Shares of Verizon Communications (NYSE: VZ) fell today after the telecom giant posted disappointing revenue results due to weakness in wireless equipment and a slow phone upgrade cycle.
As of 11:44 a.m. ET, shares of Verizon were down 4.3%.
Verizon disappoints
Verizon’s core wireless business continued to see steady growth, up 2.7% to $19.8 billion, with 239,000 new postpaid net phones, representing monthly paying customers. The broadband business also delivered solid growth, with a net increase of 389,000.
Total revenue was flat at $33.3 billion, slightly below estimates of $33.43 billion, while wireless revenue fell 8.1% to $5.3 billion.
Verizon also said it reached its fixed wireless subscriber goal 15 months ahead of schedule, reaching 4.2 million fixed wireless subscribers.
On the cost side, however, the company reported $2.3 billion in special costs, including $1.7 billion related to severance payments.
Smartphone upgrades slowed even with the release of the iPhone 16, and eventual growth remained sluggish, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rising modestly from $12.2 billion to $12.5 billion . Adjusted earnings per share (EPS) fell from $1.22 to $1.19, beating expectations of $1.18.
CEO Hans Vestberg said, “Our new products – myPlan, myHome and Verizon Business Complete – and our brand refresh are resonating with customers.”
What’s next for Verizon?
Verizon maintained its full-year expectations of wireless revenue growth of 2% to 3.5%, adjusted EBITDA growth of 1% to 3% and adjusted earnings per share of $4.50 to $4.70, compared with the estimates at $4.57.
Verizon looks forward to the acquisition of Border Communicationwhich it sees as a way to expand its fiber footprint. The deal will cost $20 billion, including Frontier’s $11 billion in debt. The deal is risky and will take time to get through the regulatory process.
Today’s earnings report had no warning signs, but it’s understandable that the stock is sliding due to a decline in revenue and earnings per share in the quarter.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Why Verizon Stock Was Slipping Today was originally published by The Motley Fool
