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Company plans to take one-time charge for its struggling business unit
By
Lyle Niedens
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Lyle spent most of the past two decades in a variety of product, communication and financial writing roles with large asset managers and mutual fund distributors, mostly recently as vice president, director of product development with Waddell & Reed/Ivy Distributors Inc. Previously, he spent a decade in senior roles as an editor and reporter with business publications and financial news wires, including Dow Jones, BridgeNewsand Knight-Ridder Financial News. A graduate of the University of Kansas with an M.B.A. and a B.S. in journalism, he lives in Westwood, KS, a suburb of Kansas City, with his wife, Caryl, and their sons, Conley and Pierce.
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Updated January 19, 2024
:max_bytes(150000):strip_icc()/GettyImages-1551169132-4bbdb786646346ea9eada30e6ea8be2f.jpg "Verizon Set to Report Declining Profits Despite Progress in Adding Subscribers (1)")
KEY TAKEAWAYS
- Verizon's fourth-quarter earnings likely declined by a third, not including a planned one-time charge.
- The company likely added its most retail subscribers in two years after losing customers in five of the past seven quarters.
- However, analysts say subsidies and promotion costs to add new customers may have outweighed the benefits.
Verizon Communications' fourth-quarter profit likely declined by a third, analysts estimate, a decrease 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 likely will 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 last quarter of 2022. Revenue likely dipped 2% to $34.6 billion.
| Verizon Communications Quarterly Earnings Profile | |||
|---|---|---|---|
| Analysts' Estimate for Q4 2023 | Q3 2023 | Q4 2022 | |
| Revenue | $34.6 billion | $33.3 billion | $35.3 billion |
| Diluted EPS | $1.06 | $1.13 | $1.56 |
| Net Income | $4.5 billion | $4.9 billion | $6.7 billion |
Verizon said Wednesday it will take the charge for its business unit because of declining demand for land- and fixed-line services provided to commercial customers. Visible Alpha estimates revenue in the division, accounting for about a fifth of the company's sales, fell an estimated 2%.
Key Metric
The company's retail wireless consumer unit, accounting for almost half of its sales, added an estimated 573,910 customers, according to Visible Alpha. That would mark the highest subscriber growth in two years, up from just 4,000 in the third quarter. The unit has lost subscribers in five of the past seven quarters.
Business Spotlight
Even as subscribers likely increased, the costs of Verizon's latest push 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 up-front marketing expenses.
The company's service costs, composing 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 misstated the amount the company would take on the planned charge for its business group. It's $5.8 billion.
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