Verizon's Q2 earnings a mixed bag: Worker strike causes investor pain, $205 million in IoT revenue
Verizon reported on Tuesday Q2 2016 net profit of $831 million with earnings of $0.17 per share -- 94 cents per share excluding non-operational items -- a downwards slide from $1.06 a share in the first quarter of 2016. (statement)
A seven-week workers strike which impacted wireline reduced earnings by approximately seven cents a share.
Total revenue was $30.53 billion, down 5.3 percent from Q1 revenue of $32.2 billion.
Total operating revenue was $30.5 billion in the second quarter of 2016, down 5.3 percent from the first quarter.
Verizon said its recent bid to snap up Yahoo in a deal worth $4.8 billion is expected to close by the end of Q1 2017.
The US company's Internet of Things (IoT) push remained strong, with revenue of approximately $205 million in the second quarter of 2016, a year-over-year increase of approximately 25 percent.
The company ended the first quarter with an additional 615,000 retail postpaid customers, bringing Verizon's postpaid subscriber base up to 107.8 million. Of that sum, prepaid connections totaled 5.4 million. Churn was 0.94 percent in the first quarter.
See also: Verizon is buying Yahoo's core business for $4.8 billion
Revenue for Verizon's wireless business was $21.7 billion in the second quarter. In total, 31.8 million customers were on device payment plans, representing about 37 percent of the postpaid customer base. 82.5 percent of the retail postpaid base had 4G devices. 74.6 million smartphone connections have been reported in total.
As for wireline, Verizon reported increased growth of 3.7 percent, to $2.8 billion. However, work stoppage impacted Fios connection growth, resulting in net declines of 13,000 Fios internet connections and 41,000 Fios video connections in Q2 2016, and an operating loss of $463 million.
The communications giant expects to save $500 million in operating costs over the next year due to new labor contracts and for 2016 adjusted earnings to be at a level comparable to 2015, with the exception of the 7 cents a share loss due to the work stoppage.
Chairman and CEO Lowell McAdam commented:
"Verizon's second quarter shows that the company continues to deliver strong results while evolving operations and advancing a strategy to sustain network leadership, build new ecosystems and deliver the promise of the digital world to customers."
At the time of writing, Verizon stock is $55.87 per share.