Verizon Wireless first quarter earnings and sales are below Wall Street estimation as the company releases its first quarter finances.
Here’s what the company reported versus what the Street was expecting, via CNBC:.
EPS: 95 cents vs estimate of 96 cents, according to Thomson Reuters analysts’ consensus.
Revenue: $29.814 billion vs $30.487 billion estimate, according to Thomson Reuters.
As per CNN, the company has lost a large number of customers, about 307,000, and this has taken its toll in their recent financial report.
According to the company, it could have lost even more customers in the first three months of this year had it not started its unlimited wireless service in February. Fierce competition from telecom giants Sprint — as well as T-Mobile — appears to affect the market of Verizon.
Verizon’s stock price has dropped by 10 percent this year while Sprint and T-Mobile’s share values have increased. On the top of that, Verizon is also lagging behind main rival AT&T.
These days Verizon and AT&T are both facing tough challenges from Sprint and T-Mobile, who have introduced dynamic schemes such as unlimited calling, texting and data plans.
About the recent struggle of the company, analyst Craig Moffett said in an interview that current market conditions make it hard for the company to grow.
“They badly missed on every important subscriber metric, and it just underscores that the wireless business is a severely growth-challenged business at the moment.”
Analysts from Wall Street predicted that the company would add about 200,000 customers in the first quarter. But the report disappointed the investors by a great degree. However, the positive note is Verizon has added 190,000 customers since their launch of an unlimited monthly plan back in mid-February. It will be well for the company if it can build on its latest bright note.
Revenues for Verizon’s wireless business were $20.9 billion in Q1, a fall of 5.1 percent from one year ago, which was principally due to a drop in overage revenue, lower postpaid customers in the quarter, and continued promotional activity, the company said.
Three days ago, the company forecasted 2017 will be fairly consistent with the previous year, and there will be improvements in wireless service revenue and equipment revenue area. According to Verizon, the company’s effective tax rate should fall within a range of 34 to 36 percent this year
The much-hyped acquisition of the Internet giant Yahoo is still uncompleted, primarily due to two data breaches that Yahoo announced last year. The data breach affected about 1.5 billion users in the years 2013 and 2014.
At first, the deal was set to be done at $4.8 billion, but about two months ago, Verizon dropped its price to $4.48 billion, according to a filing with the Securities and Exchange Commission.
This month, Verizon Chief Executive Lowell McAdam said in an interview that the company is open to merger talks with companies ranging from Comcast Corp to Walt Disney Co. Explaining those comments, CFO Matthew Ellis said the following.
“The ecosystem is constantly changing, and if there’s somebody who comes to us with an idea of how we can kind of leapfrog forward in that environment, we’re going to listen to them.
“We are very confident with the strategy that we have.”
Referring to Comcast Chief Executive Brian Roberts, McAdam said this.
“If Brian came knocking on the door, I’d have a discussion with him about it.
“If there is the right opportunity out there to accelerate [Verizon’s] strategy organically in a way that adds shareholder value, we’re always looking at those opportunities.
“We are committed to remain the largest and most reliable 4G network… As part of the densification, we are deepening our fiber assets as seen by the XO transaction and continuing to focus on ‘organic’ growth, for now.”
McAdam concluded saying Verizon is confident that wireless subscriber growth will increase this year and the following year as long as the company keeps its price at the “right level” and works to increase its customer base.
[Featured Image by Scott Olson/Getty Images]