Profit, excluding severance and other costs, amounted to 60 cents a share, New York-based Verizon said today in a statement. That compared with the 59-cent average of estimates compiled by Bloomberg. Sales rose 10 percent to $27.3 billion, compared with the average $27.2 billion projection.
Yeah, but....
Verizon added 1.3 million wireless customers in the quarter, including customers obtained through acquisitions. That surpassed Fritzsche's 1.13 million projection. Sales of data services rose 48 percent and accounted for about one-third of customers' bills. Customer turnover rose to 1.49 percent from 1.33 percent a year earlier.
A bit of hair on that dog - acquisitions tells you nothing about organic growth. The other interesting component is the data services pricing and growth - this has been a push for a long time, and remains so. The surprise is that 1/3rd of customer billings is now data, and that it continues to accelerate.
On the worrisome side is the growth in churn - that's a 12% increase and definitely not going the right way. It's showing up in the internals of the firm's performance too:
Net income attributable to Verizon fell 30 percent to $1.18 billion, or 41 cents a share, from $1.67 billion, or 59 cents, a year earlier.
Verizon said in July it planned to cut 8,000 employees and contractors in the second half, with additional cuts to come in the next few years. AT&T reported last week it had almost 19,000 fewer employees as of Sept. 30 than a year earlier.
I hope Verizon likes competition, because there are two potential cannibalization effects staring them in the face.
The first is "Straight Talk" from WalMart, which is Tracfone's latest foray. It is a "you buy the phone" plan with the price of the phone being anywhere from ~$40-100 (depending on device) with service plans being either $30 or $45/month - the latter being unlimited voice, text message and (on-device) data. There are no contracts - and Tracfone runs on top of Verizon's service as an MVNO (essentially a bucket shop that buys blocks of time and resells.)
In the "more conventional" carrier arena T-Mobile launched "Project Black" Sunday. This is a direct assault on Verizon and AT&T, and comes in two "flavors" - a subsidized contract-style agreement (2 year) as with everyone else where the phones are cheap, and then a second, non-subsidized plan that is $10 cheaper per month.
