Verizon to report 2Q results; investors to look for new Verizon Wireless contract customers
By APWednesday, July 21, 2010
Earnings Preview: Verizon to report 2Q results
NEW YORK — Verizon Communications Inc., the nation’s largest wireless carrier and second-largest telecommunications company, reports its second-quarter results before the stock market opens on Friday.
WHAT TO WATCH FOR: How successful Verizon Wireless was in recruiting new contract-signing customers, the unit’s bread and butter.
In the first quarter, the recruitment of new contract-signing customers hit a wall across the industry. Verizon added just 429,000 customers under contract, fewer than it has in many years. AT&T did only slightly better than Verizon, and both Sprint Nextel Corp. and T-Mobile USA lost contract customers.
AT&T has an edge because of the popular iPhone, for which it’s the exclusive U.S. carrier. Verizon is positioning its phones with Google Inc.’s Android software as the alternative. Friday’s report will give an indication of how that is coming along.
During the quarter, AT&T stopped letting new customers sign up for its unlimited Internet data plan for smart phones and iPads, breaking with industry practices. Instead, new customers have to sign up for cheaper plan with limited data traffic allowances. Verizon Wireless is widely expected to follow suit, and there’s speculation that an announcement could come any day. Putting allowances in place could help carriers deal with growing data traffic without breaking the bank on capital upgrades, analysts say.
AT&T reports its second-quarter results on Thursday.Vodafone Group PLC owns 45 percent of Verizon’s growth engine, Verizon Wireless. That means only 55 percent of its profits flow to Verizon. Verizon has signaled before that it wants to get out of the situation somehow, but it seems unlikely to be able to buy out Vodafone.
WHY IT MATTERS: AT&T had 92.8 million wireless customers and 31.8 million landlines at the end of the last quarter. The stock is a component of the Dow Jones Industrial Average and is considered a bellwether of telecommunications industry health.
WHAT’S EXPECTED: Analysts surveyed by Thomson Reuters expect Verizon to earn 56 cents per share on $27.1 billion in revenue.
LAST YEAR’S QUARTER: Verizon reported a profit of 58 cents per share on $26.6 billion in revenue in the second quarter of 2009.
