What AT&T's Earnings Say About Verizon
Verizon's (VZ Quote) third-quarter earnings report on Monday is expected to follow rival AT&T's (T Quote) latest profit release, which highlighted strong wireless growth and continued erosion of its wireline business.
But AT&T had Apple's (AAPL Quote) new iPhone 3G -- Verizon might be stuck with slower growth in both its wireless and business-customer segments. "The worrisome [takeaway] from AT&T is that the report was mostly black clouds and one silver lining with the iPhone," says Craig Moffett, analyst with Sanford Bernstein. "Verizon could be a mirror image of that report, but without the sliver of good news." Verizon is expected to notch a profit of 66 cents a share on revenue of $24.5 billion, according to a Thomson Reuters poll of analysts. That revenue target marks an increase of 1.6% sequentially and 3% from the same quarter a year ago. On Wednesday, AT&T said its third-quarter profit fell short of Wall Street's forecast on a per-share basis, as earnings were hit by higher subsidies related to greater-than-expected sales of Apple's new iPhone 3G, a product for which it is the exclusive authorized U.S. provider. AT&T's pretax third-quarter earnings were cut by about $900 million, or 10 cents a share, as a result. But he new iPhone helped AT&T realize a net gain of 2 million wireless subscribers, much more than analysts expected to see. Moffett says Verizon doesn't have the luxury of a hot handset device like the iPhone, meaning that it might see a slight slowdown in subscriber growth.- Loading Comments...
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