Verizon Profit Jumps




Verizon Communications, the nation’s second-largest telephone company, said on Friday that its profit doubled during the last quarter, bolstered by customers attracted by its portfolio of iPhone and Android devices.

But like ATT, which reported its third-quarter results on Thursday, Verizon added fewer new contract customers than analysts expected. This in part reflects an overall slowdown in the wireless industry, and a heated-up rivalry between Verizon and ATT, analysts said.

It also resulted, though, from the later-than-expected announcement of the iPhone 4S, which kept many consumers from upgrading or buying new devices.

“Everyone was frozen, waiting for the iPhone,” said Philip Cusick, an analyst with J. P. Morgan who covers the telecommunications industry.

Even so, Verizon added 1.3 million customers, bolstering its total subscriber base to 107.7 million. Of those new customers, 882,000 were contract customers. With these results, Verizon outpaced ATT, which reported that it signed up 319,000 wireless customers during the same quarter.

Verizon said it sold two million iPhones during the quarter. It declined to give the number of iPhone 4S’s it sold; that device became available after the quarter ended. Executives did say they sold out of their supply of iPhone 4S’s on the first day the phones were available for sale, Oct. 14. The phones have been on back order since then.

In its earnings report, ATT revealed that it had activated 2.7 million iPhones during the quarter, and sold 1 million iPhone 4S’s after the quarter ended.

Verizon revealed that 20 percent of its iPhone customers jumped over from rival carriers and 80 percent were current customers upgrading their handsets.

Analysts said Verizon’s robust catalog of Android smartphones, tablets and mobile hot spots, particularly those compatible with the company’s next-generation wireless network, known as LTE, helped sharpen the company’s edge over ATT. Of the 5.6 million smartphones that Verizon sold this quarter, 1.4 million were LTE devices.

“They haven’t needed the iPhone for years while ATT had it, and this is no different,” said Rick Franklin, an analyst at Edward Jones, a financial services firm.

Those new additions, combined with profit margins on those customers and a low rate of defections among its current customer base, ushered the company into a “stunningly profitable quarter,” Mr. Franklin said.

In addition, the sale of those devices, which require expensive data plans to use them, helped nudge the amount of money the company makes per subscriber up 2.4 percent, to $54.89, over the same period a year earlier.

During the third quarter, which ended on Sept. 30, Verizon’s profit rose to $1.38 billion, or 49 cents a share, up from $659 million, or 23 cents a share, in the third quarter of last year. Adjusted earnings for the quarter, excluding certain items, were 56 cents a share, compared with 55 cents a share in the previous quarter. Analysts surveyed by Thomson Reuters expected that the company would report 55 cents a share for adjusted earnings.

Revenue rose 5.4 percent, to $27.9 billion, during the quarter, compared with $26.5 billion during the same period a year earlier, the company said.

After the announcement of the results, shares rose modestly, closing up 32 cents at $37.42.

The landline portion of Verizon’s business, which includes its business and FiOS offerings, did not fare as well, dipping 1.3 percent, to $10.15 billion. The company attributed that decline to the damage caused by Hurricane Irene as well as to the two-week employee strike during August. The financial fallout from both events cost the company $250 million, executives said.

In a call to investors and analysts on Friday morning, John Doherty, the chief financial officer at Verizon, said that the company was looking forward to a robust fourth quarter. “We will compete extremely heavily,” he said. “And when we compete head to head, we generally win.”

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Article source: http://www.nytimes.com/2011/10/22/technology/verizon-profit-jumps.html

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