3 Things Verizon (VZ) Investors Want to Hear More About in its Fourth-Quarter Report - TheStreet

Verizon's (VZ) - Get Report  investors will be hoping the telecom giant provides color on a few major issues on its fourth-quarter earnings call on Tuesday morning before the market opens. 

Principal among them is the status of the company's planned $4.8 billion purchase of Yahoo's (YHOO)  core assets, amid reports that the Securities and Exchange Commission is probing whether Yahoo! should have disclosed its massive user hacks earlier. Yahoo! noted on Monday evening that it now expects the deal to close in the second quarter of 2017, rather than the first quarter of this year.

Investors will also be looking for signs of how the Trump administration's deregulatory positions could benefit the telecom industry, and on how well Verizon has been fending off rivals T-Mobile USA (TMUS) - Get Report and Sprint (S) - Get Report .

Wall Street expects Verizon to report earnings of 89 cents per share for the quarter or $3.90 per share for the year, according to FactSet. Forecasts call for $32.1 billion in fourth-quarter sales and $125.7 billion in revenues for all of 2016.

Tuesday marks the first earnings report for new Verizon CFO Matthew Ellis, who took the role in November. Ellis replaces Fran Shammo, who had been CFO since 2010 and led the $130 billion purchase of Vodafone's (VOD) - Get Report stake in Verizon Wireless, the acquisition of AOL and the bid for Yahoo and purchases of telematics outfits Telogis and Fleetmatics.

According to The Wall Street Journal, the SEC has inquired about massive security breaches that Yahoo! disclosed last year. Yahoo announced in December that a billion accounts were attacked in 2013, after reporting in September that 500 million accounts were hacked in 2014.

Yahoo and the SEC declined to comment. Yahoo disclosed in November that it is "cooperating with federal, state, and foreign governmental officials and agencies" that have sought information on the attacks, in an SEC filing.

Verizon has not indicated whether it will seek to cut the price or back out of the deal, although executives have noted those are possibilities.

Since Trump won the presidential election and promised lighter regulations on businesses, shares of Verizon have gained more than 10% and trade above $42 per share. On Monday afternoon, Verizon 

Wells Fargo analyst Jennifer Fritzsche called the post-election gains unsustainable in a Monday note, and downgraded the stock. Fritzsche pointed to

competition from T-Mobile

and

Sprint

, lack of scale in Verizon's digital businesses and other factors. 

Verizon stepped up promotions in the quarter, offering a pair of Apple (AAPL) - Get Report iPhone 7 trade-in deals. The offers could show up in subscriber counts during the quarter, but could also hurt margins.

The Yahoo! purchase is a key to Verizon's efforts to grow its digital business. Verizon has bet on its AOL unit and its millennial-centric Go90 mobile video product, while rival AT&T (T) - Get Report has bet on more traditional media with the purchase of DirecTV and the pending acquisition of Time Warner (TWX) . Meanwhile, Sprint has become more aggressive in the content business, with the announced purchase on Monday of a stake in Jay Z-backed music streaming service Tidal.

Trumps's views on M&A are a wildcard for Verizon and other telecoms. Aside from AT&T's purchase of Time Warner, one question is whether the new regime would allow Sprint and T-Mobile to merge. A combination of the number-three and four wireless carriers in the U.S. would present a larger competitor to Verizon and AT&T.

However, Macquarie analyst Amy Yong suggests that a market with three players rather than four would have less aggressive price competition. And a let-up in price battles would benefit Verizon, which generates more than 70% of its sales come from wireless, more than AT&T, according to Yong. AT&T gets just 45% of its revenues from its wireless business.

A $1 boost in average revenue per user would translate to a 1% increase in revenue and a bump of $1 per share for Verizon stock, Yong estimates.

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