Verizon Revenue Misses Expectations; Shares Slip
Verizon Sales Fall Short of Views as Benefits of Cost Cuts Await
(Bloomberg) -- Verizon Communications Inc. shares fell as much as 3.8 percent after the telecom giant reported fourth-quarter sales that missed analysts’ estimates, the first top-line miss in seven quarters.
The largest U.S. wireless carrier said Tuesday revenue was $34.3 billion, up 1 percent from a year earlier but slightly short of analysts’ projections of $34.4 billion.
Shares of the carrier fell 2.8 percent to $53.53 after slumping as low as $52.97. Verizon advanced 6.2 percent in 2018.
The top-line miss and the company’s forecast failed to reflect much in the way of new revenue growth from advanced mobile services. Verizon hopes to reduce the drag from the former Oath media business, but continued challenges from a mature wireless market are also pressuring the carrier.
Hans Vestberg, who took over as chief executive officer in August, is moving Verizon away from media and squarely toward new fifth-generation, or 5G, technology that promises to power smart cars and smart homes. Earlier this month, the company said it gained 1.2 million wireless subscribers in the quarter.
The company is two years into a four-year, $10 billion cost-cutting program that eliminated 10,400 jobs through a buyout program and an additional 800 media employees last week. The company said Tuesday it’s on track to deliver those savings by 2021.
2019 Outlook
For 2019, Verizon forecasts low single-digit growth in revenue, with profit expected to roughly match 2018 earnings of $4.71 a share, excluding some items. Capital spending will be $17 billion to $18 billion, the company said, including the expanding commercial launch of 5G service.
Matt Ellis, Verizon’s chief financial officer, said in an interview that the build-out of the company’s proprietary 5G technology is complete in four initial cities. The project gave Verizon bragging rights to being first with commercial 5G service in the U.S.
The company is now expanding with standardized 5G equipment in “several cities” and expects to have at least two 5G phones available to consumers in the first half of this year.
Fourth-quarter earnings, excluding special items, came to $1.12 a share, topping the $1.09-a-share average of estimates.
--With assistance from Karen Lin.
To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum
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