Tuesday, January 22, 2013

Verizon posts 4Q results

Verizon Wireless released fourth quarter results Tuesday, with earnings falling to 45 cents per share excluding one-time losses due to hurricane Sandy, pension related costs and restructuring costs. Analysts were expecting adjusted EPS of approximately 50 cents per share, which represents a 10% miss. Despite lower net income, Verizon was able to add a record high 2.1 million net postpaid subscribers this quarter, as well as an 8.5% increase in service revenue and retail service revenue. They also increased wireline revenues by 4.1% and a 9.5% gain in average revenue per user. Verizon continues to add customers to its wireline segment as they increase their FiOS availability to more markets. They also continue to increase the markets offering the newest 4G LTE cell phone service, which is now offered in an industry high 476 markets. Verizon suffered from slightly lower operating margins this quarter, most likely due to increased sales of Apple’s iPhone, as well as other smartphones. Immediately following the earnings release Verizon’s stock dropped approximately 2%, however by market open it was up 2%. This is most likely due to the poor earnings per share numbers, which led investors to a quick sell off, however diving deeper into the results of Verizon, they were able to add a record number of customers to their postpaid wireless segment, as well as increase their customer base for their wireline services. This quarter may not have been the most profitable for Verizon, but it has set them up for future success by growing their customer base. Looking forward, Verizon remains the leading wireless carrier in the United States, which puts them in position to continue to benefit from the smartphone and tablet craze. Coupling this with the fact that they continue to have a dividend over 4%, Verizon is a stock that represents great value.

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