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Verizon Posts Second Quarter Earnings
Broadband, Wireless Boosts Bottom Line
Verizon Communications reported continued strong financial and operational results for the second quarter 2006. Quarterly earnings fell to $1.6 billion, or 55 cents per diluted share, compared with $2.1 billion, or 75 cents, per share from 2005. Costs related to its acquisition of MCI reflect 9 cents per share in special items for severance, pension and benefits charges, and merger integration costs. "Our second-quarter results are strong, and we are gaining momentum as we focus on growth initiatives and creating shareholder value," said Ivan Seidenberg, Verizon chairman and CEO. "We have maintained excellent cost management across our network-based wireless, broadband and enterprise businesses, and we are confident in our ability to grow earnings." Verizon reported adding 440,000 total broadband connections, with FiOS accounting for 111,000 new customers for the quarter. FiOS now numbers 375,000 of the company's 6.1 million wired broadband consumers. Broadband revenue was up 35% while expenditures also rose, up 40%.
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Chiyo
Save Me Konata-Chan
Premium Member
join:2003-02-20
Salisbury, NC
·Hotwire Communic..

Chiyo

Premium Member

they may have lost some money now but....

I hope the shareholders aren't ticked or anything I think they should suck it up and wait for the next quarter or even as far as sometime next year to see another profit they are spending money like crazy but it will all come back 2 fold once alot of areas are upgraded with fiber.

So lets hope this doesn't stop FiOS deployment.
Rick5
Premium Member
join:2001-02-06

Rick5

Premium Member

Re: they may have lost some money now but....

I'm not sure what they have to really be ticked off about.
Verizon is even beating their estimates now while even deploying this new fiber network.

Besides that, imagine what Verizon will be doing after this when this new network is fully rolled out and all the new money coming in from things like TV service as well.

Verizon is really doing the right thing. Hopefully AT&T will take notice and start themselves before it's too late for them.
chemaupr
join:2005-06-06
Alexandria, VA

chemaupr

Member

Re: they may have lost some money now but....

That is correct. If I'm an investor for VZ I will be pleased with this results considering the capital investment they are undertaking with FIOS. Sure, I will have to suck the losses or small gains in the next two years but that is the price to pay for a better positioned company.
soothsayer15
join:2002-03-01
Irving, TX

soothsayer15

Member

Re: they may have lost some money now but....

said by chemaupr:

That is correct. If I'm an investor for VZ I will be pleased with this results considering the capital investment they are undertaking with FIOS. Sure, I will have to suck the losses or small gains in the next two years but that is the price to pay for a better positioned company.
True, but today's investor is more of a gambler than anything else.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5 to chemaupr

Premium Member

to chemaupr
said by chemaupr:

That is correct. If I'm an investor for VZ I will be pleased with this results considering the capital investment they are undertaking with FIOS. Sure, I will have to suck the losses or small gains in the next two years but that is the price to pay for a better positioned company.
The problem, for the investor, is that the $.55 EPS when annualized means you are getting a return of 6.5% on your investment in the stock. You can get that same return with much less risk in a jumbo CD. To keep investors from selling the stock, Verizon will have to start making a better return. Or at the very least, investors will have to expect much higher returns within a reasonable time period. And the limit for waiting for many investors is not more than a year, 2 at max. So, yes, the Fios rollout had better start paying off or the investor money will start to leave.
TheOtherPete
join:2001-06-28
Boyds, MD

TheOtherPete

Member

Re: they may have lost some money now but....

said by FFH5:

The problem, for the investor, is that the $.55 EPS when annualized means you are getting a return of 6.5% on your investment in the stock. You can get that same return with much less risk in a jumbo CD.
Honestly I fail to see a correlation between VZ's single quarters earnings and the rate an investor can get on a CD but I would certainly like to hear about where you can get a jumbo CD with a 6.5% rate.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5

Premium Member

Re: they may have lost some money now but....

said by TheOtherPete:

Honestly I fail to see a correlation between VZ's single quarters earnings and the rate an investor can get on a CD but I would certainly like to hear about where you can get a jumbo CD with a 6.5% rate.
An investor looks to get the best return on his investment vs the safety of the investment. If he can get comparable returns in a safer vehicle, then that is what many investors will do. The correlation is that Verizon is competing for investor dollars and the return they can provide will have an effect on the investor dollars they can obtain to fund their Fios rollout.

My 6.5% guess was a little high for a Jumbo CD, but you can get an APY of 5.75% on a jumbo CD.
»www.bankrate.com/brm/rat ··· 6&sort=2
TheOtherPete
join:2001-06-28
Boyds, MD

TheOtherPete

Member

Re: they may have lost some money now but....

said by FFH5:

said by TheOtherPete:

Honestly I fail to see a correlation between VZ's single quarters earnings and the rate an investor can get on a CD but I would certainly like to hear about where you can get a jumbo CD with a 6.5% rate.
An investor looks to get the best return on his investment vs the safety of the investment. If he can get comparable returns in a safer vehicle, then that is what many investors will do. The correlation is that Verizon is competing for investor dollars and the return they can provide will have an effect on the investor dollars they can obtain to fund their Fios rollout.
Just because VZ earned X in a particular quarter has little to do with shareholders return in the short term.

