Verizon Profit Rises, Weathers Economic SlowdownBy Reuters - | Posted 2008-04-28 Email Print
Verizon profit looks up on strong wireless business.
NEW YORK, April 28 (Reuters) - Verizon Communications Inc (VZ.N: Quote, Profile, Research) reported on Monday a higher quarterly profit on stronger-than-expected growth in wireless subscribers, showing resilience in the face of a U.S. economic slowdown.
Shares in Verizon, the second-largest U.S. phone company, rose 1.9 percent after the results showed Verizon Wireless, a mobile venture with Vodafone Group Plc (VOD.L: Quote, Profile, Research), added 1.5 million net new subscribers in the first quarter.
That exceeded the average estimate of 1.42 million additions from six analysts contacted by Reuters.
"Wireless was the star," said Craig Moffett, analyst at Sanford C. Bernstein & Co.
He and other analysts noted, however, that Verizon's home-phone business suffered a dramatic drop as customers switched to cell phones and rival services from cable operators, similar to trends at industry leader AT&T Inc (T.N: Quote, Profile, Research).
Verizon said first-quarter profit rose to $1.6 billion, or 57 cents a share, from $1.5 billion, or 51 cents a share, in the year-ago quarter.
Profit after adjusting for costs such as the spin-off of some wireline assets was 61 cents a share, matching the average forecast on Wall Street according to Reuters Estimates.
Revenue rose 5.5 percent to $23.8 billion, also in line with analysts' expectations.
Chief Executive Ivan Seidenberg said the results showed "Verizon has weathered the current economic uncertainty."
Wireless revenues rose 13.2 percent to $11.7 billion, boosted by demand for advanced, data services.
Churn, the industry term for cancellations, was 1.19 percent. The rate of churn among post-paid users, or those who pay monthly fees, was 0.93 percent.
Verizon said the launch of its $99 unlimited wireless calling plan, a move that was quickly followed by AT&T and triggered concerns of a price war ahead, had not dragged down revenue as many analysts had feared.
"I'd kind of like to put this issue to rest," Chief Operating Officer Denny Strigl told Reuters. "It was accretive to revenue."