How Verizon Nearly Drowned During Sandy

And how it's recovering. An amazing report from Verizon's terrifying subterranean cyber-swamp.

At Broad Street, near the tip of Lower Manhattan, the situation is far from normal. Many streets in the area are closed off and packed with trucks, equipment, and generators. Manhole covers are open everywhere. Verizon’s Broad Street central office, which routes local phone, DSL, and FiOS data, resembles a military field base. Walls of sandbags remain around the building, and the constant hum of generators and pumps bounces down the streets. The lobby of the building is covered in plywood to protect any decorations it may have, and the entrance has become a type of checkpoint lit by a string of incandescent bulbs.

On Wednesday, two weeks after the storm, I met with Verizon's Executive Director of Operations, Christopher D. Levendos, who showed me the extent of the damage and repairs. Levendos tells me the 90,000 cubic foot cable vault has suffered a “catastrophic failure,” far worse than the damage done to a similar, but much larger vault at Verizon’s West Street headquarters near the World Trade Center.

I’m told that an estimated 100 people are working here — a collection of contractors, power utility, and Verizon crews — and there seems to be a realization of how much work is left to be completed. As Levendos and I walk past the workers and squeeze between cables into the underground vault, I don’t know what to expect.

A two-day pumping operation has left the cable vault mostly dry, but it doesn’t look right. Cable insulation has been stripped back in areas, cords are cut, chunks of cables lie on the ground, and splice boxes have been torn open.

The 90,000 cubic foot cable vault has suffered a "catastrophic failure"

Levendos explains to me that before crews could even begin removing water, they needed to repair ground-level fuel pumps to feed backup diesel generators on the upper floors. Two mobile generator trailers were brought in, and they remained in use when I visited, as local power utility Con Ed worked to reconnect the building to the grid. Workers then used trucks to pump dry air through the copper wiring — a job that’s typically handled by air pumps in the basement that were rendered useless by the storm surge. It was too late for the decades-old copper wiring, which was submerged for the better part of two days. After crews sent test signals into the copper, Levendos says he was "left with the conclusion here that much of what is around me has been destroyed."

Miles of copper is ruined not only in the cable vault at Broad Street, but also at 20 or so manholes around the area. Even worse, paper insulation in the copper wiring sucks water through the cabling from capillary action, destroying cabling even in dry areas. Levendos says it’s "far too tedious, time consuming, and not effective of a process to try and put this infrastructure back together," so Verizon’s taking the opportunity to rewire with fiber optics instead. Service has been restored to FiOS customers for over a week — unlike copper, fiber optics aren’t damaged by the water. As part of this process, crews have already pulled fiber up the major corridors — including Water, Broad, and Pearl Streets — to ultimately connect the fiber network to buildings.

Despite the progress, huge challenges remain. While fiber optic cabling weathered the storm, the electronics that send light through them are vulnerable to water. Verizon has to analyze the extent of damage done to equipment in buildings they serve and see how much work remains to hook up areas without FiOS. Once fiber is brought to a building’s doorstep, workers still must bring service to each and every unit. Verizon wouldn’t give me a number, but thousands served by copper-based phone and DSL remain without service to this day in Lower Manhattan. For them, the wait will surely continue as the process of bringing fiber up floor by floor progresses.

Credit : The Verge

Cell Phones : Verizon sells two million iPhones in the September quarter

Carrier Verizon Wireless, a joint venture of U.S. telecommunications firm Verizon Communications and UK multinational mobile network operator Vodafone, today announced financial results for the September quarter. Big Red sold two million iPhone units which represents a 300,000 units decline compared to the June quarter. Verizon was also behind rival AT&T which yesterday reported activating 2.7 million iPhones in the quarter out of a total of 4.8 million total devices.
In a separate statement, rival AT&T said it activated a million units of the new iPhone 4S on its network as of Tuesday, while Verizon made no mention of iPhone 4S in its quarterly filing. iPhone 4S went on sale in the United States, UK, Australia, France, Germany, Canada and Japan on Friday, October 14. The phone will roll out to 22 new countries later this month, with regional online Apple Stores in those countries accepting reservations beginning today.

