Is Verizon Losing the Battle for Growth to AT&T?
Shares of Verizon (NYSE:VZ) fell as much as 2 percent in early trading on Thursday after the communications company reported first-quarter results. Total operating revenues of $30.8 billion, up 4.8 percent on the year (the highest quarterly growth rate in five periods), beat the mean analyst estimate of $30.7 billion. Adjusted earnings of 84 cents per share, up 23.5 percent on the year, fell just short of the mean analyst estimate of 87 cents per share. GAAP earnings of $1.15 per share were up 69.1 percent on the year.
The big news was on the bottom line, where Verizon was able to report its fifth consecutive month of double-digit growth in both earnings and operating income. Operating income of $7.2 billion was up 15.1 percent on the year — consolidated operating margin widened to 23.2 percent from 21.1 percent. Adjusted consolidated EBITDA margin widened to 36.7 percent from 35.1 percent.
“Verizon has delivered double-digit earnings growth in eight of the past nine quarters, and in the first-quarter 2014 we posted our strongest consolidated revenue growth in five quarters,” Verizon Chairman and CEO Lowell McAdam said in a statement. “With the wireless transaction now behind us, we have great confidence in our ability to sustain these strong results.”
That “wireless transaction” was Verizon’s $130 billion acquisition of Vodafone Group’s (NASDAQ:VOD) 45 percent stake in Verizon Wireless. The deal valued the unit, which is the most profitable phone carrier in the U.S., at nearly $290 billion.
“We are already seeing the expected earnings accretion from the transaction,” McAdam said in the earnings report. Immediate accretion is expected at about 10 percent.