By Chelsey Dulaney
Verizon Communications Inc. posted a heavy loss in its fourth
quarter on pension and severance costs, though strength in tablets
were again a driver of growth for the company.
Excluding one-time items, Verizon's earnings were in-line with
Wall Street expectations. Shares, though, fell 1% in premarket
trading as Verizon also forecast a pension-funding requirement of
$700 million for the 2015 year.
Verizon is the first telecom company to report results for the
fourth quarter, which analysts have said will be challenging for
the industry because of a holiday season of aggressive price
promotions.
Verizon has leaned heavily on tablets for wireless subscriber
growth. The carrier has pushed subscribers to add tablets and has
even given them away free when customers add them to their data
plan.
In the latest quarter, Verizon said 1.4 million of its 2 million
net retail postpaid additions came from tablets. Postpaid phone
additions were 672,000, as 4G smartphone additions were offset by
declines in basic and 3G smartphones.
The company in late February completed its deal to gain full
ownership of Verizon Wireless, buying Vodafone Group PLC's 45%
stake in the wireless carrier for $130 billion. The acquisition is
expected to sharply increase Verizon's profits and will give the
company more flexibility in driving Verizon Wireless's future.
Verizon has said it is looking to focus on smartphone penetration
and connected devices, such as cars and tablets, to boost sales at
Verizon Wireless.
Wireless providers are expecting to spend billions of dollars in
upcoming years in government-run wireless spectrum auctions, as
they seek to beef up their networks. However, Verizon and AT&T
Inc., the two largest U.S. wireless providers, may face limits to
how much spectrum they are allowed to purchase, as government
regulators try to keep smaller providers T-Mobile US Inc. and
Sprint Corp. competitive against their larger rivals.
Overall, Verizon posted a loss of $2.23 billion, or 54 cents a
share, compared with a profit of $5.07 billion, or $1.76 a share, a
year earlier. Excluding a pension-adjustment charge of $1.12 a
share and a charge of 13 cents a share for early debt retirement,
per-share earnings were 71 cents a share, up from 66 cents a year
earlier.
Revenue increased 6.8% to $33.2 billion.
Analysts polled by Thomson Reuters were expecting 71 cents a
share in earnings and $32.69 billion in revenue.
Revenue in its Verizon Wireless division increased 11% as the
unit added 2.1 million retail net connections. Verizon said about
75% of phone activations in the quarter were customer upgrades.
For its FiOS TV and broadband service service, Verizon posted
145,000 internet and 116,000 video net additions. Revenue in the
division increased 11.6% from a year earlier.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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