Press Release

Verizon Generates Strong Wireless Results, Increased Cash Flow, and FiOS and Strategic Services Growth in 3Q

3Q 2011 HIGHLIGHTS
Consolidated
· 49 cents in diluted earnings per share (EPS), compared with 23 cents per share in 3Q 2010.
· 56 cents per share in adjusted EPS (non-GAAP), which excludes 7 cents per share in non-operational items, compared with 55 cents in adjusted EPS in 3Q 2010.
Wireless
· $15.0 billion in service revenues in 3Q 2011, up 6.1 percent year over year; data revenues of $6.1 billion, up 20.5 percent, representing 40.6 percent of service revenues; total revenues of $17.7 billion, up 9.1 percent.
· 2.4 percent growth in retail postpaid ARPU over 3Q 2010; retail postpaid data ARPU up 15.7 percent; retail service ARPU also up 2.4 percent.
· 29.0 percent operating income margin; record-high 47.8 percent Segment EBITDA margin on service revenues (non-GAAP), up 60 basis points year over year.
Wireline
· 138,000 FiOS Internet and 131,000 FiOS TV net additions, with increased sales penetration for both products; 4.0 million customers now subscribe to FiOS TV.
· 8.8 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues represent nearly 60 percent of total consumer revenues.
· 15.6 percent increase in strategic services revenues, representing nearly 50 percent of global enterprise revenues.
NEW YORK – With another strong showing by Verizon Wireless, and continued growth in FiOS and strategic business services, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported third-quarter 2011 financial and operational results that keep the company on track to achieve its full-year earnings and revenue guidance.
Verizon reported 49 cents in EPS in the quarter, compared with 23 cents per share in third-quarter 2010.
Adjusted third-quarter 2011 earnings (non-GAAP) of 56 cents per share exclude 7 cents per share for a non-operational charge relating to a remeasurement, based on an actuarial valuation of pension plans. No adjustments were made for the previously announced $250 million (5 cents per share) negative impact in the quarter due to storm-related repair costs and a two-week strike affecting the Wireline segment. Comparable adjusted third-quarter 2010 earnings were 55 cents per share, excluding the impact of non-operational charges, the largest of which was related to pension and benefits remeasurements.
Well-Positioned for 4Q and 2012
“Verizon emerges from the third quarter in a strong position to accelerate growth,” said Lowell McAdam, Verizon president and chief executive officer. “We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012. We continue to grow revenues from strategic products and to increase free cash flow through improved operating performance and disciplined capital spending.”
McAdam added, “Verizon Wireless delivered impressive results across the board in the third quarter, and we are geared up for an even better fourth quarter, with new smartphones, tablets and data devices coming to market. In FiOS, we expect to capitalize on pent-up demand and deliver stronger growth in the fourth quarter. In enterprise, the integration of Terremark and recent acquisition of CloudSwitch have significantly improved our competitive positioning.”
Verizon has targeted 2011 adjusted EPS growth of 5 percent to 8 percent from an adjusted base of $2.08 in EPS in 2010, and 2011 revenue growth of 4 percent to 8 percent on a comparable basis with 2010.
Consolidated Revenue and Cash Flow Growth
In third-quarter 2011, Verizon’s total operating revenues were $27.9 billion on a consolidated basis, an increase of 5.4 percent compared with third-quarter 2010. Total operating expenses were $23.3 billion, an increase of 0.7 percent.
Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter totaled $8.8 billion, up 19.2 percent year over year.
Cash flow from operating activities totaled $21.5 billion in the first nine months of 2011, and capital expenditures totaled $12.5 billion — on track to meet the company’s full-year guidance of $16.5 billion. From the $9.0 billion in free cash flow (non-GAAP, cash flow from operations less capex) over the first nine months, Verizon has paid $4.1 billion in dividends to shareholders, and in September the Verizon Board of Directors approved a dividend increase for the fifth consecutive year.
Verizon Wireless Delivers Strong Results
In third-quarter 2011, Verizon Wireless again delivered strong growth in revenues, retail customers and other connections, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).
Wireless Financial Highlights
· Service revenues in third-quarter 2011 totaled $15.0 billion, up 6.1 percent year over year. Data revenues were $6.1 billion, up more than $1.0 billion or 20.5 percent year over year, and represent 40.6 percent of all service revenues. Total revenues were $17.7 billion, up 9.1 percent year over year.
· Retail postpaid ARPU grew 2.4 percent over third-quarter 2010, to $54.89. Retail postpaid data ARPU increased to $22.22, up 15.7 percent year over year. Retail service ARPU also grew 2.4 percent, to $53.21.
· Wireless operating income margin was 29.0 percent. Verizon Wireless generated $7.2 billion of EBITDA in third-quarter 2011, an increase of 7.5 percent year over year. Segment EBITDA margin on service revenues (non-GAAP) was 47.8 percent, up 60 basis points over third-quarter 2010 and up 240 basis points over second-quarter 2011. This was the highest Segment EBITDA margin on service revenues Verizon Wireless has ever reported.
Wireless Operational Highlights
· Verizon Wireless added 1.3 million total connections in third-quarter 2011, including 882,000 retail postpaid customers, and 367,000 wholesale and other connections. These additions exclude acquisitions and adjustments.
· At the end of the third quarter, the company had 107.7 million total connections, an increase of 6.5 percent year over year, consisting of 90.7 million retail customers and 17.0 million wholesale and other connections.
