Verizon Earnings Top Estimates; New CEO Named
Verizon Communicationsis seeing a big boost from the iPhone, adding more new subscribers on contracts in the second quarter than it has in two and half years.
Yet AT&T, which was been the exclusive seller of Apple's iconic phone in the U.S. until February, still activates three iPhones for every two Verizon does.
When posting a profit for the second quarter on Friday, Verizon also said Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg, 64, on Aug. 1. The company has signaled the succession for the past year. McAdam, 57, is the former head of Verizon Wireless. Seidenberg will remain chairman of the company.
Verizon added 1.3 million wireless subscribers under contract in the April to June period, a result that flies in the face of the slowdown in new subscribers across the industry in the last two years. Since nearly everyone already has a cellphone, gaining new subscribers is chiefly a matter of luring them over from other carriers. A year ago, Verizon added just 665,000 subscribers under contract.
Verizon activated 2.3 million iPhones, well below the 3.6 million AT&T reported for the same period. Verizon sells only the iPhone 4, starting at $199, while AT&T also sells the older iPhone 3GS for $49.
Yet AT&T recruited only 331,000 new contract subscribers in the quarter. The iPhone is its chief draw, while Verizon has other advantages on its side, like a broader "3G" data network and new, ultra-fast "4G" network in many cities.
Verizon said its net income was $1.61 billion, or 57 cents per share, in the three months ended June 30. A year ago, it posted a loss of $1.19 billion, or 42 cents per share. Analysts polled by FactSet were expecting earnings for 55 cents per share, on average.
Revenue rose 2.8 percent to $27.5 billion, in line with analysts' expectations.
Excluding the sale of phone lines in 14 states at the end of last year's second quarter, Verizon's revenue grew 6.3 percent on the back of its thriving wireless operations.
However, only 55 percent of Verizon Wireless' profits flow to Verizon Communication's bottom line, because British carrier Vodafone Group owns 45 percent of Verizon Wireless.
"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," CEO Seidenberg said.
Get real-time quotes for Verizon here.