The new question about Verizon ( VZ) is whether its pacesetting wireless unit can maintain its blistering expansion. The nation's largest phone company has long been troubled by line losses in its core local phone business. On Tuesday, Verizon posted another
weak quarter on that score. But as has been the case lately, those numbers were offset by strong results at the fast-growing Verizon Wireless operation. With the latest mixed numbers, Verizon joins Baby Bell peers SBC ( SBC) and BellSouth ( BLS) in wringing more revenue out of offerings such as fast Internet access and cell-phone service. In fact, Verizon executives on Tuesday trumpeted the fact that sales are now split between those so-called growth businesses and the eroding basic local phone operation. That sounds like good news. But Tuesday's land-line numbers were even weaker than expected. And now there's doubt in some quarters about whether even Verizon Wireless, the nation's No. 1 cell-phone service provider, can keep up with its recent growth kick. Verizon shares slipped 53 cents to $37.21 in midday trading.
That weakness is well understood by investors, who have mostly stopped paying attention to the wire-line results reported by the Baby Bells. With the wireless industry growing by leaps and bounds and consolidation getting under way with February's $41 billion Cingular- AT&T Wireless ( AWE) merger agreement, Wall Street's focus has been firmly on the wireless side. But a looming concern among investors is whether Verizon's wireless business, a joint venture between Verizon and Vodafone ( VOD), can sustain its recent level of performance. Even fans of Verizon Wireless wonder if the company may have picked all the wireless industry's low-hanging fruit in recent periods.