· At the end of the third quarter, smartphones accounted for 39 percent of the Verizon Wireless retail postpaid customer phone base, up from 36 percent at the end of second-quarter 2011.
· Retail postpaid churn was 0.94 percent in third-quarter 2011, an improvement of 13 basis points year over year. Total retail churn was 1.26 percent, an improvement of 17 basis points year over year.
· Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the United States, during the quarter. As of yesterday (Oct. 20), Verizon Wireless 4G LTE service was available in 165 markets covering a population of more than 186 million, across the country. With additional markets planned before year-end, the company’s 4G LTE network build-out is ahead of schedule and has already exceeded the company’s 2011 target of covering a population of 185 million.
· The company introduced five new 4G LTE devices: the DROID BIONIC by Motorola, Pantech Breakout, Samsung Galaxy Tab 10.1 tablet, Compaq Mini CQ10-688nr netbook and HP Pavilion dm 1-3010nr notebook. On Oct. 14, the Apple iPhone 4S became available on the Verizon Wireless 3G network. On Oct. 18, the company announced that the DROID RAZR by Motorola, a 4G LTE device, will be available in November.
· Verizon Wireless opened its LTE Innovation Center in Waltham, Mass., in July and its Application Innovation Center in San Francisco in August.
· The company continued to invest in and enhance its 3G network, the nation’s largest and most reliable 3G network.
· Verizon Wireless ranked highest in customer care among the major national wireless phone service providers in the J.D. Power and Associates “2011 Wireless Customer Care Performance Study.” Verizon Wireless was also named a Small Business Influencer Champion for 2011 by Small Business Trends and SmallBizTechnology.com.
FiOS, Strategic Services Transform Wireline Revenue Mix
Revenues and customers continued to increase for FiOS fiber-optic services, and sales of strategic services to business customers remained strong — countering the adverse impacts to Verizon’s Wireline segment in third-quarter 2011. FiOS and strategic services continued to become a larger percentage of the wireline revenue mix.
Wireline Financial Highlights
· Third-quarter 2011 operating revenues were $10.1 billion, a decline of 1.3 percent compared with third-quarter 2010. Consumer revenues grew 1.1 percent compared with third-quarter 2010.
· Consumer ARPU for wireline services was $94.20 in third-quarter 2011, up 8.8 percent compared with third-quarter 2010. ARPU for FiOS customers continues to be more than $146. Revenues for Verizon’s FiOS services to consumer retail customers generated nearly 60 percent of consumer wireline revenues in third-quarter 2011, compared with approximately 50 percent in third-quarter 2010.
· Global enterprise revenues totaled $3.9 billion in the quarter, up 2.1 percent compared with third-quarter 2010. Sales of strategic services — including Terremark cloud services, security and IT solutions, and strategic networking — increased 15.6 percent compared with third-quarter 2010 and now represent nearly 50 percent of global enterprise revenues. Terremark achieved record new sales bookings in third-quarter 2011. International revenue, which makes up approximately 15 percent of global enterprise, grew 9.8 percent year over year.
· Segment EBITDA (non-GAAP) was $2.2 billion in the quarter, including the $250 million impact from the storms and strike. This compares with $2.3 billion in third-quarter 2010. As a result, segment EBITDA margin (non-GAAP) was 21.4 percent in third-quarter 2011, compared with 22.7 percent in third-quarter 2010.
Wireline Operational Highlights
· Verizon added 138,000 net new FiOS Internet connections and 131,000 net new FiOS TV connections in third-quarter 2011. Verizon had a total of 4.6 million FiOS Internet and 4.0 million FiOS TV connections at the end of the quarter. With the clearing of FiOS installation backlogs caused by the storms and strike, Verizon expects to add at least 200,000 FiOS Internet and 200,000 FiOS TV customers in fourth-quarter 2011.
· FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 35 percent at the end of third-quarter 2011, compared with 31 percent at the end of third-quarter 2010. In the same periods, FiOS TV penetration was 31 percent, compared with 27 percent, respectively.
· Broadband connections totaled 8.6 million at the end of third-quarter 2011, a 2.8 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 20,000 broadband connections from second-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.6 percent to 24.5 million — the smallest year-over-year decline since fourth-quarter 2006.
· During the quarter Verizon continued to aggressively execute its global cloud strategy, expanding its portfolio of secure IT solutions and acquiring CloudSwitch, which will enable Verizon to boost industry adoption by simplifying the move to the enterprise cloud. Multinational companies including ARINC adopted Verizon enterprise cloud services during the quarter. In addition, enterprise customers including RWE of Germany, the University of North Carolina at Chapel Hill, Plunkett & Cooney Inc. and Smile Brands Inc. completed new agreements for a wide range of strategic advanced communications and information technology solutions.
· Verizon also continued to broaden the scope and capabilities of its global network infrastructure. The company completed the integration of Terremark data centers in Florida and Virginia with Verizon’s Global IP network; activated its first 100 gigabit-per-second network route in the United States; expanded its 100G capabilities in Europe; and completed deployment of advanced network equipment on its global network in Singapore and Sydney.

