NEW YORK – A 25 percent surge in the sale of wireless services helped boost second-quarter profit five times higher at Verizon Communications Inc., the nation’s largest telecom company. The results beat Wall Street expectations.
The New York-based company said Tuesday that it earned $1.8 billion, or 64 cents a share, up from $338 million, or 12 cents a share, in the year-ago quarter. Revenues for the quarter were $17.84 billion, compared with $16.83 billion the year before.
Analysts polled by Thomson First Call had been expecting earnings of 60 cents a share. Verizon shares closed up $1.36, or 3.7 percent, at $37.86 on the New York Stock Exchange.
Cost cutting helped the company wring more profits from revenues that were up 6 percent. Verizon has cut 14,000 jobs in the past year. More than 21,000 workers accepted a voluntary retirement package in the fourth quarter, which cost nearly $3 billion, but the company added jobs, mostly in the wireless segment, offsetting those losses.
Verizon, which has its Northwest headquarters in Everett, has said it hopes to cut $1 billion more a year from its expenses in coming years.
“There’s lots of opportunity for additional cost reductions,” said Doreen Toben, Verizon’s chief financial officer. “There’s a lot more mechanization we can do. A lot of the systems, especially in teleco, are old.”
The company’s revenue mix shifted, with more than half its revenues coming from wireless, long-distance and broadband.
Sales in the wireless division were 25 percent higher than for the year-ago quarter. Verizon said its wireless division, which it jointly owns with the United Kingdom’s Vodafone Group PLC, has 40.4 million customers. The division’s profit margin widened and its customer churn rate, a measure of how many customers leave each month, hit a record low for the company.
About $1 billion of the company’s revenue came from cellphones and other wireless devices.
Verizon said it installed 52 percent more DSL lines than in the year-ago quarter. It now has more than 2.9 million DSL lines in service.
Traditional wire-line revenues decreased 2.9 percent as the number of lines in service to homes and businesses dropped slightly for the quarter.
Verizon also said about 50 percent of its residential customers buy bundles of service, which package local service with either long-distance or DSL.
Rival AT&T Corp. announced last week that it would stop competing for residential customers, saying a recent regulatory ruling would increase its costs of providing local service and make it unworkable to bundle services together.
“Verizon remains the 800-pound gorilla in wireless,” Citigroup telecom analyst Michael Rollins wrote in a report. The company beat its peers on the number of new customers it added, which gave it the scale it needs for wide profit margins, he wrote.
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