Verizon Drops Despite Wireless Profits

NEW YORK ( TheStreet) - Verizon ( VZ)'s wireless unit generated double-digit profits last quarter but amid worries that demand for its wired-Internet services is declining, shares were falling on Thursday for the first time in three days.

The New York-based telecom's shares were dropping 2.1% to $49.66 in mid-day trading.

Verizon posted a 16% increase in net income to $5.2 billion on nearly $30 billion in revenue as the company attracted nearly one million new wireless subscribers. Beating analyst estimates, Verizon reported earnings of 78 cents per share compared to 64 cents per share for the same period a year ago, and one penny better than estimates.

According to the latest numbers, Verizon's wireless revenues grew 8.3% in 2Q/'13. Wireless profits increased 14% in the same period due to the addition of 941,000 new postpaid subscribers. That's a 6.6% increase in subscribers over last year's figures.

The company added a number of new handsets to their offerings in the quarter including Nokia's ( NOK) Lumia 928, the BlackBerry ( BBRY) Q10 and Samsung's Galaxy S4. And, Apple iPhone activations increased to 3.9 million in the quarter and increase of 44 percent. Verizon says increased sales were boosted by a 4G/LTE wireless network is now available to more than 300 million Americans in 500 markets across the country

But questions remain about the high cost of upgrading Verizon's landline network to current and future standards. The company has been aiming to replace its older, high-maintenance copper wires with higher capacity fiber optic cables. Verizon says it's more than halfway toward reaching its goal of upgrading more than 300,000 connections nationwide by the end of 2013.

FiOS sales increased 14.7% over a year ago, which translates into 161,000 new FiOS internet subscribers and 141,000 additional FiOS video customers bringing total FiOS subscriber numbers to 5.8 million and 5.0 million respectively, increases of 12.2% and 12.6% respectively.

More than one third of those internet customers subscribe to FiOS Quantum Verizon's Web service offering various levels of higher-speed (ranging from 50-to-300 megabits per second) Web connections

Overall, Verizon reported a 4.7% year-over year increase in consumer revenues from its wireline business. Average revenues per user (ARPU) were up 9.4% to $109.67.

During this morning's conference call, Verizon said it will join rivals T-Mobile ( TMUS) and AT&T ( T) in providing installment plans to aid subscribers who wish to upgrade their phones more often that once every two years. Verizon's CFO, Fran Shammo announced the new Verizon Edge plan but gave no further details.

Verizon could disclose more at next week's planned press conference in New York - rumored to feature the next generation of Motorola ( GOOG) Android models.

--Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's senior technology correspondent.