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Verizon Hits Its Stride

Monday's third-quarter report should show more wireless user gains.

Verizon's (VZ) - Get Report third-quarter numbers are likely to reveal another stage of its steady transition from old-line colossus to new-line giant.

Shares of the New York telco are trading near a five-year high as investors continue to believe that the growth in wireless and video has helped offset the rapid decline of its core phone business.

Verizon reports earnings before the market opens Monday, and observers on Wall Street are not expecting any huge surprises.

The company should report adjusted earnings of 62 cents a share on $23.7 billion in sales, according to Thomson Financial First Call.

But beyond the basic financials, there are other key categories that help fill in the fuller picture.

One pesky area of worry is access line losses. These are the basic connections to homes and businesses that have been dwindling for the past decade or so. Total line losses are expected to hit as much as 9% in a year-over-year comparison, according to some analysts' predictions. That is well above the 7.8% in the second quarter.

Investors aren't getting too worked up over this erosion problem because of healthy growth in wireless subscribers and momentum in Verizon's fiber optic powered video and Internet offering.

Wireless growth, despite a strong

Apple

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iPhone-driven performance at

AT&T

(T) - Get Report

, is expected to remain strong. Analysts are looking for Verizon Wireless -- co-owned by Verizon and

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Vodafone

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-- to have added 1.6 million net new customers in the quarter. And the monthly defection rate may have jumped up a bit to 1.2% from 1% in the second quarter, but it still remains among the lowest in the industry.

Verizon's video numbers should provide some insight into the shifting fortunes in the TV program delivery business.

Comcast

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cut its cash flow projections in part due to increased competition from satellite players

EchoStar

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and

DirecTV

(DTV)

and video offerings from Verizon.

At the end of the second quarter, Verizon had more than 500,000 TV customers who have signed on to the FiOS service. Sequential growth of at least 50%, or more than 250,000 new TV subscribers, is probably in the cards, say observers.

Verizon shares rose 59 cents to $45.50 in midday trading Friday.