Verizon Profit, Revenues Miss on Subscriber Loss
Verizon Communications Inc. (NYSE: VZ – $48.17) reported a 20% fall in quarterly profit as it lost wireless postpaid subscribers despite the re-launch of unlimited data plans. The nation’s largest wireless carrier said adjusted earnings per share came in at $0.95, down from $1.06 in the same period a year ago, and just shy of the estimate of $0.96 from analysts. Total revenues of $29.81 billion were down from $32.17 billion in the same period last year and fell short of the Street projection of $30.41 billion. The company lost 307,000 retail postpaid subscribers in the first quarter vs. analysts’ expectations of net additions of 222,000.
Management said it expects full-year 2017 consolidated revenues and earnings per share to be “fairly consistent” with 2016, with improvement in wireless service revenue and equipment revenue trends. The company earned $3.89 per share in 2016 and it appears that the results will be no better for the coming year. Some improvement in 2018 are possible with benefits from FiOS success and next generation smartphone launches. Cash usage going forward will be focused on network upgrades, dividends and reducing debt. The purchase of Yahoo! enhances VZ’s value and scale within the mobile media space and I would not be surprised to see the company take on another acquisition to expand content and reduce exposure to wireless services. I remain encouraged about FiOS growth opportunities and see the company’s dividend yield, about 4.6%, providing support for the reasonably valued shares. However, this is a stock to watch as Verizon continues to transition its business model.