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Verizon Plans Buyback

The telco reaffirms full-year guidance and backs its fiber plan.


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guided lower for the first quarter but maintained full-year earnings targets and set a $1 billion stock buyback plan.

The news came as the New York telco made a presentation to investors in Florida. Verizon finance chief Doreen Toben said the company expects to make 57 cents to 59 cents a share for the first quarter and $2.56 or so for the year. Analysts surveyed by Thomson Financial were looking for 62 cents in the quarter and $2.55 for 2006.

In a late morning press release, Verizon also defended its costly

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buildout of fiber optic lines to the home. Verizon said that it "continues to see a strong and growing customer response" to fiber-optic-based FiOS data and video product offerings. Verizon added that "customer take-rates for FiOS services are 'well on plan,'" while "deployment costs are declining."

Wall Street has been concerned that while Verizon is pouring billions of dollars into the ground to compete with cable rivals on the so-called triple threat of TV, voice and data service, it's not entirely clear when investors will see the payoff.

Verizon said it continues to target the completion of the divestiture of its Verizon Information Services unit by the end of this year. In December Verizon had announced that it had begun reviewing strategic alternatives -- including a spinoff, sale or other strategic transaction -- for the domestic operations of the company's wholly-owned directories publishing business.

Toben said that, as part of the divestiture plan, Verizon management expects to recommend that the current dividend of $1.62 be maintained after this divestiture. If VIS is divested through a spinoff, Verizon expects to create a capital structure for the new entity that would enable a separate dividend payment for its shareowners -- "a net increase in the amount of overall dividends for current Verizon shareowners," Verizon said.

The company also said it is "rapidly executing" on its integration of operations acquired from MCI.

On Monday, Verizon rose 50 cents to $34.31.