Verizon 2Q profits, revenue down from year ago, union strike impacted earnings, officials said

Verizon Communications’ quarterly earnings beat Wall Street expectations but the company’s second quarter results fell well short of year ago as wireless profits fell nearly 81%, the New Jersey telecom giant announced before the opening of market on Tuesday.

For the period ended June 30, Verizon reported second-quarter earnings of 17 cents or $831 million, compared to $1.04 per share or $4.3 billion in second-quarter 2015. Adjusted for a number of one-time items, Verizon reported second quarter earnings of 94 cents per share on revenue of $30.5 billion, down from revenues of $32.2 billion a year ago.

Analysts had expected earnings of about 92 cents a share on $30.94 billion in revenue, according to a consensus estimate of Thomson Reuters.

Verizon Wireless continues to operate a regional call center in Little Rock at the former Alltel headquarters, but company officials have not divulged employee levels following a regional restructuring in late 2015

During an hour-long conference call with analysts and reporters, Verizon said the second quarter earnings were negatively impacted by a seven-week strike by 40,000 union workers. Still, company officials strike by the company’s wireline workers is no longer an issue and expressed excitement about Monday’s announcement to acquire Yahoo’s operating business for approximately $4.8 billion, in a transaction expected to close in first-quarter 2017. McAdam and Verizon CFO Fran Shammo also talked in detail about the Yahoo deal and how the company hopes to move aggressive into mobile media, especially in the area of providing sports, finance and news content to smartphone and tablet users.

“By acquiring Yahoo, we are scaling up to be a major competitor in mobile media,” said Verizon Chairman and CEO Lowell McAdam. “Yahoo is a complementary business to AOL, giving us market-leading content brands and a valuable portfolio of online properties and mobile applications that attract over 1 billion monthly active consumer views. We expect this acquisition to put us in a great position as a top global mobile media company and give us a significant source of revenue growth for the future.”

In Verizon wireless business, which make up about 75% of the company’s total revenues, the company reported 615,000 retail postpaid net additions in second-quarter 2016 and now has a total of 74.6 million smartphone connections. Still, total wireless revenues were $21.7 billion in second-quarter 2016, a decline of 4% compared with second-quarter 2015, as more customers continued to choose unsubsidized device payment plans, officials said.

During a morning conference call with analysts, McAdam and Verizon CFO Fran Shammo talked in detail about the Yahoo deal and how the company hopes to move aggressive into mobile media, especially in the area of providing sports, finance and news content to smartphone and tablet users.

Verizon executives also said the company has started conducting field and technology trials on its next-generation 5Q technology. Lowell told analysts that race to super-fast 5G technology with ten to 100 times the speed of 4G networks will have a huge impact on the company’s financial structure and wireless business over the next decade as the industry and federal regulators look toward implementing next-generation, Internet of Things innovations.

“We are seeing the starts aligning very quickly on the 5G forefront,” McAdam said. “We are determined to lead the next (industry) growth surge.”