Verizon tops estimate by a penny

(Telephony) Verizon beat the street by one cent for its first quarter 2001, reporting adjusted earnings per share of 72 cents on net income of $2 billion, a 4.3% increase year over year.

Consolidated revenues, which have been adjusted to exclude properties from Vodafone Group that became part of the wireless joint venture, were up 7% to $16.3 billion.

“More than 40% of total revenues in the quarter—$6.6 billion of $16.3 billion—was generated from growth areas of the business: wireless, high-speed data, DSL, [long distance] and international,” said Fred Salerno, Verizon’s chief financial officer.

Verizon’s domestic telecom revenues went up almost 3% to $10.9 billion, while operating income grew 7% to $2.7 billion.

Driving this growth in large part was the company’s data revenues, which increased by 27.6% to $1.7 billion during the quarter. The company’s DSL subscribership numbers, which are accounted for in data revenues, went up 180,000 to 720,000. Long-distance subscribership also increased, from 3.6 million to 5.2 million, making Verizon the fourth largest long-distance provider nationwide.

Domestic wireless revenues, which were also adjusted to account for the joint venture, were up 17.3 % to $4 billion, and operating income was up more than 40% to $490 million. Revenues from consolidated international operations grew 15.3% to $527 million.

Salerno also said that the company was lowering its capital expenditures for the year by $1 billion to $17.5 billion. About 75% of that cut will come from equipment not bought and 25% as a result of lower prices from vendors, he estimated.

For 2001, the company reaffirmed EPS for the year of $3.13 to $3.17, up 8% year over year.

Though taking a positive stance on Verizon’s overall performance for the quarter and upping his projections for the company, Dan Reingold, analyst with Credit Suisse First Boston, anticipates the company’s EPS for 2001 to be $3.05 to $3.07, lower than Verizon’s guidance.

“The economic slowdown has not yet hit Verizon in a meaningful way,” he said in a note. “While we are satisfied that Verizon successfully anticipated the impact of the economy in its first quarter 2001 guidance, we are cautious about the second half of the year, which is why we remain below company guidance on earnings growth for the year.”