Verizon posts improved Q4 earnings; 1M BlackBerry Storms sold

Reports strong sales in broadband, wireless, business services

In contrast to recent dreary economic news, Verizon Communications Inc. today posted improved fourth-quarter earnings compared to a year earlier, and said it finished fiscal 2008 more than 7% ahead of earnings compared to 2007.

The BlackBerry Storm smart phone, put on sale Nov. 21 exclusively by Verizon in the U.S., has sold 1 million units through January, company officials said today.

"That's not a bumpy start," a spokeswoman said today, in reaction to a recent report in the Wall Street Journal that characterized the rollout and a quick software update as "bumpy." By comparison, sales last summer of the iPhone 3G by AT&T Inc. were 2.4 million in their first full quarter.

In all, Verizon Communications Inc.'s revenues for the fourth quarter of 2008 were $24.6 billion, up 3% over the same quarter a year ago. Revenues for all of 2008 were $97.4 billion, up 4.2% from all of 2007, the company said. Earnings were 43 cents per share for the quarter, up from 37 cents from the fourth quarter of 2007. Total year earnings were $2.54 a share, up 7.6% from 2007 earnings of $2.36 a share.

Verizon CEO Ivan Seidenberg said in a statement that the company has shown "it is able to compete effectively in this economic environment." He said the fourth quarter included strong sales for all its major categories, which include broadband, wireless and business services.

The results were a stark contrast to yesterday's news from third-ranked Sprint Nextel Corp., which announced layoffs of 8,000 workers, about 14% of its workforce.

The success in the wireless segment included sales of the Storm, which was built by Research In Motion Ltd. Today's earnings statement included a few short references to how "customers across the country lined up to purchase the new BlackBerry Storm," when it went on sale Nov. 21. However, there were also early complaints about the smart phone, and a quick software December update was issued that helped some users who had noticed a performance lag.

In all, the wireless division had 72 million customers at the end of the quarter, and added 5.8 million new wireless customers during 2008. With the acquisition of Alltel Corp., however, the company was able to cover nearly the entire U.S. population and now serves about 80 million customers, the company said. Wireless revenues were $49.3 billion for all of 2008, up 12.4% over the prior year.

Verizon also had record growth in its FiOS TV and Internet offerings, with revenues in the fourth quarter of $1.2 billion for consumers (an increase of 42%) and $1.5 billion for strategic business services (an increase of 8%). Full-year totals were not immediately available.

Overall wired revenues were nearly $12 billion for the quarter, which represents a 2% increase for Verizon Business accounts. Full-year totals were not immediately available.

"The Verizon results are good overall considering the economic climate," said Phillip Redman, an analyst at Gartner Inc. He said the continued economic downturn could mean that Verizon will slow down investment in LTE (Long Term Evolution), a fourth-generation wireless technology. But he said he expects at least one U.S. city will be launched on LTE in 2009, although Verizon will not sell a phone to run on it.

In general, Redman said he hopes that carriers like Verizon will "rationalize spending" on such next-generation technology and instead "focus on continued improvement of current infrastructure to improve the current network and customer service experience." One area where he said Verizon needs to improve upon is technology that integrates wired and wireless networks.

Copyright © 2009 IDG Communications, Inc.

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