 EPS to $1.25-$1.33 ($1.21 consensus) and FY08 revenues to $1.52-$1.54 billion ($1.5B consensus). Friedman Billings, Robert W. Baird, UBS and Deutsche Securities subsequently reiterated "buy" ratings on the shares. Lehman Brothers reiterated its "equal weight". All five firms boosted their price targets to the $18.50-$20.00 range.

The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with seven "strong buys", five "buys" and six "holds". The stock's Price to Sales ratio (1.49), Price to Book ratio (2.06), Price to Free Cash Flow ratio (22.67) and Sales Growth rate (19.17%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 89% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $11.59 and $21.06. A stop-loss of $14.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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MAJOR PAPERS:

• The LiveTV unit of JetBlue Airways Corporation (NASDAQ: JBLU) is buying Verizon Communications Inc's (NYSE: VZ) Airfone network, the Wall Street Journal reported.
• As Lehman Brothers Holdings Inc (NYSE: LEH) is about to report a second quarter loss of about $2B, the firm is closing in on raising over $5B in new capital, the Wall Street Journal reported. Once source of Lehman's new funding is reportedly the New Jersey Division of Investment.
• The Financial Times reported that General Electric Company's (NYSE: GE) NBC Universal and British private equity firm GMT Communications Partners are expected to soon acquire Bigpoint, a German-based computer games website.

• According to the Independent, the credit crunch has cost the jobs of about 100 bankers at Barclays Plc (NYSE: BCS). The bank cut about 20 individuals on the leveraged finance team and will reportedly cut 80 more in investment banking and IT support.

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Before the bell: Futures steady ahead of payroll report

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Traditionally, strategic buyers have an edge over financial buyers (that is, private equity funds). Essentially, they have the advantage of revenue and cost synergies. However, when debt became dirt cheap over the years, financial buyers had a big advantage and were able to out bid strategic bidders.

Of course, with the credit crunch, this is over. And, yes, strategic buyers are coming to the table - and even talking to the portfolio companies of private equity funds.

This is the case with Verizon Wireless, which is a joint venture of Verizon (NYSE: VZ) and Vodafone (NYSE: VOD). The company has announced that it will purchase Alltel for $28.1 billion. Keep in mind that the company went private about seven months ago for $27.5 billion. They buyers included TPG and Goldman Sachs (NYSE: GS).

For Verizon Wireless, the deal makes a lot of sense. Basically, it will add 13 million customers and as a result, make the firm the #1 player in the US market. More importantly, Verizon Wireless expects to achieve $1 billion in incremental cost savings in two years after the closing of the transaction.

Oh, and I'm sure that Alltell's financiers - which include Goldman Sachs (NYSE: GS), Citigroup Inc. (NYSE: C), Barclays PLC (NYSE: BCS) and Royal Bank of Scotland Group PLC -- are happy. Simply put, they still haven't sold off $20 billion in outstanding debt. In other words, the sale of Alltel deal should be a big relief.

What's more, Verizon Wireless is going to buy the equity from TPG and Goldman for roughly $5.9 billion. Interestingly enough, these private equity firms originally wrote a check for $4.6 billion. So, yes, they will be making a nice return (considering the short period of time).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements

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