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Strike stings Verizon's earnings


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Strike stings Verizon's earnings

A seven-week strikeby wireline workers weighed on VerizonCommunications Inc.'s earnings.

In the wireline business, the work stoppage, resulting from thestrike of 39,000 union workers, helped lead to net declines of 41,000 in FiOSvideo connections and 13,000 FiOS internet connections in the quarter.

However, CFO Fran Shammo told investors that the new workercontracts ultimately should lead to strong revenues in the remaining half andin 2017.

As for wireless, the company added 615,000 net retailpostpaid customers, a decline of 46% year over year.

Verizon reported earnings a day after it announced adeal toacquire 's operating businessfor $4.83 billion. The New York-based operator noted that its AOL unitdelivered strong revenue growth in a quarter that saw its wireless and wirelinebusinesses falter. The company is hopeful that the addition of Yahoo — with itsdigital assets like sports, finance, news, email and advertising technology —will further strengthen its mobile and video offerings.

"By acquiring Yahoo's operating business, we arescaling up to be a major competitor in mobile media … The market is going togrow dramatically," Verizon CEO Lowell McAdam said on a conference call todiscuss earnings. "We're a small player today relative to ['s] and Facebook [Inc.] All we need to do is take more than ourfair share of the growth of the market," he said.

McAdam also alluded to the possibility of more acquisitionsahead "that will drive us to take a better share of this growing market."He said the company will look to partner with networks and sports channelsfurther.

"They may already have NBA rights or NFL rights, and wecan work on streaming their games" on FiOS as well as digital platforms,he said.

Speaking specifically about the revenue upside from theYahoo deal, Shammo said: "Yahoo brings viewers. Viewers bring advertising.Advertising brings topline growth. … We believe that with the combination ofall these assets we have a lot of revenue synergy upside."

On a consolidated basis, total operating revenues in thesecond-quarter decreased 5.3% to $30.53 billion, compared to the prior-yearperiod. Total operating revenues on a non-GAAP basis, excluding revenues fromcertain divestments and other items, declined 3.5% year over year.

Verizon's second-quarter net income came to $702 million, or17 cents a share, down from $4.23 billion, or $1.04 a share, in the same perioda year ago.

The S&P Capital IQ consensus normalized estimate for thesecond quarter was 93 cents.