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Verizon sees no increase in 2019 profit, misses fourth-quarter revenue estimate

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Reuters
By Sheila Dang and Akanksha Rana
(Reuters) - Verizon Communications Inc on Tuesday gave full-year 2019 profit guidance that disappointed investors, and missed analysts' fourth quarter revenue estimates, though it beat on profit.
The company forecast that adjusted earnings per share for this year would be similar to 2018, and that it expected low-single-digit percentage growth for total revenue for the full year.
Shares of Verizon, the largest U.S. wireless carrier by subscribers, were down 3.25 percent to $53.30 in morning trading.
Verizon Chief Financial Officer Matt Ellis said during the earnings call with analysts that the company expects earnings per share growth to be reduced by 24 cents to 28 cents, due to a higher effective tax rate and increased interest expense.
Ellis said Verizon's business was still strong enough to offset the "non-operational items" and balance out to the same earnings per share level from 2018.
Still, Craig Moffett, an analyst with MoffettNathanson, said Verizon's outlook for profit to be unchanged may cause concern from investors given the strength of the U.S. economy.
"They're guiding flat EPS year-over-year, at a time when GDP is growing strongly and competitive intensity is so benign. It's not very inspiring," he said.
Total operating revenue rose 1 percent to $34.28 billion in the fourth quarter, missing the average analyst estimate of $34.44 billion, according to Refinitiv data.
The company forecast an increase in 2019 capital spending to the range of $17 billion to $18 billion, including the expansion of the commercial launch of its 5G wireless technology, up from $16.7 billion last year.
Verizon launched 5G home internet in four cities last October, and claimed to be the first to offer a commercial 5G product in the United States amid heated competition between major carriers. 5G offers faster wireless data speed.
Verizon, which has 118 million wireless customers, said it added a net 653,000 postpaid phone subscribers during the fourth quarter, beating the average estimate of 355,600, according to research firm FactSet.
Analysts pay attention to postpaid customers, or those with a recurring bill, because they are more valuable to carriers and remain with the company longer than prepaid customers.
The company lost 46,000 Fios video subscribers during the quarter, more than the 29,000 it lost last year, as viewers leave for cheaper internet TV services rather than pay for pricier cable packages. Analysts looked for 51,000 losses.
Net income attributable to the company fell to $1.94 billion, or 47 cents per share, in the quarter, from $18.78 billion, or $4.56 per share, a year earlier, when it recorded a $16.8 billion one-time benefit from the U.S. tax overhaul.
Revenue for the Verizon Media Group, formerly called Oath and includes Yahoo and AOL, was $2.1 billion during the quarter, down 5.8 percent from the prior year.
Excluding items, Verizon earned $1.12 per share, above the average estimate of $1.09 per share, according to IBES data from Refinitiv.
(Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Jeffrey Benkoe and Phil Berlowitz)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Jan 29 2019 | 9:38 PM IST

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