Verizon Misses Target

But the big telco notches up capital spending plans as Verizon Wireless growth continues.
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Verizon's

(VZ) - Get Report

second-quarter profit rose 18% from a year ago but missed Wall Street's target as the company's wireline phone business continued to lose ground to wireless competition.

For the second quarter ended June 30, the New York telco made $2.11 billion, or 75 cents a share, up from the year-ago $1.8 billion, or 64 cents a share. But excluding special items, latest-quarter earnings were 63 cents a share, a penny shy of the Thomson First Call analyst consensus estimate.

Revenue rose 4.6% from a year earlier to $18.6 billion, driven by another strong performance at the company's 55%-owned Verizon Wireless unit. Verizon Wireless

added 1.9 million net new users in the latest quarter, an industry record. The gains came much at the expense of rival Cingular, the nation's leading cell-phone service provider, which had a lukewarm second quarter with just 1.07 million new users.

Verizon Wireless continued to post solid numbers, with churn, or monthly customer defections, falling to 1.2% and revenue rising 14.6% from a year ago to $7.8 billion.

"These are strong first-half results, with contributions from all segments of our diverse revenue base," said CEO Ivan Seidenberg. "Wireless in particular remains in high gear. Because of the healthy margins in our wireless business, we are able to take the steps to increase our market share, which we did effectively this quarter. We continue to make the technology and infrastructure investments that allow us to unleash the full potential of the best wireless network in the country. As is evident by our market-share gains and our industry-leading customer-loyalty results, customers are responding."

But the story was different at the wireline business, where Verizon said revenue rose just 0.7% from a year ago even as expenses rose 1.6%. The company said comparable access lines dropped 5.5% from a year ago.

Still, Verizon boosted its capital spending target to a 15% gain on last year's $13.3 billion total, up from previous guidance of a 10% gain. The company cited Verizon Wireless' strength and the rollout of its FioS fiber-to-the-home plan.