Verizon Communications Inc., the largest U.S. wireless carrier, rose the most in a year in New York trading after reporting earnings that beat analysts’ estimates and forecasting rising profit for the second half.
Second-quarter profit, excluding costs to cut jobs, fell to 58 cents a share from 63 cents a year earlier, the New York- based company said in a statement today. Analysts had forecast a 56-cent profit, according to a Bloomberg survey.
Verizon introduced several phones running on Google Inc.’s Android software, including Droids from Motorola Inc. and HTC Corp., to compete against AT&T Inc.’s iPhone. The new devices helped Verizon add 665,000 contract customers -- beating AT&T’s gains -- and the mobile business relieved some of the costs from job cuts in the company’s home-phone unit.
“They’re doing far better than AT&T both from a margin standpoint and a net-add standpoint,” said Christopher King, an analyst at Stifel Nicolaus & Co. in Baltimore, who advises investors to buy the shares and doesn’t own any. “While there’s no question that Verizon would like to have the iPhone all else being equal -- it’s still the premier handset out there -- it’s not a necessity for them.”
Verizon rose $1.02, or 3.8 percent, to $28.02 at 4 p.m. in New York Stock Exchange composite trading, the biggest gain since July 2009. The stock has lost 9.5 percent this year.
Android vs. IPhone
Profit, excluding the results from properties sold this year, will rise 5 percent to 10 percent in the second half, Chief Financial Officer John Killian said on a conference call.
That would equate to earnings of as high as $1.11. Analysts in a Bloomberg survey had forecast $1.08. Smartphone users and the data plans they buy to access the Internet and download programs will help drive revenue, Killian said in an interview.
Second-quarter revenue fell less than 1 percent to $26.8 billion. The net loss was $198 million, or 7 cents a share, after a profit of $1.48 billion, or 52 cents, a year ago. The company had costs of 52 cents a share from job cuts.
The wireless unit, which accounted for more than half of revenue, fended off competition from AT&T, the exclusive U.S. carrier for Apple Inc.’s iPhone. The division boosted sales 3.4 percent to $16 billion.
Verizon customers hoping to buy the HTC Incredible will have to wait until next month for the phone to ship, according to carrier’s Web site. The Droid X, by Motorola, went on sale July 14 and sold out of some stores in the first few days.
The Android operating system, which is available to any phone maker, is gaining on the iPhone, according to research from Gartner Inc. The iPhone operating system’s share of the global smartphone market grew to 15.4 percent in the first quarter from 10.5 percent a year ago. Android rose to 9.6 percent from 1.6 percent.
The popularity of smartphones and the data plans that let users access the Internet and download programs has helped Verizon increase average monthly bills even as some customers spend less for voice plans. Average revenue per user grew almost a percent to $51.56 last quarter. Monthly sales from data plans increased 19 percent to $17.85 per customer.
“They continue to run the most profitable wireless business, and by a wide margin,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. Growth in mobile customers’ bills “is the potential driver of future revenue growth for the company as a whole.”
Moffett had forecast 500,000 contract-customer additions for Verizon. AT&T, based in Dallas, added 496,000 contract customers last quarter, as it activated 3.2 million iPhones for new and existing subscribers.
Verizon said in January that it planned to cut 13,000 jobs in its fixed-line phone business to balance subscriber losses. The company reduced a similar number of employees in this business last year.
The unit, which includes home-phone, Internet, TV and business customers, is suffering as newer technologies replace the traditional telephone and corporations curb spending. The unit’s sales fell 3.3 percent to $11.1 billion last quarter.
The company has invested in more advanced fiber-optic technology to lure customers with faster Internet and high- definition television. Verizon added 196,000 FiOS Internet customers, giving it a base of 3.8 million. The company signed up 174,000 new TV customers, bringing the total to 3.2 million.
The new subscribers helped push wireline bills up 11.4 percent, Verizon said.
Verizon shrunk its traditional fixed-line holdings further this year, selling 4.8 million rural phone lines Frontier Communications Corp. in an $8.6 billion deal.
Verizon shareholders received about $5.25 billion in Frontier stock, the companies said when they announced the deal on May 13, 2009. Frontier will take on about $3.3 billion in debt and pick up accounts in 14 states including Idaho, Michigan and Oregon, tripling its phone lines.