NEW YORK – The rising cost of pensions and building out a fiber-optic network kept earnings essentially flat at Verizon Communications Inc. in the fourth quarter, while customers migrated from traditional phone lines to cell phones and broadband connections.
The telephone company said it earned $1.7 billion, or 59 cents a share, in the last three months of 2005, down from $3 billion, or $1.08 a share, a year ago, when results were boosted by the sale of Canadian assets and a tax gain.
Excluding items, earnings in both periods were 64 cents a share, matching the average analyst estimate for the latest quarter as polled by Thomson Financial.
New customers at Verizon Wireless boosted revenue to $19.3 billion, up 5.8 percent from $18.3 billion in the fourth quarter of 2004.
The latest earnings were reduced by $59 million because Verizon stopped contributing to its pension plan for managers, partly compensating them with an 18-month enhancement to the plan. When announcing the move in December, the company said it would cut costs by $3 billion over 10 years.
A voluntary severance program for union employees cut $36 million from earnings. Also, consolidating New Jersey operations into the old AT&T headquarters in Basking Ridge cost $29 million.
Verizon shares rose 30 cents, or 1 percent, to close at $31.68 on the New York Stock Exchange. The stock is down about 8 percent from a year ago.
Verizon Wireless, owned in partnership with Vodafone Group PLC, accounted for $8.7 billion of the revenue total, up 18.3 percent from the fourth quarter of 2004. Its operating income jumped 63 percent to $2.24 billion, but only 55 percent of that flowed to Verizon’s bottom line for its share of the joint venture.
Verizon Wireless added a net 2 million cell-phone subscribers in the quarter, ending the year with 51.3 million subscribers, just short of Cingular Wireless LLC’s 54.1 million subscribers.
Verizon Wireless’ average monthly service revenue was $49.36 per customer, down 1.9 percent from a year ago. Analysts had expected the number to decline because of price cuts and the popularity of family plans.
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