Verizon Sees Slowing Wireless Growth
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Some analysts said they were impressed by strong growth in Verizon's (NYSE: VZ) FiOS television and high-speed Internet subscribers, but the results showed the No. 2 U.S. phone company was not immune to the recession and plunging global markets.
Verizon said on Tuesday that quarterly profit rose to $1.2 billion, or 43 cents a share, from $1.1 billion, or 37 cents a share, a year earlier.
Earnings per share before items fell to 61 cents from 62 cents. That was a penny below the analysts' average forecast of 62 cents, according to Reuters Estimates.
Total revenue rose 3.4 percent to $24.6 billion, roughly in line with market expectations.
Verizon said pension and other post-retirement expenses would hurt 2009 earnings by 9 cents to 11 cents per share, joining a growing number of companies being forced to fill funding gaps due to turmoil in financial markets.
But some analysts said they were impressed with growth in FiOS, which competes with cable service providers. Verizon reported 303,000 net new FiOS TV customers and 282,000 FiOS Internet customers for the quarter, the biggest gains ever, helping to offset the loss of traditional wireline subscribers.
"FiOS is really beginning to rock and roll, although wireless net adds were a little bit soft," said analyst Christopher King of Stifel Nicolaus Telecom Equity Research.
Verizon Wireless, owned by Verizon and Britain's Vodafone Group (NYSE: VOD), said it had added 1.4 million net subscribers in the quarter, compared with the analysts' average forecast of about 1.5 million. It added 2 million in the year-earlier quarter.
The wireless unit also closed its acquisition of rural wireless provider Alltel in early January. The merger created the biggest U.S. wireless provider by surpassing AT&T (NYSE: T) in terms of subscribers.
Verizon shares were down 5.4 percent at $29.32 in morning New York Stock Exchange trading.