Earnings Preview: Verizon to report 1Q results

Earnings Preview: Verizon to report 1Q results, customer additions seen muted after big 4Q

Associated Press

NEW YORK (AP) -- Verizon Communications Inc., parent of the country's biggest wireless carrier, is expected to report Thursday its results for the January to March period, generally a somewhat sleepy one for phone companies.

WHAT TO WATCH FOR: The net number of new wireless devices on contract-based plans is an important measure for cellphone companies, but the quarter saw no big new device launches, and is likely to be a muted. Michael Rollins at Citigroup expects Verizon to report adding a net 650,000 new devices. That's a big slowdown after 2.1 million added in the fourth quarter last year, when the iPhone 5 was new, but would be more than the 501,000 added in the first quarter last year.

Either way, Verizon Wireless is likely to keep cementing its position as the largest wireless carrier.

On Friday, Verizon Wireless said it was extending the time it takes for a subscriber to earn a subsidized upgrade to a new phone from 20 months on contract to 24 months. Like other phone companies, Verizon subsidizes new phones by hundreds of dollars to bring the cost of, for instance, an iPhone 5, down to $199. By making subscribers wait longer between upgrades, Verizon will save money.

Verizon Communications makes no secret of its interest in buying out Vodafone Group PLC, which owns 45 percent of Verizon Wireless. There's been renewed speculation that a deal is close this year, due to low interest rates and a strong dollar. Two weeks ago, Verizon shot down a rumor that it was looking at working with AT&T to buy Vodafone, with AT&T taking the non-Verizon assets.

WHY IT MATTERS: Verizon Wireless sends out bills for 98.2 million wireless devices, and there are millions more on the network through wholesale access deals. Verizon Communications still has 22.5 million landlines as well. The stock is a component of the 30-stock blue-chip Dow Jones industrial average.

Verizon's report marks the debut for telecommunications companies this earnings season. Rival AT&T Inc. reports next week.

The company reports amid feverish deal-making in the lower ranks of the wireless industry, with No. 3 Sprint now the target of two bidders, Softbank Corp. of Japan and satellite broadcaster Dish Network Corp. No. 4 T-Mobile USA is set to buy No. 5 MetroPCS Communications Inc.

WHAT'S EXPECTED: Analysts polled by FactSet on average expect Verizon to report earnings of 66 cents per share on revenue of $29.5 billion.

LAST YEAR'S QUARTER: Verizon earned 59 cents per share in the first quarter of 2012. Revenue was $28.2 billion.

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