Verizon Shares Set to Rise on Upbeat Earnings

Mel Evans/AP NEW YORK -- Verizon Communications on Thursday posted stronger- than-expected third-quarter earnings and revenue on strong wireless growth, sending its shares up 2.4 percent in early trade. While the company's wireless customer growth numbers were slightly below Wall Street estimates, its Verizon Wireless venture with Vodafone Group (VOD) posted good profit and revenue growth as customers spent more on their services. "The numbers were fine but it wasn't a blowout quarter. It was a good third quarter," said Hudson Square analyst Todd Rethemeier. Verizon Wireless added 927,000 net retail subscribers in the quarter, compared with Wall Street expectations of about 1 million customers, according to eight analysts, with estimates ranging from 900,000 to 1.2 million. Verizon has agreed to buy out Vodafone's 45 percent share of the mobile venture. Verizon (VZ) said it expects wireless customer growth to improve sequentially in the fourth quarter. Verizon reported a third-quarter profit of $2.2 billion, or 78 cents a share, compared with $1.59 billion, or 56 cents a share, a year ago. Excluding unusual items, Verizon earned 77 cents a share in the quarter, compared with Wall Street expectations of 74 cents, according to Thomson Reuters I/B/E/S. Revenue rose 4.4 to $30.28 billion from $29.01 billion. Wall Street expected $30.16 billion. Its wireless profit margin was 51.1 percent, based on earnings before interest, taxes, depreciation and amortization as a percentage of service revenue, and above its target range of 49 percent to 50 percent for the full year. Rethemeier said the profit margin would likely come down in the fourth quarter due to steep holiday season costs, since the company kept its wireless margin target for the year despite the strong third-quarter number. A 7.2 percent increase in wireless revenue for the quarter was offset by a slower 4.3 percent rise in wireline revenue. Verizon shares rose 2.4 percent to $48.40 in premarket trading after closing at $47.25 in the regular New York Stock Exchange session.