Verizon Communications Inc. (VZ - Free Report) is the largest telecom operator in the U.S. providing high-end wireless and wireline services to individuals, business enterprises and government agencies.
Spectrum crunch is a major issue in the U.S. telecom industry and Verizon continues to operate in a saturated and competitive wireless market. Expenses related to Verizon’s promotional plans and lucrative discounts to lure more customers might impact the wireless segment’s EBITDA and EBITDA service margins in the to-be-reported quarter.
The company’s wireline division continues to suffer from persistent losses in access lines owing to competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data, video) offerings from cable companies.
Nevertheless, Verizon’s decision to launch FiOS Prepaid plan, FiOS Internet service and zero-rate its FiOS Mobile App data should help it gain subscribers in the wireline segment in the to-be reported quarter. Verizon’s unlimited data plans have already heated up the wireless industry. Moreover, Verizon Communications’ strengthened foothold in the Internet of Things (IoT) and fiber space bode well.
Zacks Rank: Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has generated negative average earnings surprise of a mere 0.07% in the previous four quarters.
We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: The Company lags first-quarter 2017 earnings. Our consensus called for an adjusted EPS (earnings per share) of 98 cents while the company reported adjusted EPS of 95 cents.
Revenue: Verizon reported total revenue of $29,814 million underperforming the Zacks Consensus Estimate of $30,504 million.
Key States to Note: In the first quarter, Verizon lost net 0.307 million retail postpaid connections. Retail postpaid churn increased to 1.15% from 0.96% in the prior-year quarter. At the end of the first quarter of 2017, Verizon had 113.913 million retail connections, up 1.2% year over year.
Stock Price: At the time of writing, the stock price of Verizon was down nearly 2.64% in the pre-market trade on NYSE. Clearly the initial reaction to the release is negative. The company missed the Zacks Consensus Estimate for both the top and bottom lines.
In the first quarter, net loss of postpaid retail connection was 0.307 million compared with a net gain of 0.640 million subscribers in the year-ago quarter. We believe these are the primary reasons behind this initial negative sentiment.
Check back later for our full write up on this Verizon earnings report later!
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