Financial Analysis

BELL ATLANTIC, COMPETITION and the TELECOMMUNICATIONS INDUSTRY

Passage of the Telecommunications Act of 1996 established criterion for abolition of the competitive restraints of the Modified Final Judgment (MFJ), the court decision that compelled AT&T to break up in 1984, and caused the creation of the "Baby Bells," including Bell Atlantic. Of primary concern to Bell Atlantic is the blurring of the division between local and long-distance providers of telecommunications services resulting from the Act's ratification. Local operators can now offer long distance, cable, and other types of services; long-distance and cable firms have been given the option of entering the local market. These conditions significantly expand the possibility of competition from a wide variety of players in markets where Bell has previously enjoyed near-monopoly. Long-distance providers have particularly shown interests in entering local markets. Bell must demonstrate it can prosper under these conditions. Their has already been a strong indication that Bell will counter entry into formerly-controlled local markets, by expanding into the long-distance arena. In this respect, it is expected that the firm's favorable brand recognition among local consumers should provide some competitive edge. Bell Atlantic has also moved ahead with merger plans with NYNEX, a strategy designed to take advantage of their mutual economies of scale and create substantial new synergy's as a consequence of their contiguous networks and high-traffic areas of service. Here again, substantial advantage over the competition is expected.

BELL ATLANTIC CORPORATION:

A STOCK ANALYSIS REPORT

Current Stock Price

Bell Atlantic Corporation's current stock price--as of Friday, April 4, 1997-- is 59 3/8, a gain of 5/8 from the previous day.

Background

The firm was established in 1984 in the break-up of the Bell System. Today, Bell Atlantic is a holding company for seven telephone subsidiaries: new Jersey Bell Telephone Co.; The Bell Telephone Co. of Pennsylvania; The Chesapeake and Potomac Telephone Co. of Maryland, Virginia and West Virginia (collectively referred to as C&P companies; and the Diamond State Telephone Co. It is customer-centered, enterprising, and diversified communications company specializing in product and service innovation. Business encompasses two segments: (1) Communications and Related Services, and (2) Financial and Real Estate Services. The Communications and Related Services segment provides wireless communication products, including cellular service, servicing computers and computer networking; this is the firm's major source of business operations. Financial and Real Estate Services engages in lease financing of commercial, industrial and high technology equipment.

Bell Atlantic's objective is performance at optimum levels in highly competitive and rapidly-emerging international markets. Its mission is to be the world's most prominent communications, entertainment and information company. Thus far, expansion into new long-distance markets has been profitable, but Bell Atlantic suffered from a decline in several critical areas of financial performance in 1996, relative to 1995; most prominent of these were: revenues per share, both annual and relative price/earnings ratios, average annual dividend yield, and revenues. Nevertheless, net profit, net profit margin, earnings per share and dividend per share improved. Present conditions suggest the firm has recovered from the 1996 performance declines, and