When it comes to adding new subscribers and pushing smartphones to its customers, it’s been a rosy quarter for Verizon. But in terms of actually making money, the company has been less successful, posting a hefty $1.93 billion loss in its fourth quarter earnings this morning.
Despite hitting $3o billion in consolidated revenue for the first time ever, Verizon faced a double whammy that quickly ate into its profit. The carrier faced a seven-cents-per-share hit (around $135 million) due to damage from Hurricane Sandy, as well as a huge $1.55-per-share loss due to pension liabilities, which led to a charge between $9 billion and $10 billion. Overall profit for the year was $10.6 billion, up 3.5 percent from last year.
During the company’s earnings call today, Verizon chief financial officer Fran Shammo stressed that this quarter isn’t representative of what the company expects for the rest of the year. “The fundamentals of this business are extremely strong,” he said. He added that he has “no doubt” the company will see high margins again later this year like it did in the second and third quarter of 2012.
While Shammo is certainly on the defensive, it’s tough to fault Verizon for this quarter’s loss. The company had no control over Sandy’s damage, and it couldn’t afford to skimp on its pension charges without angering employees. Perhaps what’s most impressive is that Verizon still managed to eke out a profit for the year, despite its fourth quarter issues.
The carrier added a “record-high” 2.1 million subscribers in the quarter, bringing its total customer count to 98.2 million. Fifty-eight percent of Verizon’s customers are using smartphones, up five points from the last quarter. Verizon activated 9.8 million smartphones during the quarter, which also accounted for 87 percent of new subscribers. And 6.2 million of those smartphones were iPhones, Shammo noted during the earnings call.
As for 4G, Verizon sold 7.3 million 4G LTE devices during the quarter. That includes smartphones and hotspots. More than 273 million people are now covered by Verizon’s LTE, and its 4G LTE traffic accounts for almost 50 percent of its total wireless traffic.
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