Verizon 3rd-Quarter Profit Flat, in Line With Forecasts
Verizon Communications, the No. 1 U.S. local telephone company, said Monday that third-quarter profit was flat, in line with Wall Street expectations, while an 18-day labor strike cut revenue growth to 7.2%.
Verizon, the company formed by the merger of Bell Atlantic Corp. and GTE Corp., reported operating earnings of $2 billion, or 73 cents a share, compared with $2 billion, or 72 cents a share, a year ago. The results met analysts’ forecasts of 73 cents a share, according to First Call/Thomson Financial.
Revenue rose 7.2% to $16.5 billion, missing some analysts’ expectations. Without the labor strike, which cut revenue by about $40 million, revenue growth would have been about 7.4%. CS First Boston analyst Dan Reingold had expected a 7.6% increase in revenue.
Verizon’s core domestic telecommunications revenue grew 3.3% to $10.9 billion. Almost 40% of its revenue was generated by fast-growing data, digital subscriber line Internet access, wireless, long-distance and international services and markets.
Verizon in August cut its profit outlook for 2000 and 2001. It confirmed Monday that it expects to generate “solid revenue growth” and earn 76 cents to 78 cents a share in its fourth quarter, in line with Wall Street expectations.
The company expects revenue growth to accelerate to between 8% and 10% in 2001. It aims to have annual earnings-per-share growth in the mid-teens by 2003. By the end of 2003, it expects to have $2 billion in annual expense saving from the Bell Atlantic-GTE merger.
Investing in new business such as high-speed Internet access and long-distance telephone services boosted expenses 6.9%.
During its third quarter, Verizon added 130,000 high-speed DSL subscribers, bringing its end-of-quarter total to more than 350,000. With 3,500 DSL installations a day, it said it is on track to meet its year-end target of 500,000 DSL customers.
Verizon Wireless, the company’s wireless telephone joint venture with Britain’s Vodafone Group, added 806,000 subscribers during its third quarter, bringing its total customer base to 26.3 million. Revenue grew 17.6% to $4.1 billion, below some analysts’ forecasts.
Shares of New York-based Verizon were up $2.56 to close at $55.62 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* Baker Hughes Inc. said third-quarter profit from continuing operations climbed more than fivefold to $70.6 million, or 21 cents a share, from $12.7 million, or 4 cents, a year ago, as the oil-field services company’s customers spent more on oil and natural-gas exploration and production. The results beat analysts’ expectations of 15 cents. Revenue rose 14% to $1.27 billion.
* Barnesandnoble.com Inc. said its third-quarter loss widened to $36.9 million, or 25 cents a share, from $21.9 million, or 15 cents, matching forecasts. Sales rose 58% to $74.1 million.
* Drugstore operator CVS Corp. said earnings rose 21% to $147.2 million, or 36 cents a share, boosted by strong pharmacy sales and improved gross margins. The results beat analysts’ expectations of 35 cents. Sales were up 14% to $4.92 billion. The latest earnings exclude a gain of $11.5 million, or 3 cents a share, from a partial payment of a settlement from a class-action lawsuit against some manufacturers of prescription drugs. Sales at stores open at least one year jumped 12.2%.
* Expedia Inc., the travel Web site 70%-owned by Microsoft Corp., posted a loss of 4 cents a share in its fiscal first quarter, a much better performance than the 26-cent loss analysts expected. No year-ago figure was available, because the company was not publicly traded at this time last year. In the previous quarter, Expedia had an operating loss of 30 cents.
* Macrovision Corp. reported a 90% jump in third-quarter earnings to $8.9 million, or 17 cents a share, beating forecasts of 12 cents, on strong sales of its copy protection products. Revenue grew 49% to $20.4 million.
* Pharmacia Corp. said third-quarter profit jumped 61% to $427 million, or 33 cents, matching forecasts, boosted by sales of its painkiller Celebrex. Revenue rose 15% to $4.29 billion. The company said it expects profit growth to slow this year and next.
* Pennzoil-Quaker State Co.’s earnings more than doubled to $15.4 million, or 20 cents a share, from $5.8 million, or 5 cents, beating forecasts of 19 cents, as the maker of motor oil raised prices and cut costs. Revenue rose 5.1% to $798.7 million.
* Starmedia Networks Inc. said its third-quarter loss widened to $32 million, or 48 cents a share, from $24.7 million, or 42 cents a share, a year ago, better than the 59-cent loss analysts expected. Starmedia said revenue more than tripled to $17.1 million from $5.6 million.
