Verizon adds few contract customers in 1Q

Apr 22, 2010 By PETER SVENSSON , AP Technology Writer
In this Oct. 26, 2009 file photo, a Verizon Wireless store is seen in Glendale, Calif. Verizon said Thursday, April 22, 2010, its earnings fell by 75 percent in the first three months of the year, brought down in large part by the one-time tax effect of the health care reform bill.(AP Photo/Damian Dovarganes. file)

(AP) -- Verizon Communications Inc., the largest wireless carrier in the country, is finding there's an end to the number of people who'll sign two-year contracts for cell phone service.

Verizon said Thursday that it signed up a net of just 423,000 customers under contract in the first three months of the year. That was the lowest number in years, and below analyst expectations.

Its chief competitor, AT&T Inc., also reported a relatively low number of contract customers for the first quarter when it reported first-quarter results the day before. But AT&T did somewhat better, signing up 512,000 with help from the iPhone.

The results demonstrate that the engine that has kept the wireless industry booming for more than a decade is now running out of steam, as nearly everyone has a cell phone.

To keep revenue growing, the carriers are now looking at other avenues. One is prepaid service, which is usually cheaper than contract plans and available to consumers without credit. Verizon lost 139,000 prepaid customers under its own brand in the quarter, but added 1.3 million through resellers.

In total, Verizon added 1.55 million wireless customers in the quarter, comparable to the 1.3 million it added in the same quarter last year. But since far fewer signed contracts, they're worth much less to Verizon. It ended the quarter with 92.8 million subscribers.

Wireless service revenues still grew 5.9 percent from a year ago, to $13.8 billion, helped by the fact that more people are signing up for data plans. But AT&T managed to grow revenues by 10 percent, again with help from the iPhone, which comes with hefty service fees.

Overall, Verizon said its earnings fell by three-quarters in the first three months of the year, brought down in large part by the one-time tax effect of the health care reform bill.

The New York company earned $409 million, or 14 cents per share, in the quarter, down from $1.645 billion, or 58 cents per share, a year ago.

The results included a previously announced a charge of 34 cents per share, to reflect a change in the health care reform package regarding the tax treatment of benefits.

Excluding that and other one-time items, Verizon said it earned 56 cents per share, matching the average analyst estimate as polled by Thomson Reuters.

Revenue rose 1.2 percent to $26.9 billion, matching analyst expectations.

In pre-opening trading, Verizon shares fell 51 cents, or 1.7 percent, to $29.05.

Eds: CORRECTS earnings excluding items and revenue change. Will be led after 8:30 am EDT conference call.

Explore further: Nokia turnaround since handset unit sale continues

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Verizon 1st-qtr profit, revenue beat expectations

Apr 27, 2009

(AP) -- Verizon Communications Inc. said Monday its earnings grew 5 percent in the first quarter, boosted by its acquisition of Alltel Corp. and strong demand for its wireless, Internet and TV services.

Bad sign for AT&T: fewer new contract customers

Apr 21, 2010

(AP) -- AT&T Inc. added fewer wireless customers with contracts in the first quarter than it has since 2004, an indication that the saturation of the market is even starting to catch up with the carrier of ...

Economy and iPhone subsidies trim AT&T's 2Q profit

Jul 23, 2009

(AP) -- AT&T Inc.'s earnings fell 15 percent in the second quarter as it subsidized a record-setting launch of the newest iPhone. The weak economy also continued to sap its landline business.

Qwest Communications 3Q earnings fall 6 pct

Oct 28, 2009

(AP) -- Qwest Communications International Inc. reported a 6 percent drop in third-quarter profit Wednesday as customers continue to give up traditional landline telephones.

Verizon posts 4Q loss on $3B in layoff costs

Jan 26, 2010

(AP) -- Verizon Communications Inc. on Tuesday posted an unusual loss for the fourth quarter, as a charge for layoffs in its shrinking landline business overshadowed the growing, and profitable, wireless ...

Verizon profit falls 30 pct on restructuring costs

Oct 26, 2009

(AP) -- Verizon Communications Inc. reported a 30 percent drop in third-quarter earnings Monday as it couldn't sign up enough new subscribers to offset higher costs from laying off workers and absorbing an ...

Recommended for you

Nokia turnaround since handset unit sale continues

4 hours ago

Nokia appears to have turned around its fortunes after the sale of its ailing cellphone unit to Microsoft, reporting a third-quarter net profit of 747 million euros ($950 million), from a loss of 91 million euros a year earlier. ...

Yahoo CEO defends strategy in face of criticism

4 hours ago

Signaling her reign has reached a pivotal juncture, Yahoo CEO Marissa Mayer is trying to convince restless shareholders that the long-struggling Internet company is heading in the right direction.

Sk Hynix logs all-time high Q3 earnings

4 hours ago

SK Hynix, the world's second-largest memory chip maker, reported Thursday a record high quarterly net profit for the three months to September on strong sales and currency earnings.

User comments : 0