Cell Phones : Verizon 'on track' in Q3, revenues up 5.4 percent to $27.9 billion

VZW's upward mobility shows no signs of slowing, as the carrier just reported total Q3 revenues of $27.9 billion -- up 5.4 percent on last year. As usual, much of the growth comes from pulling in new smartphone customers, who were among 882,000 new retail postpaid connections and who helped to bring Big Red's average revenue per user (ARPU) up to $54.89, which is 2.3 percent higher than the same quarter last year. We'll have to wait for the Q4 results to see any impact from the iPhone 4S or the new Droid RAZR, but, in the meantime, there are plenty of double-digits in Verizon's data revenue figures: it made $22.22 from each postpaid retail customer for data usage alone, which adds up to a 15.7 percent leap year-on-year. 

 

Press Release

Verizon Generates Strong Wireless Results, Increased Cash Flow, and FiOS and Strategic Services Growth in 3Q

3Q 2011 HIGHLIGHTS

Consolidated

• 49 cents in diluted earnings per share (EPS), compared with 23 cents per share in 3Q 2010.
• 56 cents per share in adjusted EPS (non-GAAP), which excludes 7 cents per share in non-operational items, compared with 55 cents in adjusted EPS in 3Q 2010.

Wireless

• $15.0 billion in service revenues in 3Q 2011, up 6.1 percent year over year; data revenues of $6.1 billion, up 20.5 percent, representing 40.6 percent of service revenues; total revenues of $17.7 billion, up 9.1 percent.
• 2.4 percent growth in retail postpaid ARPU over 3Q 2010; retail postpaid data ARPU up 15.7 percent; retail service ARPU also up 2.4 percent.
• 29.0 percent operating income margin; record-high 47.8 percent Segment EBITDA margin on service revenues (non-GAAP), up 60 basis points year over year.

