Conservative · Income · Stocks to Consider and Updates

Verizon Reports Better-than-Expected Results

Verizon Communications, Inc. (NYSE: VZ – $55.95) reported total revenues in the second quarter at $32.1 billion, down 0.4% from last year. Wireless service revenue growth was offset by lower wireless equipment and wireline service revenue. Net income was $4.1 billion. Adjusted earnings per share totaled $1.23, three cents better than last year and three cents ahead of Street views. Cash flow from operations totaled $15.8 billion, a decline of approximately $600 million year-over-year. Verizon Wireless added more mobile customers in the second quarter than some analysts expected as the carrier stepped up its promotions and pushed to bring faster 5G wireless service to more cities. First half 2019 capital expenditures totaled $8.0 billion. Verizon’s capital expenditures continue to support the launch and build-out of its 5G Ultra Wideband network; the growth in data and video traffic on the company’s 4G LTE network; the deployment of significant fiber in markets nationwide; and the upgrade to Verizon’s Intelligent Edge Network architecture. By business segment:

  • Consumer revenues were $22 billion, flat year-over-year, reflecting continued strong growth in wireless service revenue and Fios service offerings, offset by declines in wireless equipment and legacy wireline services. The company reported 126,000 wireless retail postpaid net additions. Consumer wireless service revenues increased 2.5%, driven by customer step-ups to higher-priced plans and an increase in connections per account. The Consumer group reported 28,000 Fios Internet net additions and 52,000 Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Fios revenues increased by 1.2%, primarily due to the demand for broadband offerings.
  • Verizon Business revenues were $7.8 billion, down 1.1% from last year, as growth in wireless services and high-quality fiber products was offset by declines in legacy products. The Business group reported 325,000 wireless retail postpaid net additions, consisting of 172,000 phone net additions, 90,000 tablet net additions and 63,000 other connected device additions.
  • Media revenues (AOL, Yahoo!, etc.) were $1.8 billion, down 2.9% year over year. This is an improvement from the first quarter when Media revenues were down 7.2% year-over-year. Gains in native and mobile advertising continue to be offset by declines in desktop advertising. 

       Last year management announced a goal of achieving $10 billion in total cash savings by 2021. Thus far, the initiative has yielded $4.1 billion in cash savings. At the end of the second quarter, Verizon completed the third and final phase of its Voluntary Separation Program and has realized about $480 million of expense savings year to date. This blue-chip stock remains a good choice for conservative and income investors due to its above-average dividend yield of 4.36% and attractive appreciation potential through the early years of the coming decade.

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