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Verizon Earnings Match Expectations

By Reuters
Published | Updated

NEW YORK – Verizon Communications Inc.(VZ) the largest U.S. telecommunications company, said on Thursday its quarterly earnings fell from a year ago, when it posted a big gain on asset sales.

But strong growth in wireless subscribers and high speed Internet customers in the fourth quarter helped operating earnings in 2005, and revenue rose 5.8 percent to $19.3 billion.

Verizon said it earned $1.7 billion, or 59 cents per share, compared with $3 billion, or $1.08 per share, in the same period a year earlier.

Before one-time items from changes to management retirement benefit plans and severance costs, Verizon said it earned 64 cents per share, compared with analysts' forecast of 64 cents per share and revenue of $19.1 billion, according to Reuters Estimates.

Its fourth-quarter 2004 profit excluding gains from asset sales was $1.8 billion, or 64 cents per share.

In a bid to outpace stiff competition from cable companies, Verizon has said it will spend more than $8 billion in 2006 to boost its wireless services and roll out fiber-optic lines. Verizon also spent $8.6 billion to buy long-distance telephone and data company MCI Inc., a deal that closed on Jan. 6.

Verizon is building a fiber network up to its customers' doorsteps to offer high-speed Internet and TV services.

All this has depressed shares of Verizon, which is down nearly 25 percent since the beginning of last year and has underperformed the S&P index by 23 percent over the same period.

Verizon Wireless, a cell phone service joint venture it shares with Vodafone Group Plc, added 2 million net new wireless subscribers in the quarter, which analysts said was a record breaking quarter for the wireless industry.

It ended the year with 51.3 million wireless customers in the U.S.

Wireless revenue rose 18.3 percent to $8.7 billion in the quarter.

Verizon added 613,000 net new high speed Internet customers in the fourth quarter, ending the year with 5.1 million customers.

Domestic traditional phone service revenue fell 1.8 percent to $9.4 billion.

Looking ahead, the company said its 2006 capital expenditures, including the recently closed purchase of MCI, will be $17 billion to $17.4 billion.