Verizon Communications Inc. (VZ) on Friday reported a 17.4 percent decline in profit for the first-quarter from last year. Quarterly operating revenues also decreased 1.6 percent. The company cut 2020 earnings outlook and withdrew revenue guidance as the coronavirus pandemic impacted its businesses.
Adjusted earnings per share topped analysts’ expectations, while quarterly revenues missed their estimates.
Looking ahead for fiscal year 2020, the company now expects adjusted earnings per share growth to be in the range of negative 2 to 2 percent, compared to the prior adjusted earnings per share growth estimation of 2 to 4 percent. The outlook is based on a scenario that assumes significant headwinds prevailing through second-quarter 2020.
The company has withdrawn its consolidated revenues guidance for fiscal year 2020.
The company projects capital spending for 2020 to be in the range of $17.5 billion to $18.5 billion, as previously announced, to facilitate network activity and help support the economy during this period of disruption.
The company reported that its net income attributable to the company for the first-quarter declined 17.4 percent to $4.16 billion from the prior year’s $5.03 billion, with earnings per share decreasing to $1.00 from $1.22 last year.
The latest-quarter results included a pre-tax loss from special items of about $1.4 billion, which consisted of a $1.2 billion loss related to the FCC’s recently completed spectrum Auction 103 and a net charge of $182 million related to a mark-to-market adjustment for pension liabilities.
The latest-quarter results also included the continued effects of a reduction in benefits from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense. The net impact was 3 cents in first-quarter 2020.
On an adjusted basis, quarterly earnings were $1.26 per share, compared to $1.20 in the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $1.23 per share for the first-quarter. Analysts’ estimates typically exclude special items.
The company noted that earnings per share and adjusted earnings for the latest-quarter included approximately negative 4 cents of COVID-19-related net impacts, primarily driven by an increase to its bad debt reserve.
Total operating revenues for the first-quarter were $31.61 billion, down 1.6 percent from $32.13 billion in the prior year. Analysts expected revenues of $32.40 billion for the first-quarter. The decline in revenues was primarily the result of growth in wireless service revenue in the Consumer and Business segments, more than offset by sharp reductions in equipment revenue, after social distancing measures were adopted in March, limiting in-store customer engagement.
Total Verizon consumer revenues were $21.8 billion, a decrease of 1.7 percent year over year, driven by strong service revenue and other revenue growth, more than offset by a significant decrease in wireless equipment revenue due to low volume activity.
As a result of COVID-19, Verizon closed nearly 70 percent of its company-operated retail locations and reduced in-store service hours to promote social distancing. This resulted in a significant drop in customer activity and device volumes for the quarter.
Consumer reported 525,000 wireless retail postpaid net losses in first-quarter 2020. It consisted of 307,000 phone net losses and 227,000 tablet net losses, offset by 9,000 other connected device net additions. Postpaid smartphone net losses were 167,000.
Consumer wireless service revenues were $13.5 billion in first-quarter 2020, a 0.9 percent increase year over year.
Total retail postpaid churn was 1.01 percent in first-quarter 2020, and retail postpaid phone churn was 0.77 percent.
Consumer reported 59,000 Fios Internet net additions as work-from-home, in-home schooling, and other related measures increased the demand for high-quality broadband offerings.
Total revenues from wireless products and services of $22.6 billion, a 0.5 percent decrease year over year. Service revenues increased 1.9 percent year over year.
The company reported 50,000 retail postpaid net losses, including 68,000 phone net losses and 95,000 postpaid smartphone net additions.
Total Verizon Business revenues were $7.7 billion, down 0.5 percent year over year. Business reported 475,000 wireless retail postpaid net additions in first-quarter 2020, compared with 264,000 last year.
Total Verizon Media revenues were $1.7 billion, down 4.0 percent year over year, hurt almost entirely by COVID-19 impacts.
In Friday pre-market trade, VZ is trading at $57.65 up $0.06 or 0.10 percent.
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