Shareholders get dividends and hope for share appreciation; their return is not the same as the company's return.

Share appreciation is affected by company earnings (over the long term) but it isnt a direct relationship. Biotech companys can have zero earnings and have high stock prices for years.

Stocks prices are determined by future prospects, not the current quarters earnings. Not trying to sound pedantic because I'm sure you know this already but really I don't see investors bailing in droves over this earning report.

Everyone knew FIOS was going to cause a short-term cash burn with the expectation of long-term greater returns.

The earnings are actually better than expected for the quarter (64 cents once you exclude special charges vs 62 first call estimates)

Right now anyone investing in VZ gets a solid dividend yield of around 4.8% and a chance to ride along with a company that is rolling out leading-edge telecommunication services that by all accounts is a smart move.

I agree with your point that over the next year or two VZ will have to show more results from their FIOS spending but I don't see anything in this announcement that makes me think that they aren't on track with their plans/expectations.
said by FFH5:

My 6.5% guess was a little high for a Jumbo CD, but you can get an APY of 5.75% on a jumbo CD.
»www.bankrate.com/brm/rat ··· 6&sort=2
Ok thanks, I wasn't aware of anything anywhere near that rate, thought something new might be out there.
tmc8080
join:2004-04-24
Brooklyn, NY

tmc8080

Member

dont forget

the numbers reflect that verizon was not completely focused on pleasing shareholders the entire quarter, which is overall healthy for the company. the broadband gains, seem to follow the chart that some cable companies to for voip (100-300+k uptake rate). this all comes on the heels of implementation of the second phase with GPON, 3G, and minor trimmings of spending including slashing some workforce (related to FIOS and MCI overstaffing).

KEY1: wireless and fios are the bread and butter
KEY2: earnings are contingent upon customer uptake/competiton/deployment/government hinderance vs cooperation

** cable companies (including satellite) may look to be a spoiler in the wireless arena somehow, someway.
Rick5
Premium Member
join:2001-02-06

Rick5

Premium Member

I really don't get it anyway...

while some investors give verizon a hard time about spending 1000+ for FIOS , cable companies like comcast and TW just bought out we adelphia customers to the tune of something like 3200.00 for EACH of us and barely a word is said by their investors.

This adelphia deal cost them 17+ billion and when divided by how many customers were involved, that was the cost of this deal for every adelphia subscriber.

Now THAT is some serious cash and in comparison, verizons money is only 1/3rd of that or so.

Strange how this works sometimes.
Ahrenl
join:2004-10-26
North Andover, MA

Ahrenl

Member

Re: I really don't get it anyway...

I didn't look into it, but if the Adelphia deal wasn't all cash, (which I doubt it was) that would be the difference. For some reason, issuing stock still doesn't register to investors, that they're spending their money. They'll just tuck it into a depreciable asset account, and maybe some goodwill, and forget about it.

purspectave
@verizon.net

purspectave to Rick5

Anon

to Rick5
Pay by the subscriber, Pay by the company. Personally, I think the creditors (and their attorney's) had something to say about how much was paid for adelphia (between you and me). Verizon acquires HARD ASSETS, in MCI or in other words, GUARANTEED ROI. Adelphia customers can switch if not happy, MCI customers are/were contractual obligations decades in the making and costly to break away from ( for both parties ).
bwalker256
join:2005-12-20
Durham, NC

bwalker256

Member

agreed

I agree with you Rick, 17+ billion is a jackpot of money! I wish verizon could spend that much to bring fios to NC! I wish I had invested in verizon when they were first starting this fios thing, hell I might still invest now. If I was a current investor I'd be OK with this report, I wouldn't be all WOW or anything like that, but still beating your own estimates is a good thing.

i'll happily take FIOS over any other service when it arrives to my hood!

dburkland
Student
join:2004-03-05
Minneapolis, MN

dburkland

Member

Re: agreed

I hope this will encourage Verizon to buy Qwest so I can get my fiber in Minnesota within the next 2 years instead of 10.

batterup
I Can Not Tell A Lie.
Premium Member
join:2003-02-06
Netcong, NJ

batterup

Premium Member

Re: agreed

said by dburkland:

I hope this will encourage Verizon to buy Qwest so I can get my fiber in Minnesota within the next 2 years instead of 10.
Buying a company costs money, it doesn't make money for many years.
quote:
Costs related to its acquisition of MCI reflect 9 cents per share in special items for severance, pension and benefits charges, and merger integration costs.

Rob A
Adjusting
Premium Member
join:2005-01-17
Pompton Plains, NJ

Rob A

Premium Member

FiOS is the future

When this thing goes nationwide, verizon's income is gonna sky rocket.

batterup
I Can Not Tell A Lie.
Premium Member
join:2003-02-06
Netcong, NJ

batterup

Premium Member

The smart money does not like this.

Broadband revenue was up 35% while expenditures also rose, up 40%. Now we will hear from Teletruth about how Verizon should give us all free broadband.
cwh
join:2006-05-14
San Antonio, TX

cwh

Member

Re: The smart money does not like this.

There are 2 telcos, both are spending gobs of cash on new networks, both are losing landlines, both are gaining in broadband and wireless lines. Odd that one is great shape(verizon) and the other is near death(ATT) or at least that is what many beleive here.