Ver­i­zon stum­bles on mixed earn­ings amidst Yahoo ac­qui­si­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

Ver­i­zon Com­mu­ni­ca­tions Inc. (NYSE: VZ) re­ported its sec­ond-quar­ter fi­nan­cial re­sults be­fore the mar­kets opened on Tues­day. The com­pany be­lieves that the re­sults from this re­port are demon­strat­ing its evolv­ing op­er­a­tions and ad­vanc­ing strat­egy that will sus­tain net­work lead­er­ship. Keep in mind that this is one of the best-per­form­ing Dow stocks in 2016 and that it re­cently en­tered into an ac­qui­si­tion agree­ment with Yahoo! Inc. (NAS­DAQ: YHOO).

The com­pany said that it had $0.94 in earn­ings per share (EPS) on $30.5 bil­lion in rev­enue. Con­sen­sus es­ti­mates from Thom­son Reuters had called for $0.92 in EPS on rev­enue of $30.94 bil­lion. In the same pe­riod of last year, it posted EPS of $1.04 and $32.22 bil­lion in rev­enue.

New rev­enue streams from IoT (In­ter­net of Things) con­tinue to grow, with rev­enues of ap­prox­i­mately $205 mil­lion in sec­ond-quar­ter 2016, a year-over-year in­crease of about 25%.

Ver­i­zon re­ported 615,000 re­tail post­paid net ad­di­tions in sec­ond-quar­ter 2016. Th­ese net adds ex­clude whole­sale de­vice and whole­sale IoT con­nec­tions. At the end of the sec­ond quar­ter, Ver­i­zon had 113.2 mil­lion re­tail con­nec­tions, a 3.3% year-over-year in­crease. Ver­i­zon’s in­dus­try-lead­ing re­tail post­paid con­nec­tions base grew 3.9% to 107.8 mil­lion, and pre­paid con­nec­tions to­taled 5.4 mil­lion.

In terms of FiOS, Ver­i­zon had net de­clines of 13,000 in­ter­net con­nec­tions and 41,000 FiOS video con­nec­tions in this quar­ter. Ver­i­zon made sig­nif­i­cant progress in work­ing through a back­log of FiOS in­stal­la­tions in June and has since re­turned to its nor­mal run rate of FiOS con­nec­tion growth.

The com­pany also re­cently announced

it en­tered into a de­fin­i­tive agree­ment to ac­quire Yahoo’s op­er­at­ing busi­ness for about $4.8 bil­lion. The trans­ac­tion is ex­pected to close in first-quar­ter 2017.

Low­ell McA­dam, chair­man Ver­i­zon, com­mented on earn­ings:

“By ac­quir­ing Yahoo, we are scal­ing up to be a ma­jor com­peti­tor in mo­bile me­dia. Yahoo is a com­ple­men­tary busi­ness to AOL, giv­ing us mar­ket-lead­ing con­tent brands and a valu­able port­fo­lio of on­line prop­er­ties and mo­bile ap­pli­ca­tions that at­tract over 1 bil­lion monthly ac­tive consumer views. We ex­pect this ac­qui­si­tion to put us in a great po­si­tion as a top global mo­bile me­dia com­pany and give us a sig­nif­i­cant source of rev­enue growth for the fu­ture.”

Cash flows from op­er­at­ing ac­tiv­i­ties to­talled $5.4 bil­lion in sec­ond-quar­ter 2016. On the books, Ver­i­zon’s cash, cash equiv­a­lents and short-term in­vest­ments to­taled $2.86 bil­lion at the end of the quar­ter, ver­sus $4.82 bil­lion at the end of 2015.

Shares of Ver­i­zon closed Monday at $55.87, with a con­sen­sus an­a­lyst price tar­get of $53.24 and a 52-week trad­ing range of $38.06 to $56.95. Fol­low­ing the re­lease of the earn­ings re­port, the stock was down about 1% at $55.30 in early trad­ing in­di­ca­tions Tues­day.

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