“Verizon has announced first-quarter 2010 results with adjusted earnings per share (EPS) of 56 cents, matching the Zacks Consensus Estimate while declining from 58 cents reported a year-ago,” Zacks Equity Research reports.
“Adjusted EPS excludes a $962 million one-time charge associated with the recent federal health-care overhaul which eliminated certain tax benefits related to retired employees,” Zacks reports. It also excludes merger integration and acquisition costs and expenses associated with the impending spin-off of specific wireline assets.”
Zacks reports, “Net income (attributable to Verizon) plunged 75% year-over-year to $409 million (or 14 cents a share), largely due to the hefty charges related to healthcare reform.”
“Verizon exited the quarter with 92.8 million wireless customers, up 7.2% year over year. Net customer additions for the quarter were 1.55 million (excluding acquisitions), down 89% year over year. Total retail customer base increased 4.4% to 87.8 million. Net retail postpaid subscriber additions for the quarter were 423,000,” Zacks reports. “The carrier’s archrival AT&T added 512,000 postpaid customers in the first quarter [and 1.9 million net additions over the same timeframe].”
MacDailyNews Note: Verizon is not alone. Roger Cheng reported for Dow Jones Newswire yesterday that “AT&T Inc.’s first-quarter profit fell 21% as a result of a $1 billion charge related to the nation’s overhaul of the healthcare system, while its wireless business continued to grow thanks largely to the enduring success of the Apple Inc. iPhone.” Full article here.
Zacks reports, “Verizon continues to extend nationwide coverage of its high-speed 3G wireless network, covering more than 285 million people. Moreover, the company is planning to launch commercial 4G services based on the Long-Term Evolution (“LTE”) standard in fourth-quarter 2010 across 25−30 markets. This will offer the carrier a head start over AT&T, which lags with its 4G LTE network launch planned in 2011.”
Full article here.
Back in March, The Wall Street Journal reported that Verizon warned in a note to employes “about the 40% tax on high-end health plans, though that won’t take effect until 2018. ‘Many of the plans that Verizon offers to employees and retirees are projected to have costs above the threshold in the legislation and will be subject to the 40 percent excise tax.’ These costs will start to show up soon, and, as we repeatedly argued, the tax is unlikely to drive down costs. The tax burden will simply be spread to all workers—the result of the White House’s too-clever decision to tax insurers, rather than individuals.”
“A Verizon spokesman said the company is merely addressing employee questions about ObamaCare, not making a political statement,” The WSJ reported. “But these and many other changes were enabled by the support of the Business Roundtable that counts Verizon as a member. Verizon CEO Ivan Seidenberg’s health-reform ideas are 180 degrees from Mr. Obama’s, but Verizon’s shareholders and 900,000 employees and retirees will still pay the price.”
Full article here.
Sinead Carew reports for Reuters, “Verizon’s Chief Financial officer John Killian said the worse-than-usual first-quarter decline in postpaid subscriber growth was due to a particularly strong fourth quarter and consumer moves to cheaper unlimited prepaid services. He said consumers would continue to move to prepaid, but he expects Verizon’s postpaid growth to improve as it aims to lure customers away from rivals with the latest smartphones and a network upgrade this year for higher speed data services.”
MacDailyNews Take: Good luck with that, Johnny (unless you’re planning on getting Apple’s iPhone, in which case you won’t need any luck).
Carew continues, “Piper Jaffray analyst Christopher Larsen said that while subscriber growth was disappointing, it helped Verizon’s wireless profits because it meant a reduction in the costs such as phone subsidies that Verizon incurs for adding new customers.”
Full article here.
Matt Phillips reports for The Wall Street Journal, “Building post-paid subscriptions is often closely tied to offering a hot new gadget. That’s why AT&T exclusivity deal with Apple for the iPhone has been a boon to the company… So with the softness in Verizon’s post paid numbers, a tantalizing question arises for any gadget geek. Is the Motorola’s Droid phone — based on Google’s Android operating plaform — fizzling? The gadget was once considered something of a potential rival to the iPhone. But you can’t help but wonder whether even diehard Googleheads thinking about buying a Droid might have been convinced to put off grabbing the Gadget when Google introduced it’s Nexus One smartphone back in early January.”
MacDailyNews Take: Wonder all you want, but they didn’t buy Nexus Ones, that much is for sure: Gizmodo: Google’s rebadged HTC ‘Nexus One’ is a total flop – March 16, 2010
Phillips reports on a question asked by an analyst on Verizon’s conference call yesterday. The analyst wondered what the expected iPhone refresh later this year will mean for Verizon:
Dave Barden of Bank of America Merill Lynch: There’s probably an iPhone refresh coming around the middle of the year. Obviously, last year’s game plan was to wait. It came, you guys really got more aggressive on your smartphone portfolio than you had really ever been in the third quarter, and that led to a market share swing back in your favor. Looking at it this year, what would be the game plan this year that you would do differently, if anything, to make sure that there isn’t a market share swing in AT&T’s favor, the way we saw last year?
Verizon’s CFO, John Killian, answered: We think we have found a very strong lineup. And, again, not just based on one operating system, but the Droid, Android-based system, the RIM systems. We’ve had some Microsoft launches recently. But you will see a lot of emphasis around the Droid as we go through the year. We think we have a very competitive lineup. There’s no question, Apple has done a great job with the iPhone. But look at our results. We’ve performed very well both from a growth — our revenue growth this quarter on the Wireless side is better than it was last quarter. Our service revenue is upticking. We have several different new devices coming as the year goes on, most notably the one I just mentioned, which is the HTC Incredible. So I think we’ll be earlier in the process this year of having very strong devices to be very competitive. But, again, based on multiple systems, and we think we’ll be in a very good position.
Full article here.