Shares of Verizon (VZ -1.03%) sank 6.8% on Friday after the telecom titan cut its full-year sales and profit forecast.
Verizon's second-quarter revenue inched up less than 1% year over year to $33.8 billion. The wireless leader gained 227,000 net postpaid phone subscribers in its business segment, but it lost 215,000 of these high-value customers in its retail segment.
Verizon is facing intensifying competition from a newly streamlined AT&T (T -1.00%). The rival telecom shed its WarnerMedia business and other assets to focus on its wireless and broadband operations. AT&T added 813,000 net postpaid phone customers in the second quarter.
The competition drove heightened promotional activity during the quarter, which weighed on Verizon's profitability. This, combined with other cost pressures, led Verizon's adjusted earnings per share to fall by 5.8% to $1.31. Additionally, Verizon's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a closely followed metric for telecommunication companies -- declined by 2.6% to $11.9 billion.
The decline in profitability also took a toll on Verizon's cash production. Its operating cash flow decreased by 13% to $17.7 billion.
These trends prompted Verizon to reduce its full-year financial guidance. Management now projects wireless service revenue growth of 8.5% to 9.5%, down from a previous forecast of 9% to 10%. The company also cut its adjusted earnings per share estimate to $5.10 to $5.25 from $5.40 to $5.55.
Still, chief financial officer Matt Ellis told investors that Verizon's troubles are likely to be transitory. "Although recent performance did not meet our expectations, we remain confident in our long-term strategy," Ellis said. "We believe that our assets position us well to generate long-term shareholder value."