Verizon profit falls 8.4% on asset sales

Verizon Communications Inc.’s first-quarter earnings fell 8.4% to $1.5 billion as strong showings in the cellphone business and the FiOS Internet and TV initiative were offset by the loss of income from assets the company sold over the last year.

The profit reported Monday also was hurt by a larger-than-expected loss of traditional telephone customers to cable TV companies and other rival providers, but the bottom line edged most Wall Street forecasts.

“Our objective is to lose less lines this year, and we have not backed away from that,” Verizon President Denny Strigl said, stressing that the number of activations of Internet connections and FiOS, or fiber optic services, exceeded the 408,000 regular phone lines turned off during the quarter.

The profit for the first three months of 2007 amounted to 51 cents a share. In the same period last year, before Verizon’s spinoff of its phone directories business and another asset sale, earnings totaled $1.63 billion, or 56 cents. The latest results included a loss of 5 cents a share on the forced divestiture of Verizon’s stake in a Venezuelan telecom company.

Revenue grew 6.4% to $22.58 billion.

Shares of New York-based Verizon rose 29 cents to $38.18.

Leading the improvement again was Verizon Wireless, where revenue grew 17% to $10.31 billion as the business added 1.7 million customers, finishing the quarter with 60.7 million.

The average revenue per user rose 2.8% to $50.73 a month, driven by gains in non-voice services, especially music downloads. Strigl said customers paid for 30 million music downloads, including full songs and ring tones. First-quarter revenue from those purchases was up 70% from a year earlier, he said.

The cellphone business, owned jointly with Vodafone Group, also continued to demonstrate strong customer retention. The number of customers leaving Verizon Wireless averaged 1.1% of the customer base per month, well below the company’s major rivals.

On the wired side of the company, phone and data services sold to businesses generated first-quarter revenue of $5.2 billion, up 2.3% from a year earlier.

But Verizon’s consumer revenue fell 3.5% to $4.2 billion as the company continued to lose residential phone customers as well as long-distance subscribers from the acquired MCI business.

Helping offset that was growth in subscribers for DSL broadband and the new FiOS cable TV and high-speed Internet services.