Thursday, February 3, 2011

Verizon earnings fall short of expectations, but users are strong Wireless growth

The company's net income was $ 2.64 billion, or 93 cents a share, compared to $ 617 million, or 22 cents, a year before. The increase was largely the result of adjustments to the value of retirement and pension plans of the company. Without them, would have been earnings 54 cents a share, one cent below the average of analysts ' forecasts.

Income fell 2.6% to 26.4 billion, from 27.1 billion the previous year, mainly due to the decrease in revenue from voice services.

Verizon has fallen behind its peers in moving towards mobile devices and wireless data services to profit, said Harry Wang, Director of mobile search in Parks Associates, a research organization. But he said that seemed to have picked up the pace in the fourth quarter.

"Verizon has been adjusting its business and deals in recent years to respond to the changing market," said Mr. Wang. "This dynamic is captured in these results more so than ever."

Verizon Wireless, a venture with Vodafone in the UK, reported a sharp increase in subscribers, adding 872,000 contract customers in the quarter. Although it is less new subscribers were added in the fourth quarter of last year, there were so many analysts expected.

Nearly 75% of new subscribers acquired Smartphone company, mainly because of its strong portfolio of elegant new handsets powered by Android, the Google operating system.

Smartphone users represent about a quarter of the Verizon Wireless contract subscriber base. That is a smaller share than its rivals, AT&T, Sprint and T-Mobile, which each pass close to 40 percent, said Mr. Wang.

In a presentation for analysts and investors, Lowell McAdam, Verizon's chief operating officer, said that the company expects half its mobile customers to your smartphone by year end.

"May be even higher," he said. "We are thrilled to revive a vibrant cycle in this area of growth".

Mr. McAdam says Verizon would concentrate on the promotion of its fourth-generation wireless network, which uses a technology known as LTE market, and would strongly different mobile devices that can run on it.

"We're going to get that penetration up, he will obtain profitability," said Mr. McAdam.

Verizon executives said that the appetite for devices compatible with LTE had already risen since it started last year with the introduction of the network.

More than 65,000 LTE laptop modem were sold in their first month on the market, he said. The initial response to tablet computers and their accompanying data plans has been positive, with more than 86,000 IPAD and Samsung Galaxy cards sold in the quarter, he said. During the Consumer Electronics Show in Las Vegas this month, Verizon demonstrated by a dozen of smartphones and tablets can run on the new network.

For the quarter, revenues increased wireless almost 6%, 6.3 billion, compared to the previous year. Wireless data revenues, increased by 25 percent, accounted for more than 5 billion of the total wireless revenues, Verizon said.

Mr. McAdam expected data consumption would increase more than 40 times before the end of the Decade.

Verizon stock rose 55 cents to $ 35.79 after the announcement of earnings.

The quarter can offer a preview of greatest interest in Verizon announced two weeks ago that it would soon begin offering a version of the iPhone running on your network.

The company has refused to provide a baseline specification for how the release of iPhone affect revenues and profitability. But he said it would begin offering various incentives, including trade-in options and unlimited data plans for the device, to entice existing customers to upgrade and attract customers from rival carriers. It warned that can eliminate the unlimited data plans at some point.

Verizon said it expects to sell iPhone as ben 11 million next year, but wouldn't the Bank entirely on a partnership with Apple to help buoy the company.

"We worked very hard to get here so we would have a balanced approach," said Ivan Seidenberg, chairman and chief executive of Verizon. "We have always said we will not be a business-focused, and we will certainly be one-focused device."

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