Verizon Swings to Profit on Wireless
With a surge in wireless business that more than made up for a decline in traditional telephone service, Verizon Communications Inc. reported Thursday that fourth-quarter sales rose 6.2% to $18.3 billion.
For the three months ended Dec. 31, Verizon’s profit climbed to $3 billion, or $1.08 a share, from a loss of $1.5 billion, or 53 cents, in the same period a year earlier.
For all of 2004, Verizon Communications’ net income was $7.8 billion, or $2.79 a share, compared with $3.1 billion, or $1.12, the year before.
Sales in 2004 were $71.3 billion.
Although Verizon owns only 55% of Verizon Wireless, the mobile communications company contributed 40% of the parent company’s revenue during the fourth quarter, up from 35% a year earlier.
The rest of Verizon Wireless is owned by Vodafone Group of England.
Verizon Wireless added 6.3 million customers in 2004, including 1.7 million in the fourth quarter.
Following an industry trend, Verizon’s traditional land-line business declined -- in part because many customers upgrading to broadband Internet access dropped extra telephone lines they no longer needed.
The company lost 2.6 million land-line subscriptions for the year, including nearly 700,000 in the fourth quarter.
One industry analyst described the company’s overall growth as healthy.
“Much of the growth in the industry is due to mergers and acquisitions,” said Phillip Redman of strategy planning and research firm Gartner Inc. “But Verizon is growing internally, which is more organic and usually involves a lot less costs.”
But the pressure to grow by acquisition might prove too much, said analyst Berge Ayvazian of research firm Yankee Group.
On the same day as Verizon announced its earnings, industry observers were buzzing over news that rivals SBC Communications Inc. and AT&T; Corp. are discussing a merger.
“As much as Verizon has worked to grow without incurring much debt,” Ayvazian said, “if SBC and AT&T; come together, Verizon will have to do something to keep pace.”
