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VERIZON COMMUNICATIONS

(VZ)
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Verizon Communications : Worker strike to pressure Verizon earnings; Q1 net income meets estimates

04/21/2016 | 10:39am EDT
File photo of the entrance to a Verizon wireless store in New York

(Reuters) - Verizon Communications Inc said an ongoing strike by its wireline workers was expected to hurt earnings in the current quarter, even as it reported first-quarter net income that met analyst expectations amid strong tablet sales.

Shares of Verizon, the No. 1 U.S. wireless carrier, were down 1.6 percent at $50.18 in morning trading on Thursday.

If the strike, now in its second week, goes on for an extended period, it could pressure full-year earnings, Chief Financial Officer Fran Shammo said in an interview.

"We'd like to settle this sooner than later," Shammo said.

About 40,000 employees of Verizon's wireline business, which includes its Fios Internet, telephone and TV services, went on strike after reaching an impasse in talks over a new labor contract. Issues include healthcare, offshoring of call center jobs, temporary job relocations and pensions.

In the wireline business, consumer revenue of $4 billion was relatively unchanged from a year ago.

Net income attributable to the company rose to $4.31 billion, or $1.06 per share, in the first quarter, meeting analysts' expectations. A year earlier, net income was $4.22 billion, or $1.02 per share.

The company stood by its full-year profit forecast. It said in January that 2016 adjusted earnings would be at a level comparable to 2015.

Verizon has been scaling back its Fios TV and Internet business, which represented about 29 percent of its 2015 revenue.

To tap new revenue, the company has shifted its focus to the advertising-supported Internet business and acquired AOL last June for $4.4 billion. It is seen as the front-runner in bidding for Yahoo Inc's core Internet business.

The company, known for its high-quality network, is locked in a battle for subscribers with competitors in the saturated U.S. wireless market. Smaller rival Sprint Corp has been offering half-off discounts, and T-Mobile US Inc has launched free music and video-streaming plans.

Verizon reported strong subscriber net additions for the first quarter ended March 31, adding 640,000 wireless retail postpaid subscribers, helped by tablet promotions during a seasonally slow period for phone upgrades. That surpassed analysts' average estimate of 480,000, according to market research firm FactSet StreetAccount.

Customer defections, known as churn, in Verizon's wireless postpaid business, dropped to 0.96 percent from 1.03 percent a year earlier.

Total operating revenue rose 0.6 percent to $32.17 billion, falling slightly short of analysts' average estimate of $32.46 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Malathi Nayak in New York and Sai Sachin R in Bengaluru. Additional reporting by Kshitiz Goliya in Bengaluru; Editing by Don Sebastian and Bernadette Baum)

By Malathi Nayak and Sai Sachin R


ę Reuters 2016
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Financials (USD)
Sales 2021 135 B - -
Net income 2021 21 874 M - -
Net Debt 2021 144 B - -
P/E ratio 2021 10,6x
Yield 2021 4,55%
Capitalization 231 B 231 B -
EV / Sales 2021 2,77x
EV / Sales 2022 2,72x
Nbr of Employees 132 200
Free-Float 96,5%
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Mean consensus HOLD
Number of Analysts 30
Last Close Price 55,72 $
Average target price 60,58 $
Spread / Average Target 8,73%
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Managers and Directors
Hans Erik Vestberg Chairman & Chief Executive Officer
Matthew D. Ellis Chief Financial Officer & Executive Vice President
Kyle J. Malady Chief Technology Officer & Executive VP
Shankar Arumugavelu Global Chief Information Officer
Craig Silliman Chief Administrative & Legal Officer, Executive VP
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