Verizon’s profits fall as it adds fewer phone subscribers

Verizon said its profit fell in its most recent quarter as it added fewer subscribers for its traditional cellphone business. It also said it’s still evaluating how the hack at Yahoo affects its $4.8 billion deal for the company.

Verizon wants Yahoo because it wants to build an online advertising arm that could rival Google and Facebook. But a massive hack of at least 500 million users’ email accounts has raised questions about whether Verizon will ask for a discount or other changes.

Verizon on Thursday said it expects the Yahoo deal to build its digital media business, but CFO Fran Shammo said on a call with analysts that the company has to assume the breach “will have a material impact” on Yahoo, echoing comments from Verizon’s general counsel last week. Shammo said evaluating what that means for its deal is going to be a “long process” and Verizon hasn’t reached a final conclusion.

In its largest division, selling internet service to millions of wireless customers, Verizon is dealing with increasing competition. It added 442,000 subscribers that pay each month, the more lucrative kind of wireless customer. That’s down 66 percent from a year ago. The company said its phone business was hurt by rivals introducing new unlimited plans, the recall of the fire-prone Samsung Galaxy Note 7 and a backlog for the iPhone 7 that came out in September.

And “churn,” a measure of how many are canceling their service, rose, which Verizon said was mostly due to tablet-customer defections.

The New York company also said that it was rebounding in its home internet and cable business, which had been hit by a strike of almost 40,000 employees earlier in the year. It added 90,000 home internet customers for its Fios service, down 6 percent from a year ago, and 36,000 cable customers, down 20 percent from a year ago.

Overall, Verizon reported net income of $3.62 billion, 89 cents per share, in the three months ending Sept. 30, compared with $4 billion, or 99 cents per share, in the same quarter a year ago.

Earnings, adjusted for non-recurring costs and severance costs, were $1.01 per share, topping Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of 99 cents per share.

More Americans bought homes in September, many for the first time, despite a persistent shortage of properties for sale.

The National Association of Realtors said Thursday that sales of existing homes rose 3.2 percent from August to a seasonally adjusted annual rate of 5.47 million, the strongest pace since June. Sales rose across the country: 5.7 percent in the Northeast, 5 percent in the West, 3.9 percent in the Midwest and 0.9 percent in the South.

Demand for homes is solid but supplies are weak. A solid job market and low mortgage rates are bringing buyers into the market, but they’re not finding many homes for sale.

The supply of available homes stood at 2.04 million units, down 6.8 percent from a year ago. Tight inventories drove the median price of existing homes up 5.6 percent from a year ago to $234,200.

The institutional investors who bought up homes in recent years have continued to rent them out rather than putting them on the market. Moreover, homebuilders have not aggressively stepped up construction. The Commerce Department reported Wednesday that home construction fell 9 percent in September to the slowest pace in 18 months.

But buyers have been lured into the market by mortgage rates that remain near historic lows. Mortgage giant Freddie Mac said Thursday that the rate on a 30-year, fixed-rate mortgage rose to 3.52 percent, still close to the record low 3.31 percent from November 2012.

The association said firsttime home buyers accounted for 34 percent of the purchases, the most since July 2012.

On Tuesday, the real estate firm Zillow released a report showing a surprise increase in first-time home buyers over the past year — good news for the housing market because home ownership rates for adults under 34 have been at record lows.

Jennifer Lee, senior economist at BMO Capital Markets, notes that first-timers account for 40 percent to 45 percent of sales in a healthy market, “so more improvement is needed.”

The strong demand for homes combined with tight inventory suggests that would-be homeowners could wind up in bidding wars when the home buying season heats up in the spring.

“What is lacking is inventory,” said the association’s chief economist, Lawrence Yun. “If we had more, we would sell more.”