Verizon stock jumps on earnings, subscriber growth
Yahoo Finance Live anchors discuss fourth-quarter earnings for Verizon.
Video Transcript
[AUDIO LOGO]
JULIE HYMAN: Let's talk about Verizon also this morning. That company was out with fourth-quarter numbers coming in mixed. Revenue topping expectations, but the company did issue some weaker than expected guidance for the fiscal year. They're expecting revenue growth to top out at around 4 and 1/2%. You can see earnings and sales came in bang in line with estimates.
Really here, what you got to pay attention to is the number of subscribers. Subscriber grew 217,000 in new wireless subscribers. That did top estimates. Although, it's way below the growth that T-Mobile has been seeing. That company continues to gain market share.
AT&T reports tomorrow. It's expected to have higher subscriber growth as well. But I guess maybe the bar was low coming in here for Verizon with that subscriber growth beating estimates. Broadband, by the way, also beating estimates. So that's also something that's working for them.
BRIAN SOZZI: Investors may want to reread this earnings release. And I would really go down to their consumer business operating margins, under severe pressure in the quarter. And, oh, yeah, they also issued an earnings warning for the year.
Again, another company that, to your point, Julie, that has really taken a back seat to T-Mobile for more than a year in terms of growth, postpaid, prepaid, you name it. Really, just taking a backseat to them. And then AT&T, I would argue, CEO John Stankey has finally I think started to turn that company around. They have reported a couple decent quarters now under their belt since they spun off that media division.
I'm just confused what the market here is trading on. And especially, my bill is getting expensive. I'm a Verizon customer. I just got my cable bill. I have a no frills bill. I'm paying almost $170 a month. I don't even know what I'm paying for at this point. But now, I'm starting to re-evaluate, do I even need any of this in my life? Should I just cut the cord and save a few bucks? It's ridiculous. The bills are absolutely ridiculous.
BRAD SMITH: Well, you're contributing to some of that consumer revenue increase. That was up by about 4.2% year-over-year. And they're driven by the wireless service revenue particularly here now.
You look at some of the investments that they're making, too, and that's where perhaps consumers who are perhaps investors in Verizon as well, are reading through this report and saying to themselves, OK, they're making so many different investments in C-band specifically. Spending in CapEx last year, full year, $23 billion. Who do you think that gets passed through to as well? Some of that comes out of that free cash flow.
BRIAN SOZZI: To me.
BRAD SMITH: But yeah, Sozzi, that shows up in your bill.
BRIAN SOZZI: It's a big bill. It's a big bill. And the charges. I mean, the bill is actually getting longer, too, with all these various surcharges. It's almost becoming unaffordable.
JULIE HYMAN: So cut down your--
BRIAN SOZZI: I should.
JULIE HYMAN: I mean--
BRIAN SOZZI: I don't have anything special. It was supposed to be a basic plan, Julie. I mean, $170, that's huge.
JULIE HYMAN: Yeah, I think we're-- something's not-- [OVERLAPPING SPEECH]
BRIAN SOZZI: No really, if you help me out because I'm gonna need to cut something.
JULIE HYMAN: I'm gonna help you. Something else I want to mention here is that Verizon has been burning through heads of its consumer business. And now Hans Vestberg, the CEO, is acting as consumer chief because the company does not have an actual consumer chief. What's really gonna be key for Verizon and for the other phone companies right now, is how much to offer in discounts. And Verizon seems to be holding the line here that they are not gonna be offering more discounts on promotioning on the phones, et cetera. Although the last time I checked, you could still get a free phone but maybe that's because I'm up for renewal or whatever.
BRIAN SOZZI: I have been getting a lot of free phone push alerts.
JULIE HYMAN: But maybe they're not gonna-- maybe they're not gonna do more. Maybe that that's the idea here. So maybe also that kind of commentary leads analysts to believe that margins are not gonna deteriorate. Maybe that's one of the reasons that the stock is up, too. But the trend for discounts in the industry is really an interesting one for sure.
BRAD SMITH: Right. Less discounts, what does that also mean for customers who are still paying their bill on time or even in a delinquent manner. What does that mean for delinquencies, too, as you have some of the rising prices for these services? So that's perhaps something to keep a close eye out for on the wires, as well, or any chatter around the company.
