Shares of Verizon Communications (VZ, Financial) have fallen by 3% in the last year. The wireless and wire-line communications company has had a tough year, with three earnings misses in the last four quarters. However, this time the retailer reported a mixed bag of numbers. Its fourth-quarter results registered some hits and some misses. The top line was higher than the Street’s estimates, whereas the bottom line missed the mark slightly. Nonetheless, its shares surged higher. Let us get into the details of the results.
The hits and the misses
Revenue for the quarter rose 7% to $33.19 billion, as compared to the previous year. This was higher than the analysts’ estimate of $32.53 billion. The top line was driven by the addition of 2.1 million retail connections during the quarter, which included 1.4 million tablets and 672,000 net post-paid phones. This means that the company witnessed higher customer demand, resulting in higher sales.
Verizon experienced growth across all the segments. The company registered a growth of 11% in the wireless revenue, clocking in at $23.4 billion. However, the estimate for the same was at $22.88 billion. Sales were driven by an increase in the number of retail customers, over last year. The Wireline segment rose 4.1% during the same period, as demand for this segment increased.
The FiOS revenue grew 11.6% over the prior year. This jump in sales was due to an increase in FiOS internet subscribers, FiOS video net additions, as well as in the net broadband connections. The FiOS segment performed exceptionally well.
The bottom line, however, was hit by some non-recurring expenses. Nonetheless, adjusted earnings for the quarter jumped to $0.71 per share, up from $0.66 per share in the previous year. Earnings for the quarter were lower than the expectations of $0.73 per share.
What lies in the future
The communications services company has expanded into more variety of services. It has diversified into services such as internet service and landline telephone services. These expansionary initiatives will help the retailer witness higher sales and grow its top line.
Further, the company has ramped up its promotions and provided huge discounts to the customers in order to attract them. This is probably the reason why Verizon posted addition of new customers in the last quarter. Moreover, the peak holiday season is one of the best seasons for the retailers since customers are willing to spend at that time. Hence, there is an increase in sales during this time.
Moreover, the retailer’s shared data plan, called “More Everything,” has become very popular among customers since it is less pocket pinching and provides a variety of benefits. Also, this enabled customers to switch to Verizon from other network providers.
Concluding thoughts
Verizon has had a tough year. But its efforts have enabled it to overcome that phase and move higher. Along with a mixed quarter, the company registered a decent guidance, including a 4% growth in revenue for the year. However, it’s difficult to say how things will shape in the future, given the poor bottom lines registered by the company in the last one year. Hence, one should stay on the sidelines until the company shows signs of a clear turnaround.
