The Causes of Verizon’s (NYSE: VZ) Q3 Earnings


The American broadband telecommunications giant, Verizon Communications Inc. (NYSE: VZ), just reported Q3 earnings this Tuesday. Its earnings per share were $0.89 with total revenue of $31.6 billion. Verizon (NYSE: VZ) was below the Thomson Reuters consensus estimate that predicted EPS to be $0.91 with total revenue of $31.58 billion. The same quarter for the last year experienced a lower earnings per share and revenue; $0.77 and $30.28 billion respectively.

The telecom giant did not report formal revenue guidance and earnings for its Q4 or for the whole year. Instead the company backed 4% revenue for the current year. Don’t get me wrong, even though the company wasn’t exactly at the exact point of its estimates with a few additions and subtractions here and there, it did manage to produce healthy results. Thomson Reuters gives away a consensus estimate of an EPS of $3.53 and revenue $126.08 billion for 2014. Hence the two digit earnings are bound to step up to the three digit level.

The company brought in $21.8 billion in its Wireless segment which was more than it made in the previous year by 7%. Inclusive of this figure, the service revenues were $18.4 billion. Its margin of operating income made it to 31.9%. Verizon (NYSE: VZ) has a net income of 3.79 billion for the quarter which dropped on a yearly basis from $5.58 billion. Retail connections amounting to 1.53 million were added and with the third quarter coming to an end the company’s retail connections were 106.2 million in total.

The company had a total of $9.6 billion in its Wireless segment which were up about 0.8% from last year. Inclusive of this, consumer revenues were $3.9 billion. Comparing the income margin from the same quarter in the last year, it went up by 0.8% with a rise from 1.5% to 2.3%. The CEO and Chairman of Verizon (NYSE: VZ), Lowell McAdam stated that consumer demand is increasing for the company’s wireless as well as broadband services.

He continued to say that Verizon (NYSE: VZ) has a strong cash generation process and just last month the company announced that it gained the board approval to give a quarterly increase in dividends. This will be the company’s eight year in a row of giving out consecutive dividends. S&P’s analyst, Angelo Zino stated that the quarter was overall a good one for Verizon (NYSE: VZ). However, the industry is a very challenging one and anything could happen with all the competition.

Hence the fourth quarter may be even more challenging with the new iPhone launch and all its promotional campaigns. The company would have to maintain its profit level and try to kick it up a notch in order to stay in the game. Verizon (NYSE: VZ) shares closed this Monday at $48.48 and dropped just a little by less than about 1% in premarket trading on Tuesday after the results of its earnings report were announced. This caused them to come down to an amount of $48.30.