Verizon Sees Earnings Decline as it Adds Customers

Verizon Communications Inc. (NYSE: VZ) reported Monday that fully diluted earnings were down in the third quarter, but adjusted (non-GAAP) earnings rose 14.5 percent compared to the year ago period thanks to customer growth in the wireless division and FiOS, the company’s fiber optic technology product set.

The company increased the number of wireless customers to 63.7 million, an increase of 1.6 million. The wireless group’s churn rate came in at 1.21 percent, compared with 1.15 percent in the third quarter of 2006.

The number of FiOS customers grew to 717,000, an increase of 202,000.

Verizon’s fully diluted earnings fell to 44 cents per share, compared to 53 cents per share for the same period in 2006, which the company blamed on merger-related costs and other items.

The company’s operating revenue rose 6 percent to $23.77 billion, close to the $23.6 billion analysts had predicted. Operating income rose 19 percent to $4.2 billion.

Adjusted earnings in the third quarter 2007 reflect 19 cents per share in special items: 16 cents per share for international taxes, 2 cents per share for costs related to a previously announced spin-off of access lines and 1 cent per share in merger integration costs. Adjusted earnings in the third quarter 2006 excluded 2 cents per share in special items for pension settlement charges, and merger integration and Verizon Center relocation costs.

“Our third-quarter results show that we have hit our stride as a leading wireless, broadband and enterprise company,” said Verizon Chairman and CEO Ivan Seidenberg in a prepared statement.