Verizon posts a great quarter

Wall Street can certainly 'hear' the company now.

By Jonathan Berr Apr 19, 2012 11:30AM
Image: Global communication (© Maciej Frolow/Brand X/Getty Images)Shares of Verizon Communications (VZ) were up more than 2% Thursday after the telecom giant posted better-than-expected results, fueled by gains in smartphone subscriptions and customer additions for its FiOS service. 

Net income soared 19.7% to $3.91 billion, or 59 cents a share, compared with $3.26 billion, or 51 cents a share, a year earlier. Revenue rose 4.6% to $28.2 billion. The results beat Wall Street forecasts of 58 cents a share on revenue of $28.17 billion.

During the quarter, Verizon Wireless added 501,000 contract customers, beating the 497,285 average estimate of analysts surveyed by Bloomberg News. Verizon co-owns its wireless business with Vodafone (VOD) and probably benefited from slowing sales of the Apple (AAPL) iPhone as it was able to sell rival smartphones that it doesn't need to subsidize as heavily. Nonetheless, it sold 3.2 million iPhones in the quarter.

"What is supposed to be strong (wireless and FiOS) is strong," said telecom analyst Jeff Kagan. "What is supposed to be weak (wireline) is weak. . . . Generally speaking, the company is much stronger than I expected it to be and a lot of other people expected it to be. The only other question is what is happening next."
 
Average monthly revenue for wireless contract customers increased 3.6% to $55.43, which was better than expected, while data service revenue grew 16% to $23.80. FiOS also had a strong quarter, adding 93,000 net new FiOS Internet connections and 180,000 net new FiOS video connections. Broadband connections rose 3.3% to 8.8 million and churn fell to 1.24%.

Consumer sentiment remains strong and recently hit its highest level in four years, which for wireless companies means that people will be more apt to upgrade their existing service and buy new smartphones. That bodes well for rival AT&T (T), which reports April 24, and Sprint Nextel (S), which reports a day later.  

As the U.S. wireless market becomes more saturated, the companies will be forced to compete more heavily on price. That's good news for consumers and bad news for shareholders.

Jonathan Berr does not own any shares of the companies listed here.


 
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. 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 Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
262
262 rated 2
480
480 rated 3
651
651 rated 4
649
649 rated 5
629
629 rated 6
616
616 rated 7
496
496 rated 8
346
346 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION9
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.