Verizon Communications Earnings: Did the Wireless Buyout Work?

Verizon took full control of its wireless division, but did it boost growth?

Jul 21, 2014 at 11:00AM

Vz Unattributed

On Tuesday, Verizon Communications (NYSE:VZ) will release its quarterly report, and investors have been somewhat nervous about the state of the wireless network business. Even as it and competitor AT&T (NYSE:T) have gone up against Sprint (NYSE:S) and T-Mobile in what initially appeared to be an all-out price war, Verizon has taken steps to ensure that it will be able to sustain its strong margins and offer unparalleled service that it hopes will preserve its competitive advantage.

Verizon's huge acquisition of the 45% of its Verizon Wireless business that it didn't already own stretched the company's finances, forcing Verizon to make huge offerings in the bond market and take on even greater leverage. Yet with the continued growth in mobile devices and increased demand for broadband Internet and video, Verizon has made an aggressive move at an important time. Will that move prove to be the right one? Let's take an early look at what's been happening with Verizon over the past quarter and what we're likely to see in its report.

Stats on Verizon

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$31.1 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Verizon earnings keep climbing?
In recent months, investors have been reasonably comfortable in their views on Verizon earnings, keeping second-quarter estimates stable and boosting full-year projections by $0.02 per share. The stock has climbed 8% since mid-April.


Verizon's first-quarter earnings report didn't give investors the confidence they wanted, as the company fell short on the earnings front despite matching expectations on revenue. Moreover, Verizon wasn't able to offer improved guidance for the full 2014 year, holding steady on its previous projections of $125 billion in revenue for the year. The company's chief financial officer noted that Verizon had to follow suit with competitors in offering customers ways to upgrade phones more quickly and efficiently, and that hurt margins. Yet with the alternative being to lose those customers entirely to AT&T, Sprint, or T-Mobile, Verizon doesn't have much of a choice.

We've already gotten a sense of how Verizon did during the second quarter, though, as the company revealed some early information on the quarter. CEO Lowell McAdam said that Verizon added more than 1.4 million subscribers for its postpaid wireless service, with record growth in tablet sales and strength in smartphones as well. Given the ultra-competitive market environment right now, those numbers are particularly impressive.

Verizon is taking a different tack in its response to competitive threats than some of its peers, choosing to build up its own integrated services rather than broadening its scope through mergers. Even while AT&T goes through the process of acquiring DirecTV, Verizon has instead invested huge effort in building up its FiOS high-speed broadband Internet service. With hopes that initiatives like the Internet of Things will require unprecedented levels of connectivity, Verizon wants to be the Internet provider of choice in the U.S., and given the lack of good alternatives currently, Verizon has a good chance of succeeding on that front.

Vz Fios
Source: Verizon.

Moreover, Verizon got a vote of confidence from a major investing guru during the quarter, with Warren Buffett revealing a stake in the telecom company. Given Verizon's huge holdings of spectrum assets, it's fair to say that the company has a competitive moat that holds off smaller players from gaining Verizon's stature in the industry. That could prove essential as rivals start to position themselves for an all-out price war.

In the Verizon earnings report, watch to see if the company puts more color on its long-term future strategy. In a changing industry, Verizon has to stay nimble to take advantage of new opportunities while also defending itself against more desperate, smaller rivals looking to break into Verizon's oligopolistic situation. If it can do so, then growth from its wireless takeover could continue into the future.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Click here to add Verizon to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers