|Verizon reported its third-quarter results before market open on Friday.|
NEW YORK ( TheStreet) -- Verizon's ( VZ) weaker-than-expected wireless subscriber growth should not detract from the company's solid third-quarter results, released on Friday before market open. The no.1 telco, like its arch-rival AT&T ( T), felt the impact of Apple's ( AAPL) decision not to launch its new iPhone during the quarter. Verizon, however, still topped analysts' profit and revenue estimates.
"Consistency continues for Verizon," explained Jennifer Fritzsche, an analyst at Wells Fargo, shrugging off the iPhone delay, as well as the storm and strike issues that weighed on Verizon's wireline division. "While there were some one-time impacts affecting both sides of this business, we believe Verizon's third-quarter results show many solid trends and illustrate its strong wireless leadership in an increasingly competitive market." "Verizon delivered what we view as a strong third-quarter financial and operational results this morning," added Chris King, an analyst at Stifel Nicolaus, in a note. "Wireless continues to impress." The New York-based company, a component of the Dow Jones Industrial Average, saw its wireless revenue jump 9.1% year-over-year. Stifel's King also pointed to strength in Verizon's retail post paid ARPU, which grew 2.4% over the same period, compared to just 1.4% at AT&T. Still, though, much of Wall Street's attention was focused on the company's wireless subscriber growth on Friday. Verizon Wireless added 1.3 million total connections during the quarter, which included 882,000 retail postpaid customers. This number, however, came in below analysts' estimate of 1.04 billion, according to Thomson Reuters. Nonetheless, Verizon's numbers should be viewed within a competitive context. On Thursday, for example, AT&T announced just 319,000 postpaid net adds. Verizon also has the edge over AT&T in the push towards high-speed 4G networks, thanks to its LTE efforts, according to Ken Hyers, an analyst at Technology Business Research (TBR). "We believe that Verizon's early move to LTE is a key competitive advantage which is allowing it to win high-value subscribers away from competitors," he explained. "Verizon Wireless offers LTE in 165 markets on 13 devices, including five handsets - in comparison, arch-competitor AT&T has only just moved to LTE, with 5 markets launched in September and plans to cover only 15 markets by the end of the year."
Jonathan Chaplin, an analyst at Credit Suisse, also sees iPhone-fueled wireless growth ahead for Verizon, albeit at some cost. "Wireless results were clearly held back by anticipation of the new iPhone launch, and growth should accelerate nicely in the fourth quarter," he explained, in a note. "However, the iPhone will likely exact a heavy toll on margins, making it unlikely that the company beats on EPS or that expectations for 2012 EPS increase from here." Undeterred, Verizon's management reiterated its 2011 earnings guidance of $2.18 to $2.25 a share on Friday. The telecom giant also re-confirmed its commitment to full-year revenue between $110.9 billion and $115.1 billion. "Verizon emerges from the third quarter in a strong position to accelerate growth," said Lowell McAdam, the Verizon CEO, in a statement. "We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012." Verizon shares rose 3 cents, or 0.08%, to $37.13 on Friday. -- Written by James Rogers in New York. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers. >To submit a news tip, send an email to: firstname.lastname@example.org