Verizon Communications Inc. (NYSE: VZ): Q1 Earnings Preview 2011

Verizon Communications Inc. (NYSE: VZ) is scheduled to release first-quarter earnings before the market open on Thursday, April 21, 2011. Analysts, on average, expect the company to report earnings of 50 cents per share on revenue of $26.89 billion. In the year-ago period, the company reported earnings of 56 cents per share on revenue of $26.91 billion.

Verizon Communications Inc. provides communication services in the United States and internationally. Verizon operates in two segments: Domestic Wireless and Wireline. Its Domestic Wireless’s products and services include wireless voice and data services and equipment sales across the United States.

In the preceding fourth quarter, the New York-based company's net income was $2.64 billion or 93 cents per share, compared to $653 million or 23 cents per share in the prior-year quarter. On an adjusted basis, the company earned 54 cents per share. Total operating revenues for the quarter declined 2.6 percent to $26.40 billion from the prior-year quarter's revenue of $27.09 billion. Analysts, on average, expected the company to report earnings of 55 cents per share on revenue of $26.47 billion. 

Growing demand for smartphones has fueled recent investor confidence in companies who run the networks. During the quarter in review, Verizon oficially added the iPhone to its lineup, following months of rumors. iPhone's arrival on Verizon Wireless ended a five-year exclusive contract of Apple with AT&T (NYSE: T). The contract between Apple and Verizon Wireless is multiyear and non-exclusive. Existing Verizon customers were able to pre-order the device on February 3.  According to Verizon, iPhone was its biggest phone launch ever.

At its last earnings call in Janaury, the company said that it expects earnings growth of 5 percent to 8 percent in 2011, while revenues are expected to grow in a range of 4 percent to 8 percent. The company further said that this outlook is based on the continued growth in strategic businesses aided by Verizon's prior investments in technology; sales and recurring revenues from the newly announced Verizon iPhone and LTE wireless devices; continued growth in revenues from FiOS and strategic business services; and a stable to improving economic environment. The company also said that with the introduction of the iPhone and LTE devices, it sees smart-phone penetration rates increasing from a current 26 percent to more than 50 percent by the end of 2011. The company expects to sell 11 million iPhones this year.

During the quarter in review, Verizon's board authorized a buyback of as many as 100 million shares of the company.

The company's stock currently trades at a forward P/E  (fye Dec 31, 2012) of 14.44 and PEG ratio (5 yr expected) of 1.82. In terms of stock performance, Verizon shares have gained nearly 25 percent over the past year.

Full Disclosure: None.

Verizon Communications Inc. (NYSE: VZ): Q4 Earnings Preview 2010

Verizon Communications Inc. (NYSE: VZ), the second-largest U.S. phone company, is scheduled to release fourth-quarter earnings before the market open on Tuesday, January 25, 2011. Analysts, on average, expect the company to report earnings of 55 cents per share on revenue of $26.47 billion. In the year-ago period, the company reported earnings of 54 cents per share on revenue of $27.09 billion.

Verizon Communications Inc. provides communication services in the United States and internationally. Verizon operates in two segments: Domestic Wireless and Wireline. Its Domestic Wireless’s products and services include wireless voice and data services and equipment sales across the United States.

In the preceding third quarter, the New York-based company's net income was $881 million, or 31 cents a share, from $1.18 billion, or 41 cents a share, in the year-ago quarter. On an adjusted basis, the company earned 56 cents a share in the latest quarter. Operating revenues dropped to $26.48 billion from $27.26 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 54 cents per share on revenue of $26.34 billion. 

At its last earnings call in October, Verizon said that it anticipates that adjusted EPS in second-half 2010 will be at the high end of the range of its guidance. Based on adjusted EPS of $1.01 in the first half of the year, Verizon estimates second-half 2010 adjusted EPS will be approximately 5 percent to 10 percent greater than $1.01. 

Recently, the telecommunication giant said that it will incur a pre-tax charge of $600 million in fiscal year 2010 as the company has adopted a new policy that changes its method of accounting for pensions and other post-employment benefits.

Growing demand for smartphones has fueled recent investor confidence in companies who run the networks. Verizon is now officially getting the iPhone, following months of rumors.  While many believe this to be icing on the cake for the carrier’s ongoing success in smartphones, it could actually prove to be a double-edged sword. Verizon will offer an unlimited data plan for the iPhone, an option no longer available through AT&T. While this plan will command a premium from subscribers, it could trigger heavy data usage and pose problems for Verizon’s network (although Verizon has dismissed these concerns). iPhone will also be likely dilutive to Verizon’s earnings this year, given the subsidies the carrier will have to shell out to Apple Inc. (NASDAQ: AAPL)  for the device. The company’s guidance for first-quarter earnings may also be lower given the subsidies it will have to pay out for the iPhone.

Among other developments, Verizon Wireless,a joint venture of Verizon Communications Inc., said recently that its 4G LTE Mobile Broadband network will cover 178 markets by the end of this year. Verizon Wireless noted that its 4G LTE network is now available in 38 major metropolitan areas, covering more than one-third of all Americans.

