Verizon profit up; shares fall
Verizon Wireless dazzled in the third quarter, but not enough to distract from worries about the wired side of Verizon Commmunications Inc., where losses of traditional phone customers accelerated, profit margins eroded and costs from a “bet the company” push into cable TV rose.
Verizon’s stock slid more than 3 percent after Monday’s third-quarter report, which showed that net income rose slightly to $1.92 billion, or 66 cents per share.
The results edged or met most Wall Street forecasts, with the cellular business outperforming on multiple fronts. But in a conference call with management after the report, analyst questions focused more on Verizon’s deteriorating traditional phone business and the huge investment in replacing copper wires with fiber-optic lines to deliver TV and speedier Internet access.
The ongoing loss of residential and business phone lines exceeded expectations, hurting profit margins from that operation. At the end of the quarter, Verizon had nearly 46 million lines in service, down 7.5 percent from a year earlier.
Possibly more worrisome, Verizon also disclosed a bigger dent to earnings from the launch of “FiOS” services in parts of 16 states where the fiber-optic lines have been installed. Executives said it had cost more than expected to acquire certain cable programming. Customer acquisition costs also exceeded expectations, though Verizon attributed that to speedier subscriber growth.
For the first nine months of 2006, Verizon has earned $5.61 billion, or $1.92 per share, on revenue of $67.99 billion. In the same period last year, net income totaled $5.37 billion, or $1.92 per share, on revenue of $54.02 billion.
Verizon shares fell $1.19 to close at $37.65 on the New York Stock Exchange after briefly reaching a new 52-week high of $38.95 earlier in the day.
“MetLife Inc., one of the nation’s biggest insurance companies, said Monday third-quarter profit rose 34.6 percent as it earned higher revenue from premiums and fees.
New York-based MetLife reported that net income available to common shareholders increased to $999 million, or $1.29 per share, up from $742 million, or 97 cents per share, in the same period last year. Third-quarter revenue rose to $12.55 billion, up from $11.98 billion a year ago.
The results beat Wall Street’s consensus estimate for profit of $1.17 per share, but revenue was less than the $12.62 billion predicted by analysts, according to a Thomson Financial survey.
“Japan’s troubled Mitsubishi Motors on Monday reported a narrower net loss of 16.1 billion yen ($137 million) for fiscal first-half compared to the same period last year, helped by favorable foreign exchange rates and reduced costs.
In the same six-month period a year ago, the company lost 63.8 billion yen.
The automaker, fighting to regain consumer trust shattered by a recall scandal several years ago, also stuck with its forecast to return to profitability in the full fiscal year through March 2007 after three straight fiscal years of red ink.