Verizon preps fourth quarter device barrage; Droid will 'stimulate demand'

Summary:Verizon delivered a solid third quarter courtesy of its wireless business, which added 1.2 million net customers excluding acquisitions.

Verizon delivered a solid third quarter courtesy of its wireless business, which added 1.2 million net customers excluding acquisitions. The company also said it is set up for the fourth quarter with the launch of Research in Motion's Storm 2 on Wednesday, two Motorola Android devices and 12 other handsets.

However, AT&T added customers at a faster pace in the third quarter on the strength of the iPhone. Verizon is hoping to change that equation via a partnership with Google. John Killian, CFO of Verizon, characterized the company's wireless performance as strong and said there "are plenty of revenue growth opportunities" ahead. It's clear Verizon is betting big on Android.

"We think our new device lineup will stimulate demand," said Killian, on a conference call with analysts. Killian said that the Storm 2 will be available Wednesday and the Droid device "will be groundbreaking."

Verizon on Monday reported third quarter net income of $2.88 billion, or 41 cents a share, on revenue of $27.3 billion, up 10 percent from a year ago. Non-GAAP earnings were 60 cents a share, a penny better than Wall Street estimates (statement, quarterly presentation).

As usual, the quarter was all about the wireless business. By the numbers:

  • Verizon ended the quarter with 89 million wireless customers, up 25.7 percent courtesy of acquisitions---notably Alltel.
  • The company had a post-paid churn of 1.13 percent. AT&T had 1.17 percent.
  • Cash expense per customer was $27.52 in the third quarter, down from $28.52 a year ago.
  • Data revenue was 30.5 percent of wireless service revenue.
  • Wireless revenue was $15.8 billion, up 24.4 percent from a year ago and 4.9 percent excluding acquisitions.
  • $5.1 billion in wireless capital expenses year to date.
  • The company said its integration of Alltel was on track. All Alltel customers have been converted to Verizon's billing system.

Verizon also posted solid results for its FiOS efforts. The company added 198,000 net FiOS Internet customers for a total of 3.3 million. Verizon said it added 191,000 new FiOS TV customers.

Killian noted that FiOS additions were off the pace of the last two quarters. He added that Verizon eased off the promotional activity. On the capital spending front, Killian said that the FiOS buildout will be complete by the end of 2010 and that fact will free up capital for 2011.

Verizon, which reorganized its wireline business into one unit that combines FiOS, legacy services and the enterprise business, said that corporate sales remain muted.

Killian said he wasn't seeing any "meaningful improvement" in the enterprise business, but did add that CIOs were becoming interested in managed services and select capital investments.

Topics: Verizon, Banking, Enterprise Software, Mobility, Networking, Wi-Fi

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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