In terms of stock performance, Verizon shares have gained nearly 2 percent over the past year.

Full Disclosure: None.

AT&T INC. (NYSE: T): Q4 Earnings Preview 2009

AT&T INC. (NYSE: T), the second largest US wireless carrier, is scheduled to release its fourth-quarter financial results before the opening bell on Thursday, January 28, 2009. Analysts, on average, currently expect the company to report earnings of 51 cents a share on revenue of $30.86 billion. In the year ago quarter, the company reported earnings of 45 cents per share on revenue of $31.08 billion.

AT&T Inc. operates as a communications holding company. Its subsidiaries and affiliates provide the AT&T brand services in the United States and internationally.

In the preceding third quarter, the telecommunications giant reported a 1.2% decline in profit for from last year, on continued weakness in the wireline business. Net income dropped to $3.19 billion, or $0.54 per share, from $3.23 billion, or $0.55 per share, in the prior-year quarter. Total wireline operating revenues declined 7.1% to $16.30 billion from $17.55 billion a year ago. Analysts, on average, expected the company to report earnings of $0.50 per share on revenue of $30.88 billion.

The company has been losing landlines at a rapid pace. However, the company has been able to weather the recession better due to their large size and lead over rivals in the wireless business. Total wireline operating revenues declined 7.1% to $16.30 billion from $17.55 billion a year ago.

However, the company continued to add wireless subscribers, saying it recorded the highest third-quarter net gain ever, and also reported low customer churn. Segment-wise, AT&T's wireless segment operating revenues for the third quarter rose 8.2% to $13.65 billion from $12.62 billion in the previous-year quarter. During the quarter, AT&T had a 2.0 million net gain in total wireless subscribers, up slightly from the year-ago quarter and up 48.1% compared to net adds in the preceding second quarter. Total wireless subscribers at the end of the quarter totaled 81.6 million, up 6.7 million over the past year. Retail postpaid wireless net adds were 1.4 million, down 18.2% from the year-ago period. The company said that 4.3 million postpaid 3G integrated wireless devices were added to its network during the quarter, the largest quarterly increase in the company's history. Postpaid subscriber churn was 1.17% compared to 1.22% a year ago. The company noted that the postpaid wireless subscriber churn was the best ever for a third quarter. Wireless postpaid subscriber average monthly revenues per subscriber, or ARPU, rose 3.8% year-over-year and 1.7% sequentially to $61.23, driven by strong data growth.

The company's focus on cost controls has protected its bottomline. AT&T's total operating expenses for the quarter were $25.47 billion, down 1.0% from $25.72 billion in the same period last year.

iPhone has worked wonders for AT&T. AT&T is the sole provider of Apple's iPhone, and it has been a major driver of new subscriber growth. AT&T has added millions of iPhone customers since Apple unveiled a faster model early last summer. During the quarter, the company had more than 3.2 million iPhone activations, the largest quarterly total to date, with nearly 40% of the activation for customers who were new to AT&T. The downside of such rapid growth has been increasing complaints about AT&T's network.

Despite sharp wireless growth in the past few years, the telecommunication companies face rising pressure on profits as mobile and video competition boils over and their older businesses decline. AT&T spent heavily on marketing during a holiday-season ad war. Meanwhile, there have been persistent but unconfirmed reports that Verizon will be getting the Apple (NASDAQ: AAPL) iPhone this year, ending AT&T's exclusive right to offer this wildly popular device.

At the recently concluded Consumer Electronic Show, AT&T announced that it would be adding new smartphones from Motorola Inc. (NYSE: MOT), HTC, Palm Inc. (NASDAQ: PALM) and even computer giant Dell Inc. (NASDAQ: DELL) later in 2010. AT&T also would become the first U.S. carrier to sell the Dell phone. Also at CES, AT&T announced deals with Lenovo and Mobinnova to provide wireless access for their latest netbooks, which are more powerful than existing models. In addition, AT&T plans to provide access to a digital-photo frame from Pandigital, to which photos can be sent wirelessly via email. The device is supposed to make it easy for consumers to add photos to their digital-photo frames, including photos emailed to them by family and friends. In the near future, AT&T hopes to serve autos with a variety of wireless features such as traffic monitoring and video entertainment. AT&T is working with most of the major automakers to incorporate wireless connectivity, though no products are being announced anytime soon.

Recently, AT&T Inc. introduced new unlimited wireless plans. The plans include an unlimited talk plan for $69.99 a month, an unlimited talk and text plan for $89.99 a month, and a $99.99 a month unlimited voice and data plan for Apple Inc.'s iPhone.

Among other developments, the U.S. phone company raised its quarterly dividend by a penny to 42 cents a share, reflecting the company's relatively steady finances in a weak economy.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 11.54 and PEG Ratio (5 yr expected) of 2.02. In terms of stock performance, AT&T shares have lost 5 percent over the past year.

Full Disclosure: None.

Verizon Communications Inc. (NYSE: VZ): Q4 Earnings Preview

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.

Full Disclosure: None.