Verizon beats Street but faces challenges
The communications giant manages to top expectations, but its earnings aren't exactly inspiring.
The company also saw slower growth in its wireless division as people continued to embrace prepaid cell phone plans or Apple's (AAPL) iPhone. But still, Verizon beat estimates for profit and growth.
The company reported an $881 million profit, or 31 cents a share, for the quarter, down from $1.18 billion, or 41 cents a share, in the same period last year.
But excluding one-time payments related to pensions and other costs, the profit rose to 56 cents a share. Analysts had expected 54 cents a share.
Quarterly revenue was $26.5 billion, just beating estimates of $26.3 billion. That's down from $27.3 billion in sales a year ago, but that period also included operations that were eventually sold to Frontier Communications. If you exclude those operations, the year-ago revenue was $25.9 billion.
Verizon disappointed some analysts by adding only 584,000 new wireless customers. An analyst at Oppenheimer was expecting 625,000, while another at Morgan Stanley had predicted 665,000, Bloomberg reported.
"While only a hair below published consensus, we think 584,000 will be viewed as disappointing," wrote one Credit Suisse analyst, according to The Wall Street Journal. "In addition, the EPS beat and guidance increase will do little to inspire investors as they came largely from lower growth and taxes."
Verizon did give some hopeful guidance for the rest of the year, saying profit in the second half should improve by 5% to 10% over the first six months.
The trend of people ditching land-line phones for cell phones continued to whack at Verizon's fixed-line business. Sales fell by 3.6% to $10.3 billion in the quarter. Fewer than 25% of Verizon's customers use smart phones, and executives were quick to point out the opportunity there, Dow Jones reported.
"It's hard to believe we're in the early innings of this revenue growth opportunity," chief financial officer John Killian told analysts.
Those numbers could change quickly if Verizon is able to sell the iPhone next spring, as some news reports have said. So far, Verizon has made a huge commitment to selling the Droid phone, which uses software developed by Google (GOOG).
Verizon's enthusiasm for the Droid has been a major factor in the platform's success this year.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
[BRIEFING.COM] The major averages ended modestly lower with the S&P 500 shedding 0.3%.
The benchmark average saw an opening loss of 1.2% after Japan's Nikkei tumbled 7.3%. Japanese stocks sold off amid continued volatility in Japanese Government Bond futures as the 10-yr yield spiked almost 16 basis points to 1.002 before the Bank of Japan's JPY2 trillion liquidity injection caused yields to retrace their gains.
Adding insult to injury was news out of China where the HSBC ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
LATEST MARKET DISPATCHES
- No more Dispatches; here's where to find market news
The Market Dispatches column has been discontinued. Here's where to find the latest stock and business news on MSN Money, and the latest from market writer Charley Blaine.
- Dow falls 59 as late-day gloom kills a rally
- Stocks held back by fiscal-cliff worries
- Stocks suffer worst weekly loss in 5 months
- Dow off 121 as post-election swoon continues
- Dow slumps 313 after Obama's re-election
- Dow jumps 133 as Americans head to the polls
In the never-ending contest for sales, American carmakers are pulling ahead.