Verizon Profit Jumps Driven By Strong Customer Growth

New York, NY - Verizon Communications Inc. (VZ) Tuesday announced that fourth quarter profit increased by 15.2% from last year, driven by strong customer growth. On an adjusted basis, quarterly earnings declined slightly over the year-ago, but managed to meet the analysts' expectations.

Poor wireline performances have traditionally been offset by good growth from wireless businesses, mainly with the popularity of smart phones. Verizon said it witnessed strong growth in FiOS Internet and TV Customers and increased sales in Verizon Wireless and strategic business services.

Verizon, which is seen as one of the telecom sector's more attractive stocks, had stated previously that strategic investments made over the past few years continue to drive growth in wireless, enterprise, broadband and video.

Net income for the fourth quarter was $1.24 billion, up 15.2% from $1.07 billion in the prior year quarter. Earnings per share rose 16.2% to $0.43 from $0.37 in the previous year quarter.

After adjusting for the spinoff of non-strategic local exchange and related Wireline business assets early in 2008, net income fell to $1.7 billion or $0.61 per share from $1.8 billion or $0.62 per share in the year-ago quarter. On average, 20 analysts polled by First Call/Thomson Financial expected the company to earn $0.61 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Verizon's total operating revenues increased 3.4% to $24.65 billion from $23.84 billion in the same quarter of last year. On an adjusted basis, operating revenues grew 4.6%. Sixteen analysts had a consensus revenue estimate of $24.74 billion for the fourth quarter.

Among others in the industry, Dallas, Texas-based AT&T Inc. (T: News ) is slated to report financial results for the fourth quarter on January 28. Analysts expect the company to earn $0.65 per share on revenue of $31.35 billion for the fourth quarter.

Another peer, Denver, Colorado-based Qwest Communications International Inc. (Q: News ) is scheduled to report fourth quarter results on February 10. Street expects the company to report earnings of $0.10 per share for the quarter on revenue of $3.31 billion.

Overland Park, Kansas-based Sprint Nextel Corp. (S: News ) is slated to release its fourth-quarter financial results on February 19, which is earlier than previously announced date. Analysts expect the company to report a loss of $0.03 per share, on revenue of $8.55 billion.

Last month, AT&T said that it would cut approximately 12,000 jobs, or about 4% of its workforce, amid the economic slowdown in the U.S. AT&T also plans to reduce its 2009 capital expenditures from 2008 levels.

Qwest Communications said in October that it plans to cut about 1,200 jobs. The reduction will represent a little more than 3% of the total workforce at the end of the third quarter.

Earlier this month, Sprint Nextel said that it would eliminate about 8,000 jobs in the face of a challenging economic environment. According to the company, the job cuts, which will be implemented in the first quarter of 2009, will reduce internal and external labor costs by about $1.2 billion on an annualized basis. The workforce reduction is expected to be largely completed by March 31.

Unlike its peers, Verizon did not make any announcements for job cuts. The company continues to bask under the continued strength in the wireless and Internet service. With its latest buyout of Alltel Corp. and other strategic investments, Verizon seems to be in strong position, compared to its fellow competitors.

Source: RTTNews