Home News Verizon Set to Report Declining Profits Despite Progress in Adding Subscribers

Verizon Set to Report Declining Profits Despite Progress in Adding Subscribers

by SuperiorInvest

KEY TAKEAWAYS

  • Verizon’s fourth-quarter earnings likely fell by a third, not including a planned one-time charge.
  • The company likely added the most retail subscribers in two years after losing customers in five of the last seven quarters.
  • However, analysts say subsidies and promotional costs to add new customers may have outweighed the benefits.

Verizon Communications’ fourth-quarter earnings likely fell by a third, analysts estimate, a decline that does not include a planned $5.8 billion charge to reduce the reported value of its Verizon Business Group.

The second-largest U.S. wireless carrier will likely report earnings of $4.6 billion, or $1.06 per share on a diluted basis, excluding one-time items, according to the consensus estimate of analysts surveyed by Visible Alpha. That’s down from $6.7 billion, or $1.56 per share, in the final quarter of 2022. Revenue likely fell 2% to $34.6 billion.

Verizon Communications Quarterly Earnings Profile
Analysts’ estimate for the fourth quarter of 2023 Third quarter of 2023 Fourth quarter of 2022
Revenue $34.6 billion $33.3 billion $35.3 billion
diluted EPS $1.06 $1.13 $1.56
Net income 4.5 billion dollars 4.9 billion dollars 6.7 billion dollars

Verizon said Wednesday it will take over its business unit due to declining demand for landline and landline services provided to business customers. Visible Alpha estimates that the division’s revenue, which represents about a fifth of the company’s sales, fell about 2%.

Key metrics

The company’s wireless consumer retail unit, which accounts for nearly half of its sales, added approximately 573,910 customers, according to Visible Alpha. This would mark the largest subscriber growth in two years, up from just 4,000 in the third quarter. The unit has lost subscribers in five of the last seven quarters.

Business focus

Even as subscribers likely increased, the costs of Verizon’s latest effort to add subscribers have outweighed the benefits at this point, Bank of America Securities noted in a report this week. Those costs include subsidies paid to new subscribers and initial marketing expenses.

The company’s service costs, which account for about a third of its operating expenses, rose a projected 7% during the quarter, according to Visible Alpha.

Verizon stock is down 1.68% over the past year.

Correction: A previous version of this article incorrectly indicated the amount the company would assume from the expected charge for its business group. It’s 5.8 billion dollars.

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