On Monday, Verizon Communications reported a 30 percent drop in third-quarter earnings. The company’s losses stem from slow subscriber growth and costs associated with the Alltel acquisition earlier this year.
“Verizon still has a lot of expenses from the Alltel merger. They’ve got the expenses from having duplicate managing structures that they are going to carry for a while until they can do a reorganization,” said Mike Disabato, a senior analyst with the Burton Group. “But that will work itself out. The company is not in any great danger.”
Verizon earned $1.18 billion, or 41 cents per share, in the third quarter. That compares to $1.67 billion, or 59 cents per share, in the year-ago period. Revenue climbed 10 percent to $27.3 billion, representing a spike from integrating Alltel’s wireless operations.
Verizon has 89 million wireless subscribers, a year-over-year increase of 25.7 percent, adding 1.2 million net accounts. The wireless division saw a 24.4 percent increase in total revenues, a 1.13 percent retail churn and a 48.1 percent increase in data revenues.
Focusing on Long-Term Value
“Verizon continues to generate strong cash flow, which we have used in building the foundation for sustainable, long-term shareowner value,” said Verizon CEO Ivan Seidenberg. “Even through the worst of the recession, we have continued to raise our dividend and to add new customers, expand markets and grow revenues based on the power and innovation of Verizon’s wireless, broadband and global networks.”
As Seidenberg sees it, the Verizon network is now an engine for next-generation communications services that will create new short- and long-term opportunities for the company. “As the U.S. economic and employment picture improves, and as we accelerate reductions in our own cost structure, we are well-positioned to quickly and significantly improve our growth profile,” he said.
Seidenberg also noted that a simplified organizational structure announced earlier this month…