Verizon has 31% jump in net income, but faces lower customer spending
CEO says it will invest in future growth, but faltering economy may lead to decreased consumer, business spending
IDG News Service - Verizon's net income was up more than 31% and its revenue up more than 4% for the third quarter, driven largely by increases in wireless and data customers.
Verizon today reported revenue of $24.8 billion for the third quarter of 2008, up from $23.8 billion for the third quarter of 2007. Net income was up from $1.3 billion to $1.7 billion.
Revenue for Verizon Wireless was up nearly 13%, from $11.3 billion to $12.7 billion. Net income for the wireless division was up nearly 14%, from $3.1 billion to $3.5 billion.
"Although the capital markets and economy may present challenges, we will continue to execute on our business plan and invest for future growth," Verizon Chairman and CEO Ivan Seidenberg, said in a statement. "Verizon has a great set of assets and an employee team focused on creating value for our customers and shareholders."
However, Verizon may face decreased consumer spending and "curtailed" business spending in upcoming quarters, because of a faltering economy in the U.S. and elsewhere, Seidenberg said during a conference call.
Still, Seidenberg said he was optimistic about Verizon moving forward. "Our business has shown remarkable stability and strength," he said. "We had what we thought was a good quarter in light of this economic uncertainty around the world."
Although Verizon has seen losses in its number of traditional telephone customers, other areas of the business are growing, he added. "What we feel is we have momentum in all of the growth areas," Seidenberg added.
Verizon sees potential for growth in its packaged voice, broadband and television service package to residential consumers with a growing number of homes for sale in the U.S., added Doreen Toben, Verizon's executive vice president and chief financial officer.
Verizon Wireless' customer base grew by more than 11%. It now has 68.8 million retail customers and 70.8 million total customers. The growth of 2.1 million customers includes an August acquisition of Rural Cellular, which brought 630,000 customers to Verizon. Wireless data revenue grew more than 42% over the third quarter of 2007, to $2.8 billion.
Verizon reported earnings per share of 66 cents for the quarter. That met analyst expectations, according to Yahoo Finance.
While wireless revenue was up significantly, Verizon reported a decrease of nearly 2% in wireline revenue. Wireline revenue, which includes traditional phone service, wired broadband and Verizon Business, was $12.2 billion.
However, Verizon reported a net increase of 129,000 wireline broadband customers, after reporting just 54,000 new broadband customers in the second quarter. During the first quarter of the year and the three previous quarters, Verizon reported more than 200,000 new broadband subscribers, and more than 400,000 new subscribers in each of the six quarters before that.
During the third quarter, Verizon reported a net loss of 96,000 DSL customers, but that was offset by subscriber growth in Verizon's Fios fiber-based broadband service.
Wireline data revenue, which now accounts for about 43% of Verizon's wireline revenue, was $5.2 billion, up nearly 15% from the third quarter of 2007.
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