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Verizon posts record 4Q loss on pension adjustment
NEW YORK (AP) - Verizon strengthened its position as the top dog of the wireless industry in its latest quarter by raking in new subscribers and selling millions of iPhones, but also posted a record loss.
The loss of $4.23 billion, or $1.48 per share, for the fourth quarter was mainly due to adjustments to the value of its pension funds and obligations, an annual routine for Verizon Communications Inc.
But even excluding the pension effects, the New York-based phone company missed Wall Street’s earnings expectations when reporting Tuesday because of the cost of repairs after Superstorm Sandy and “aggressive” advertising and price cuts on smartphones.
Verizon’s loss for the October to December period compared with a loss of $2.02 billion or 71 cents per share, a year ago.
Excluding the pension adjustments and various other charges, Verizon earned 38 cents per share. Stripping out a further 7 cents per share for the cost of repair after Superstorm Sandy, earnings were 45 cents per share. That still missed the average forecast of analysts polled by FactSet, of 50 cents per share.
Verizon CFO Fran Shammo said the earnings miss was due to additional costs related to Sandy that the company couldn’t firmly attribute to the storm, and a “strategic decision” to invest in attracting new wireless customers by selling smartphones for a lower price.
Revenue rose 6 percent to $30.05 billion from $28.44 billion, beating analyst forecasts of $29.8 billion, as Verizon added a record net of 2.2 million devices to its contract-based wireless plans. It had announced the wireless additions two weeks ago.
The bumper quarter was fueled by the launch of the iPhone 5 on Sept. 21. Verizon activated 3 million of those, and 6.2 million iPhones of all kinds, another record for the company. IPhones accounted for two out of three smartphones activated, also the highest figure ever for Verizon, which promotes competing “Droid” phones.
IPhone sales are not an immediate benefit to the company, since it sells them at a big loss. It recoups the money over the life of a two-year contract, but the blockbuster sales helped curb its fourth-quarter loss.
Verizon’s stock rose 40 cents to close at $42.94 Tuesday.
Verizon Wireless revenue climbed 9.5 percent to $20 billion and contributed nearly all of the profit, as usual. Verizon Communications owns 55 percent of Verizon Wireless. The rest is owned by Vodafone Group PLC, which gets a corresponding share of its profits.
On the wired side, operating revenue continued its long slide, falling 1.5 percent to $10 billion as households kept cancelling their landlines.
To compensate, Verizon added a net 144,000 Internet customers and 134,000 pay-TV customers to its FiOS fiber-optic service, bringing the company to a total of 5.4 million FiOS Internet and 4.7 million FiOS Video customers.
For the year, Verizon Communications earned $875 million, or 31 cents per share. In 2011, it earned $2.4 billion, or 85 cents per share. Annual revenue increased to $115.85 billion from $110.88 billion.
Verizon’s report marks the debut for telecommunications companies this earnings season. Rival AT&T Inc. reports on Thursday.
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