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NEW YORK — Verizon Communications Inc. is scheduled to report second-quarter results Monday morning. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Verizon, the country's second-largest telecommunications company, hasn't gotten much love from investors recently.
Like its slightly larger peer, AT&T Inc., Verizon shares were a good investment during the market meltdown last fall but have failed to keep pace with the stock recovery since the start of May.
AT&T reported solid second-quarter results on Thursday, boosting both its own and Verizon's stock, but they still lag the S&P 500 when looking over the last few months.
Like AT&T, New York-based Verizon is dealing with a long-running decline in landlines as consumers switch to competing services from cable companies or do without home phones, relying solely on cell phones. In addition, the weak economy is hurting sales of Internet and telephone connections to businesses.
Both companies have wireless divisions to compensate for their weak businesses, but their situations differ.
With the closing of its acquisition of Alltel Corp. on Jan. 9, Verizon Wireless is the country's largest wireless carrier, with 86.6 million subscribers at the end of the first quarter. However, Verizon Communications owns only 55 percent of Verizon Wireless, meaning it doesn't get to keep all of the profits. Vodafone Group PLC of Britain owns the rest of wireless venture.
BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect Verizon to post earnings, excluding items, of 63 cents per share on $26.9 billion in revenue. In the same quarter last year, it earned 67 cents per share on $24.1 billion in revenue. The acquisition of Alltel accounts for much of the projected sales increase.
ANALYST TAKE: Christopher King at Stifel Nicolaus said he expects Verizon Wireless to add a net 1.2 million subscribers in the quarter, but that was before AT&T reported adding a net 1.37 million, potentially because it snagged iPhone-craving customers from rivals like Verizon.
The quality of Verizon Wireless' network should help shield it from the lure of the new iPhone model, which went on sale June 19, according to James Breen at Thomas Weisel Partners. He expects Verizon Wireless to add 1.1 million subscribers.
WHAT'S AHEAD: Verizon Wireless has been doing well, but would probably dearly love to have a smart phone that's as hot as AT&T's iPhone. The BlackBerry Storm didn't do it. Palm Inc.'s Pre might develop a cachet that approaches the iPhone, but it's exclusive with Sprint Nextel Corp. for now. Verizon has said it will have the Pre once Sprint's exclusivity expires (the timing is unclear), and may have a phone running the same software before that.
Verizon Wireless has also said it will introduce smart phones based on Google Inc.'s Android software.
STOCK PERFORMANCE: Verizon's stock rose 1.7 percent during the quarter, compared to a 17 percent rise in the S&P 500.
