Verizon vs. AT&T: How The Carriers' Q3 2011 Results Compare

NEW YORK -- Earnings doubled at Verizon Communications Inc. in the latest quarter due to pension accounting effects, but the bottom-line result masked a weak quarter in the local-phone division, which was hammered by a strike and a hurricane.

In wireless, Verizon, the largest carrier, kept adding more high-paying subscribers than rival AT&T Inc. But like AT&T, it was hurt by the delayed launch of the new iPhone model, and missed analyst expectations for the number of new subscribers on contract-based plans.

Verizon on Friday said its net income rose to $1.38 billion, or 49 cents per share, in the three months ended Sep. 30. That's up from $659 million, or 23 cents per share, a year ago.

Excluding an adjustment in the value of its pension plans, Verizon said it earned 56 cents per share. That is a penny above the average forecast of analysts polled by FactSet.

Pension adjustments were larger in last year's quarter. Without them, the latest earnings were about even with last year.

Revenue rose 5.4 percent to $27.9 billion from $26.5 billion a year ago and was in line with analysts' expectations.

Verizon Wireless added 882,000 subscribers on contract-based plans. That was a slowdown from iPhone-fueled results earlier in the year – Verizon started selling the coveted smartphone in February. Analysts had expected about 950,000 additions in the quarter.

Analysts were in general caught flat-footed by the effect of the delayed iPhone launch, underestimating how much people were holding back. Apple Inc.'s overall iPhone sales failed to meet their expectations when it reported Tuesday, sending its stock down. Last week, the company launched the new iPhone 4S. Sprint and AT&T have said sales set records, but Verizon executives were mum on the subject Friday.

Verizon subscribers who bought an iPhone earlier this year aren't eligible yet to upgrade to the iPhone 4S for $200. Because they haven't yet "paid off" their phones through service fees, they must pay more, which is probably limiting Verizon's iPhone sales.

Verizon once again beat AT&T in gaining new contract subscribers. It now has 108 million devices connected to its network.

Verizon had previously warned that a two-week strike in the local-phone division and the ravages of Hurricane Irene and Tropical Storm Leo would cost it about $250 million in the quarter. Operating income for the division was a weak $53 million, and new installations of FiOS TV and Internet service were the lowest in five years.

Verizon Wireless is the growth driver for the company, but Verizon Communications owns only 55 percent of it. The rest belongs to Vodafone Group PLC of Britain, which thus gets 45 percent of the profits.

Analyst Kevin Smithen at Macquarie Capital said investors will likely give Verizon a "free pass" on weaker-than-expected FiOS and wireless results, due to the hurricane and delayed iPhone launch, as they look ahead to a stronger fourth quarter.

Shares of Verizon, which is based in New York, rose 32 cents to close at $37.42.

Comments

[munki]

11:01 AM on 10/24/2011

If upgrade is not available... Shop around to see what makes sense...

[jim dorino]

11:25 AM on 10/22/2011

The posterchild for corporate greed.

I'm a union member who works for Verizon.Verizon is a healthy, profitable company. They make billions in profit every quarter. They paid no federal income taxes the past 2 years and somehow even got a tax refund. They also took 1.5 billion $ in bailout money from you and me even though the CEO stated that they did not need any bailout money. So, how do they repay this country and their workers ? By trying to take away my pension, my healthcare plan and most importantly by moving as many American jobs as they can overseas! How does this help America's economic recovery ? Who are the politicians that allow this? Oh ,and the CEO makes the same amount of money as 300 average employees but I'm not supposed to mention this little fact because if I do then Rush Limbaugh says I'm engaging in class warfare. This corporation has no allegiance to this country, only to the stock price. The media does not report this because they are afraid to lose ad revenue. There has got to be a middle ground between corporate profits and maintaining a viable middle class in this country.

[loco48]

07:10 AM on 10/23/2011

I am a share holder of a lot of verizon stock (owner). They just raised the dividend 4 cents a year this quarter. Companys that are having financial problems to not raise dividends, they usually reduce them!

[corppigwatcher]

09:38 AM on 10/22/2011

If Verizon doesn't settle the contract soon, there may be another much more damaging strike. Settle the damn thing. We shareholders want stability.

[StevieTheK]

08:27 AM on 10/22/2011

Tweedle dumb vs. Tweedle Scum.

A pox on both of their senior managements.

[Philip Masiello]

07:38 AM on 10/22/2011

The issue I have with AT&T is that the phone calls on their cellular network just don't work. Especially in major markets like NY. I travel with several people who are on the AT&T network and continually have issues making calls, receiving calls and receiving data while on the road.

I am a Verizon customer and have thought about making the switch for several years, but then I travel with people and I see the frustration. it boggles my mind that it has not been addressed because it is such a well known issue which has been brought up on national media shows. Maybe one day

[jaredbrain]

12:08 AM on 10/22/2011

hey everyone, let's all describe why we have that one company furiously over the other now!

[filo]

09:30 PM on 10/21/2011

Settle the contract Verizon!

[James De La Cruz]

08:21 PM on 10/21/2011

Verizon Wireless continues to treat their employees like cattle and shareholders would love to audit the books to find their real net contract base.

[James De La Cruz]

08:19 PM on 10/21/2011

Verizon Wireless records record profits ever quarter and still lays off their most profitable employees once they steal their ideas.