Southern Company, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in Alabama, Georgia, Florida, and Mississippi. As of December 31, 2006, it served approximately 2,305,676 residential, commercial, and industrial customers. The company also engages in the construction, acquisition, and management of generation assets; provision of digital wireless communications services; and the provision of fiber optic solutions to telecommunication providers. In addition, it holds investments in synthetic fuels and leveraged lease projects. Southern Company was founded in 1945 and is based in Atlanta, Georgia.

Utility Industry Analysis

WikiWealth.com Industry Description: A public utility (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies. ... Read more about the utility industry. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: Utilities tend to be less sensitive to economic changes. During economic recessions, consumers tend to decrease discretionary expenses to save money, but they can not decrease utilities purchases, because they are needed for everyday living. Spending on utilities generally remains constant, so during economic recessions, investors tend to buy utilities stocks, which causes stock prices to increase. During economic recoveries, utilities stock prices generally underperform the general stock market. Investor who bought utilities stocks during the recession, tend to make new investments in faster growing industries. During longer economic expansions, utilities tend to grow at the same rate as the general stock market.

¹ WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

² Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.

³ The weighted average cost of capital (WACC) analysis for the industry is a broad representation of the WACC for each individual company. A sub-industry WACC analysis offers both stability and accuracy for each individual company.

WikiWealth.com Profit Analysis: The best way to profit from utilities stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) before economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, utilities stocks tend to underperform the general stock market, because consumers quickly resume spending on items they wanted, but resisted buying during tougher economic times. Utilities are generally items that consumers bought during a recession, but don't increase purchases during economic expansions. Eventually other stock investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to buy utilities stocks, because they are the least risky equity investments in a declining stock market. As investors search for safe (less risky) stock investments, they tend to buy utilities. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. Click for more information: stock research ratings.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

Southern Company (NYSE: SO), headquartered in Atlanta, Georgia, is currently the eighth largest utility company in the world, the second largest in the U.S. and the largest in the southeastern U.S. It owns and operates over 42,000 megawatts of generation capacity and serves 4.3 million customers in Alabama, Georgia, Florida and Mississippi.

Overview

Among Southern's highlights are its dedication to customer service, electricity rates about 17% below the national average and its quick response to storm damage repairs. One of the most glorifying moments of recent for the company was the way in which it helped the victims of Hurricane Katrina, many of whom live inside its service territory.

Recent issues which have cast Southern in a less positive light include its stance on global climate change and allegations of violating FERC's Standard of Conduct provisions. Southern Power, the company's wholesale electricity marketing subsidiary, has been accused of showing preferential treatment to Georgia Power Company, another Southern subsidiary, when bidding out wholesale contracts. The company has agreed to pay a fine and strengthen the operational distance between its wholesale and retail companies.

Southern Company owns the following companies:

* Alabama Power - operating company
* Georgia Power - operating company
* Gulf Power - operating company
* Mississippi Power - operating company
* Southern Company Services - common services (originally named Southern Services, Inc.)
* Southern Power - wholesale generation
* Southern Communications Services (d/b/a SouthernLINC Wireless) - cellular telephone provider
* Southern Telecom - wholesale fiber optic communications
* Southern Nuclear - engineering and operations for nuclear power plants (Southern Company is the majority owner and operator of the Farley, Hatch, and Vogtle nuclear power plants.)

History

Southern Company's earliest predecessors date to the 1920s when Alabama Power, Georgia Power and Mississippi Power joined together under a holding company, Southeastern Power & Light. Following a merger and later breakup due to regulatory changes, in 1945 Alabama Power, Georgia Power, Gulf Power, and Mississippi Power came together as Southern Company.

Foreign Expansion

In 1995, Southern bought the British South Western Electricity Board. This was the first purchase of a foreign power corporation by a US power corporation. However, in 2003, SWEB was sold to a French company, EDF Energy.

Generation facilities

Southern Company subsidiaries operate hydroelectric, oil/gas, coal, and nuclear generation sources. In 2006, total generation was distributed coal 70%, nuclear 15%, natural gas 13%, and renewable hydroelectric power 2%.

Environment

The Center for Responsive Politics has criticized the Southern Company for large partisan contributions by its employees coincidental to large greenhouse gas emissions. In addition to such PAC contributions, in 2005 Southern Company itself was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush.

In response to growing public and financial community interest, in recent years the company has issued reports detailing environmental issues in which it is involved and the company's response to those issues such as incorporating emissions controls at generation facilities, funding research for carbon dioxide capture, and working to improve wildfile habitats through conservation groups such as National Wild Turkey Federation, The Nature Conservancy, and the Wildlife Habitat Council. As given by the 2008 update on key company parameters, highlighted environmental actions include:

* Investing $3.9 billion over the next three years to add additional environmental controls, which will further lower emissions of nitrogen oxides, sulfur dioxide and mercury.
* Selected Plant Daniel in Mississippi as a test site for carbon dioxide geologic storage to learn if the technique can effectively reduce accumulations of greenhouse gases in the atmosphere.
* Opened the nation’s first mercury-controls technology research center in Florida.
* Awarded 93 biodiversity and habitat improvement grants from 2003-2007 through the National Fish and Wildlife Foundation and other partners.

SWOT Analysis

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