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Verizon's 3rd-quarter profit declines but beats analysts' estimates

October 22, 2010|Bloomberg News

Verizon Communications Inc. reported third-quarter profit that beat analysts' estimates after more customers bought smart phones and signed up for data plans to operate them.

Net income at Verizon, which co-owns its mobile-phone business with Vodafone Group, fell to $881 million, or 31 cents a share, from $1.18 billion, or 41 cents, a year earlier.

Excluding payments related to its pension fund and charges from sales and acquisitions, profit was 56 cents a share, the New York company said Friday. Analysts in a Bloomberg survey had predicted 54 cents.

Verizon has added new mobile phones to its network to boost growth as older businesses, such as home phones and wireless voice service, stagnate or decline. Verizon has increased the number of smart phones under its Droid brand with Android operating systems. Customers paid an average of $18.61 a month for data plans, up 19% from a year earlier.

"Verizon has been doing exceedingly well with its Android launch," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. "They've had a pretty steady diet of sexy new phones, and they've really closed the gap versus the iPhone."

The company added 584,000 new wireless customers on monthly contracts.

Revenue for the quarter was $26.5 billion. Analysts had forecast $26.3 billion, according to the Bloomberg survey. Sales a year earlier, which included land-line operations sold to Frontier Communications Corp., were $27.3 billion. Excluding those operations, revenue from the third quarter of 2009 would have been $25.9 billion.

Verizon will start selling service on a new wireless network this quarter that will improve data speeds, making applications such as streaming, high-definition video and low-delay online games possible. The fourth-generation technology, called long-term evolution, will be introduced in 38 markets by the end of the year, including Boston, New York, Washington and Miami.

Verizon shares fell 43 cents, or 1.3%, to $32.09. The shares have gained 3.7% this year.

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