Verizon Communications Inc. (NYSE: VZ), largest US wireless carrier, is scheduled to release its fourth quarter 2009 earnings before the opening bell on Tuesday, January 26, 2010. Analysts, on average, expect the company to report earnings of 54 cents per share on revenue of $27.33 billion. In the year ago period, the company reported earnings of 61 cents per share on revenue of $24.65 billion. Verizon expects to report fourth-quarter earnings in the range of 53 cents to 55 cents per share, excluding special items.Verizon Communications Inc. provides communication services in the United States and internationally. It operates in two segments, Wireline and Domestic Wireless.
The company's third-quarter net income totaled $2.89 billion, down 29.5% from $3.19 billion reported in the same period a year ago. On a per share basis, earnings fell 30.5% to $0.41 from $0.59 in the same quarter of last year. Adjusted earnings totaled $0.60 per share, compared to $0.66 per share in the corresponding quarter of the previous year. Revenue jumped 10.2% to $27.3 billion from the previous year's revenue of $24.8 billion. Analysts, on average, expected the company to post earnings of $0.59 per share on revenue of $27.17 billion.
The company's Wireless division has registered strong performance in past few quarters. In the third quarter, the division fetched quarterly revenues of $15.8 billion, an increase of 24.4%, compared to $12.7 billion in the year-ago quarter. Verizon Wireless had 89.0 million customers at the end of the quarter, up 25.7% year over year, and 6.3% on a pro forma basis.
Meanwhile, the company's traditional wirleine segment has continued to struggle amid shifting consumer preference. Wireline segment generated third-quarter revenue of $11.6 billion, compared to $12.2 billion from prior year, a decrease of 4.8%.
Verizon has invested heavily in its Fiber-to-the-Home (FTTH) service or FIOS, which it advertises as a "triple play" package as it bundles internet, TV and wireline phone together for one low price. The company added 198 thousand net new FiOS Internet customers in the third quarter. It served 3.3 million FiOS Internet customers by the end of the quarter, a 49.2% year-over-year increase.
Revenue growth from broadband and video services boosted consumer ARPU to $75.04 in the third quarter 2009, a 12.6% increase from last year.
Early in January, the second-largest U.S. phone company said that its 2009 earnings fell 13 cents to 15 cents a share from a year earlier earnings of $2.54 a share, excluding some items. Earnings dropped because of pension-plan expenses, Chief Executive Officer Ivan Seidenberg said at a Citigroup Inc. conference in San Francisco. Verizon exceeded its mobile-subscriber growth target of 1 million customers for the fourth quarter, Seidenberg said.
In November, Verizon started selling Motorola Inc.’s Web-equipped Droid handset, and plans to offer Google Inc.’s Nexus One touch-screen phone this year. Meanwhile, there have been persistent but unconfirmed reports that Verizon will be getting the Apple iPhone this year, ending AT&T's exclusive right to offerthe device. Among other develoments,in January, Verizon Wireless slashed the price of unlimited voice service to lure customers to its network.
The company is all set to launch its 4G network in 2010 in 30 metropolitan areas and expects to blanket the continental U.S. and Hawaii with the new wireless network by 2015. The 4G network will handle more wireless services and with better speed and quality than 3G network. On the other hand, rival AT&T (NYSE: T: 25.58, 0.19) is not looking to deploy its 4G network until 2012.
The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 12.68 and PEG (5 yr expected) of 2.92. In terms of stock performance, J&J shares have lost nearly 2% over the past year.
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