Verizon reports revenue drop but ‘continued strong profitability’ in Q3 2016
America’s number one wireless communications service provider is definitely feeling the squeeze of a silver medalist that continues to breathe down its neck, a most-improved third-placed player, and a slowly recovering fourth.
But it will still take years to find out if Verizon’s new advertising strategy and costly AOL and Yahoo acquisitions pay off, according to financial analysts, which is why Big Red needs to focus in the short term on a return to profit growth.
The Q3 (or 3Q) 2016 results aren’t terrible, though they’re obviously not great, despite VZW’s “continued strong profitability” spin. Yes, earnings per share narrowly exceeded estimates for the July – September timeframe, at $1.01, but total operating revenues fell 6.7 percent year-on-year, to $30.9 billion.
Meanwhile, there were 442,000 retail postpaid net additions during 2016’s third quarter, a decent score offset by a loss of 36,000 in net phone additions. The latter part was due to a massive decline in basic and 3G handheld usage, which 357,000 newly activated 4G LTE smartphones couldn’t cover for.
Verizon’s increase in retail connections was also fairly modest, of 2.6 percent, to a grand total of 113.7 million, with device payment plans proving more and more popular, at 70 percent of all new activations, up from 67 the previous quarter.
It still remains to be seen if a Yahoo renegotiation is in order, as evaluation of the recently disclosed hack attack’s material impact on the Sunnyvale business is “going to be a long process”, according to CFO Fran Shammo.