Verizon (NYSE:VZ) delivered a mixed fourth quarter that fell slightly short of expectations as it preps to launch Apple’s iPhone on its network.
The telecom giant reported fourth quarter net income of $4.65 billion, or 93 cents a share, on revenue of $26.4 billion, down 2.6 percent from a year ago. Those earnings (statement) include 39 cents of a non-operational gain. Excluding the gain, Verizon had earnings of 54 cents a share.
Wall Street was expecting earnings of 55 cents a share on revenue of $26.48 billion.
For 2010, Verizon reported net income of $10.2 billion with revenue of $106.6 billion.
Verizon executives were generally upbeat on the earnings conference call. The earnings miss was largely due to the calculation of minority gains from the Verizon Wireless joint venture with Vodafone, said CFO Fran Shammo.
Key points from Verizon’s conference call:
- The company cut $1 billion in expenses in 2010 mostly due to better logistics and plans to cut another $1 billion in 2011.
- Verizon Wireless spent $8.4 billion in capital spending, up $1.3 billion from 2009. “Our capital spending was higher than 2009, driven by 4G LTE deployment and increased 3G network capacity requirements, which included preparing for the launch of the iPhone,” said Shammo.
- 65,000 dongles sold since Verizon Wireless’s LTE network launched.
- 86,000 tablets sold, mostly iPads. Verizon Wireless also said 96 percent of those customers were new to Verzion.
During 2010, total data revenues increased to $19.6 billion. That is $4 billion of data revenue growth in one year. Think about that number, and then you can understand our excitement about the revenue opportunity with 4G LTE tablets, 4G LTE, all new 3G and 4G smartphones that are coming to the market. We are confident that the Verizon network advantage will become even more of a differentiator in the marketplace in 2011 and beyond.
By the numbers:
- Verizon Wireless added 872,000 retail postpaid customers and 803,000 total retail customers. Wall Street was expecting Verizon Wireless to add about 650,000 or so. Churn for retail customers was 1.01 percent.
- Verizon Wireless ended 2010 with 87.5 million retail customers and 94.1 million total. Total customer churn was 1.34 percent.
- Twenty six percent of Verizon Wireless’ postpaid customers had smartphones, up from 15 percent. Verizon added that 75 percent of its postpaid customer additions are smartphones. The percentage of smartphones in Verizon Wireless’ mix should increase as it adds the iPhone.
- On the FiOS front, Verizon added 197,000 net Internet customers and 182,000 new TV subscribers. Analysts were expecting Verizon to add about 225,000 FiOS broadband subscribers and 190,000 TV customers. Verizon had 4.1 million FiOS Internet subscribers (3.5 million for TV).
- FiOS revenue was about 53 percent of consumer wireline revenue in the fourth quarter.
- Enterprise revenue was $4 billion, up 1.3 percent from a year ago.