Verizon earnings beat estimates
Verizon Communications Inc. on Monday reported third-quarter earnings that were largely in line with expectations, reflecting steady growth in its wireless operations and a slow decline in its wired telephone business.
The nation’s second-largest telecommunications company earned $1.27 billion, or 44 cents a share, in the July-September period, down 34% from $1.92 billion, or 66 cents, a year earlier. Revenue increased 5.8% to $23.8 billion.
Excluding one-time charges, earnings would have been 63 cents a share. That compares with 53 cents a share in the same period last year, excluding the high-margin Yellow Pages business and other operations that have since been sold off.
On that basis, the latest earnings beat the average estimate of analysts polled by Thomson Financial by a penny a share. Wall Street had expected revenue of $23.7 billion.
Verizon shares rose 39 cents to close at $45.99. The stock has risen steadily from a 52-week low of $33.98 set last November as investors have gotten over their skepticism of Verizon’s $23-billion fiber-optic build-out plan.
Verizon’s major growth driver, the cellphone operations, added 1.6 million customers for a total of 63.7 million -- just behind AT&T; Inc.’s 65.7 million. Though Verizon has generally been slowly closing the gap with AT&T;, Verizon’s rival pulled ahead this quarter with an assist from Apple Inc.’s iPhone, for which it is the exclusive carrier.
Verizon Chief Operating Officer Denny Strigl said the iPhone has had “minimal impact” but acknowledged two brief jumps in customers applying to have their numbers transferred to another carrier. The first was when the iPhone went on sale in the previous quarter. The second occurred when the iPhone’s price was lowered in September.
“We have a very aggressive fourth-quarter plan in terms of introduction of new products,” Strigl said. The new phones include the LG Voyager, which like the iPhone has a large touch-screen. Strigl said it was “a very close competitive offer to the iPhone.”
Verizon Wireless is a joint venture of Verizon and Vodafone Group of Britain. All of its revenue -- $11.3 billion in the third quarter -- is counted on Verizon’s books but only 55% of its profit, with the rest going to Vodafone.
Verizon’s other growth engine, though still much smaller than the wireless division, is the fiber-optic network that it is building to replace its copper phone lines.
It added 229,000 fiber-optic subscribers during the quarter, up from 203,000 in the second quarter. It connected 202,000 subscribers to the TV service, FiOS TV.
At the same time, the wireline division continued to lose regular phone subscribers at a much faster rate: 3.7 million in a year. Recruitment for phone-line broadband has also slowed substantially. Verizon added just 56,000 subscribers to its digital subscriber lines, or DSL.
