The stock rose 1.2% to $49.21, as Chief Financial Officer Matt Ellis told investors that Verizon plans to stanch declines in wireless services revenues next year.
Verizon reported non-GAAP earnings of 98 cents a share, while analysts expected non-GAAP earnings of 97 cents, according to FactSet. Revenue of $31.7 billion grew 2.5% from the third quarter a year ago and topped forecasts of $31.4 billion. Storms in Florida and Texas reduced earnings by one cent a share, the telecom said.
"[Verizon] delivered a second consecutive quarter of strong results, particularly in its wireless segment," Wells Fargo Securities LLC analyst Jennifer Fritzsche wrote, noting that Verizon's addition of 274,000 net post-paid phones topped forecasts of about 195,000.
Phone upgrades were lower than usual, Ellis said, citing the schedule of new smartphone releases. Apple's (AAPL) - Get Report split the launch of its new devices, with the iPhone 8 coming in the third quarter and the iPhone X going on sale in the fourth. Alphabet's (GOOGL) - Get Report Pixel 2 phone also went on sale in the fourth quarter, he noted.
Operating revenue from wireless services -- a closely watched figure for wireless carriers -- declined 5.1% from a year ago to $15.8 billion. However, Verizon said that service revenue improved from the prior quarter for the first time in three years. Elliott said the number would fall below 4% in the fourth quarter and return to growth in 2018.
"A clear focal point, wireless service revenues appeared to have bottomed in 2Q," Barclays analyst Amir Rozwadowski wrote.
Verizon showed the impact of cord cutting, however, losing 18,000 net FiOS video subscribers during the quarter. Total video subscribers came to 4.6 million.
The video declines echo recent disclosures from AT&T (T) - Get Report and Comcast (CMCSA) - Get Report that they have lost more video subscribers than expected. The market will get a clearer read on the pace of cord cutting when AT&T and Charter (CHTR) - Get Report report on Oct. 24; Comcast presents third-quarter numbers on Oct. 26.
Meanwhile, Verizon's Oath digital media business, which includes AOL and Yahoo!, generated $2 billion in third quarter revenue. Ellis said integration of AOL and Yahoo! is ahead of schedule, and that the telecom would report more on Oath in future quarters. Verizon put Oath's user base at about one billion, lower than the 1.3 billion figure that it has recently cited.
Chairman and CEO Lowell McAdam piqued interest in Verizon's media strategy at a September investor conference in September, when he said the telecom would likely announce a big media deal later that month. Investors are still waiting, and Ellis said Thursday that Verizon is working on the transaction. The CFO also said Verizon is exploring an over-the-top video service. "We don't want to launch a me-too type product," he said.
Ellis would not comment on the potential impact of a merger between Sprint (S) - Get Report and T-Mobile. The Verizon CFO said investors will get more details on its 5G wireless broadband tests later in the fourth-quarter.
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