Verizon posts record Q4 loss on pension adjustment
Verizon strengthened its position as the top dog of the wireless industry in its latest quarter by raking in new subscribers and selling millions of iPhones, but it also posted a record loss.
The loss of $4.23 billion, or $1.48 per share, for the fourth quarter was mainly due to adjustments to the value of its pension funds and obligations, an annual routine for Verizon Communications.
But even excluding the pension effects and the cost of repairing after Superstorm Sandy, the New York-based phone company missed Wall Street's earnings expectations when reporting Tuesday, apparently because it attributed an unusually large amount of its profits to Vodafone Group, the British cell phone company that owns 45 percent of Verizon Wireless.
Verizon's loss for the October-to-December period compared with a loss of $2.02 billion, or 71 cents per share, a year ago.
Excluding the pension adjustments and various other charges, Verizon earned 38 cents per share. Stripping out a further 7 cents per share for the cost of repair after Superstorm Sandy, earnings were 45 cents per share. That still missed the average forecast of analysts polled by FactSet of 50 cents per share.
Revenue rose 6 percent to $30.05 billion from $28.44 billion, beating analyst forecasts of $29.8 billion, as Verizon added a record net of 2.2 million devices to its contract-based wireless plans. It had announced the wireless additions two weeks ago.
The bumper quarter was fueled by the launch of the iPhone 5 on Sept. 21. Verizon activated 3 million of those, and 6.2 million iPhones of all kinds, another record for the company. IPhones accounted for two out of three smartphones activated, also the highest figure ever for Verizon, which promotes competing "Droid" phones.
IPhone sales are not an immediate benefit to the company, since it sells them at a big loss. It recoups the money over the life of a two-year contract, but the blockbuster sales helped curb its fourth-quarter loss.
Verizon's stock rose 36 cents to $42.90 in midday trading Tuesday.
Verizon Wireless revenue climbed 9.5 percent to $20 billion. On the wired side, operating revenue continued its long slide, falling 1.5 percent to $10 billion as households kept cancelling their landlines.
To compensate, Verizon added a net 144,000 Internet customers and 134,000 pay-TV customers to its FiOS fiber-optic service, bringing the company to a total of 5.4 million FiOS Internet and 4.7 million FiOS video customers.
For the year, Verizon Communications earned $875 million, or 31 cents per share. In 2011, it earned $2.4 billion, or 85 cents per share. Annual revenue increased to $115.85 billion from $110.88 billion.
Verizon's report marks the debut for telecommunications companies this earnings season. Rival AT&T reports on Thursday.