Verizon Communications announced today that its quarterly revenue rose due to strong wireless subscription growth. Verizon Wireless, which Verizon Communications owns with Vodafone, added 1.8 million net retail customers in the quarter, giving the company 63.7 million subscribers.
“It’s a story of tremendous strength in wireless and continued deterioration in wire line,” said Sanford C. Bernstein analyst Craig Moffett.
Even though wireless subscription sales are strong, Verizon profits are down due to merger-related costs and other items. Verizon repurchased nearly $800 million of its shares in the third-quarter and the company said it will increase its 2007 share buyback target by 25 percent to $2.5 billion. Verizon’s third-quarter net income was $1.27 billion, or 44 cents per share, compared with $1.92 billion, or 66 cents a share, a year earlier.
“It was a very solid quarter, not spectacular,” said analyst Chris King of Stifel Nicolaus, who was not impressed with the performance of Verizon’s DSL service, which offers high speed Internet over traditional phone lines. “If there was one weak spot in the numbers that’s on the DSL side,” but King added that was “a relatively low profit margin business for them so it’s something I’m not overly concerned with. FiOS and wireless are far more important.”
Verizon is investing in its FiOS high-speed fiber optic service, which allows the company to deliver video for television sets. Verizon wants to provide subscribers with a triple-play all in one package of video, phone and Internet. This will allow Verizon to compete with cable operators like Comcast who offer video, phone and Internet packages.