Verizon Reports Loss Of $2 Billion For Fourth Quarter (NYSE: VZ)
Verizon announced a net loss of $2 billion, or $0.71 a share, for the fourth quarter of 2011. Revenue climbed 7.7%, to $28.44 billion in the quarter, from $26.4 billion for the quarter a year earlier. Revenue was in line with expectations. The company reported net income of $2.64 billion, or $0.93, for the same quarter a year earlier.
The loss was mainly a result of previously announced pension charges. Adjusted for the pension charges, income was $0.52 a share, below the forecast of $0.53 a share from analysts. Lowell C. McAdam, Verizon’s chief executive, said in a statement, “Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2% total return to our shareholders for the full year, and the company has great momentum for 2012.”
Verizon reported rising iPhone sales and revenue growth in its wireless business. Strong sales of smartphones drove Verizon’s wireless business to its best quarterly growth rate ever, up 13% to $18.3 billion in revenue. The company sold 7.7 million smartphones in the fourth quarter, 4.2 million of which were iPhones. 1.5 million wireless subscribers were added over the quarter, bringing the company’s total subscriber count to 108.7 million.
Profit margins were reduced due to the high subsidies paid by Verizon for each new iPhone bought by customers when they commit to a two-year contract. Many wireless carriers subsidize part of the price of a new cellphone to attract customers, then recoup the costs over the duration of the customer’s contract.
During a conference call after the earnings report was released, Francis J. Shammo, chief financial officer of Verizon, said, “We have great momentum in wireless, and we expect to build on that strength.” Mr. Shammo added that Verizon’s wireless business intends to expand in the business market and is planning wireless innovations for the automobile, health care and energy conservation sectors.