topped estimates with its second-quarter profit Monday, but shares slipped after the telco shop fell short of the Street's revenue targets.
The New York phone giant posted net income of $1.88 billion, or 66 cents a share, which rose from $1.68 billion, or 58 cents a share, in the year-ago quarter. Adjusted for one-time items, Verizon said it had a profit of 67 cents a share, which is 2 cents better than the Thomson Reuters average estimate.
Sales rose 3.7% from a year ago to $24.12 billion, but that figure was just shy of Wall Street's expectations of a $24.17 billion top line. Rival
, which reported earnings Wednesday, also came up short on second-quarter revenue.
"Our second-quarter results were on track with our business plan, and top- and bottom-line growth remained solid," said CEO Ivan Seidenberg in a release. "We remain focused on steady improvements in revenue growth and productivity that will increase profitability and cash flows and create future opportunities to enhance shareholder returns."
Verizon shares recently dipped 51 cents, or 1.5%, to $33.94. AT&T was off by 3 cents, or 0.1%, at $31.37.
was slipping 7 cents, or 0.8%, to $8.67.
Weakness on the wireline side pressured Verizon's stock: Wireline revenue fell 1.8% to $12.1 billion as customers disconnected second lines or shifted to competing services. Residential switched access lines plummeted 11.4% from a year ago to 22.4 million.
The company said it added 176,000 net new FiOS TV customers, taking the total to 1.4 million at the end of the quarter, although that figure was lighter than industry observers had expected. Verizon said it gained 187,000 fast Internet subscribers, coming close to topping the 2 million mark for fiber-optic connections, nearly doubling the amount of customers it had at the end of the second quarter in 2007.
On the other hand, Verizon Wireless -- jointly owned by Verizon and
-- continued to show strength, adding 1.5 million net subscribers in the second quarter. The monthly customer defection rate remained at an industry low 1.12%, with post-paid churn slightly below 1%. The wireless unit generated revenue of $12.1 billion, up 11.8% year over year.
"In a carbon copy of AT&T's results last week, Verizon's Wireless results were strong but its wireline results were weak," writes Craig Moffett, analyst with Sanford Bernstein. "Although the miss was less extreme than that reported by AT&T last week, Verizon continues to hemorrhage access lines at a stunning rate, with annual line losses now exceeding 11.4%, significantly worse than the rate at AT&T and the worst rate in Verizon's history."
During the company's conference call, Verizon COO Dennis Strigl said he expects double-digit earnings growth for the year, with revenue rising in the single digits for the remainder of the year. He added that Verizon does not anticipate any significant impact from weak macroeconomic conditions for the rest of 2008.