What happened
Shares of Verizon (VZ 0.88%) were moving backward today after top rival AT&T (T 1.30%) posted disappointing results in its first-quarter earnings report.
Verizon and AT&T essentially compete in a triopoly with T-Mobile, and both companies are subject to similar trends in the macro-level economy and the telecom industry.
As a result, Verizon shares were down 3.6% at 11:38 a.m. ET, while AT&T had fallen 9.3% at the same time.
So what
AT&T's revenue and earnings were mostly in line with estimates, but that isn't saying much, as revenue grew just 1.4% to $30.1 billion, and adjusted earnings per share fell from $0.63 to $0.60.
Investors also seemed concerned that free cash flow plunged from $2.8 billion in the quarter a year ago to $1 billion and postpaid net phone adds fell nearly 40% to 424,000.
Overall, AT&T's report showed the company struggling to upgrade customers and grow the business, which seemed to be reflective of general headwinds in the telecom industry.
Crown Castle (CCI 1.42%), a large owner of cell towers, was also falling today after reporting earnings last night, as the company warned of the impact of higher interest rates. Crown Castle is also dependent on the large telecoms for a majority, so its own weak results also bode poorly for the telecom sector.
Now what
Verizon is set to report first-quarter earnings on April 25, and analysts have modest expectations, calling for just 0.1% in revenue growth to $33.6 billion, and see adjusted earnings per share falling from $1.35 to $1.20.
Both companies have been losing market share to T-Mobile, and the broader economic headwinds also seem to be affecting the industry.
Don't be surprised if analysts dial down those forecasts ahead of the company's report next Tuesday, as today's sell-off shows that expectations are falling.