Wireline

• 138,000 FiOS Internet and 131,000 FiOS TV net additions, with increased sales penetration for both products; 4.0 million customers now subscribe to FiOS TV.
• 8.8 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues represent nearly 60 percent of total consumer revenues.
• 15.6 percent increase in strategic services revenues, representing nearly 50 percent of global enterprise revenues.

With another strong showing by Verizon Wireless, and continued growth in FiOS and strategic business services, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported third-quarter 2011 financial and operational results that keep the company on track to achieve its full-year earnings and revenue guidance.

Verizon reported 49 cents in EPS in the quarter, compared with 23 cents per share in third-quarter 2010.

Adjusted third-quarter 2011 earnings (non-GAAP) of 56 cents per share exclude 7 cents per share for a non-operational charge relating to a remeasurement, based on an actuarial valuation of pension plans. No adjustments were made for the previously announced $250 million (5 cents per share) negative impact in the quarter due to storm-related repair costs and a two-week strike affecting the Wireline segment. Comparable adjusted third-quarter 2010 earnings were 55 cents per share, excluding the impact of non-operational charges, the largest of which was related to pension and benefits remeasurements.

Well-Positioned for 4Q and 2012

"Verizon emerges from the third quarter in a strong position to accelerate growth," said Lowell McAdam, Verizon president and chief executive officer. "We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012. We continue to grow revenues from strategic products and to increase free cash flow through improved operating performance and disciplined capital spending."

McAdam added, "Verizon Wireless delivered impressive results across the board in the third quarter, and we are geared up for an even better fourth quarter, with new smartphones, tablets and data devices coming to market. In FiOS, we expect to capitalize on pent-up demand and deliver stronger growth in the fourth quarter. In enterprise, the integration of Terremark and recent acquisition of CloudSwitch have significantly improved our competitive positioning."
Verizon has targeted 2011 adjusted EPS growth of 5 percent to 8 percent from an adjusted base of $2.08 in EPS in 2010, and 2011 revenue growth of 4 percent to 8 percent on a comparable basis with 2010.

Consolidated Revenue and Cash Flow Growth

In third-quarter 2011, Verizon's total operating revenues were $27.9 billion on a consolidated basis, an increase of 5.4 percent compared with third-quarter 2010. Total operating expenses were $23.3 billion, an increase of 0.7 percent.

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter totaled $8.8 billion, up 19.2 percent year over year.

Cash flow from operating activities totaled $21.5 billion in the first nine months of 2011, and capital expenditures totaled $12.5 billion -- on track to meet the company's full-year guidance of $16.5 billion. From the $9.0 billion in free cash flow (non-GAAP, cash flow from operations less capex) over the first nine months, Verizon has paid $4.1 billion in dividends to shareholders, and in September the Verizon Board of Directors approved a dividend increase for the fifth consecutive year.

Verizon Wireless Delivers Strong Results

In third-quarter 2011, Verizon Wireless again delivered strong growth in revenues, retail customers and other connections, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).

Wireless Financial Highlights

• Service revenues in third-quarter 2011 totaled $15.0 billion, up 6.1 percent year over year. Data revenues were $6.1 billion, up more than $1.0 billion or 20.5 percent year over year, and represent 40.6 percent of all service revenues. Total revenues were $17.7 billion, up 9.1 percent year over year.

• Retail postpaid ARPU grew 2.4 percent over third-quarter 2010, to $54.89. Retail postpaid data ARPU increased to $22.22, up 15.7 percent year over year. Retail service ARPU also grew 2.4 percent, to $53.21.

• Wireless operating income margin was 29.0 percent. Verizon Wireless generated $7.2 billion of EBITDA in third-quarter 2011, an increase of 7.5 percent year over year. Segment EBITDA margin on service revenues (non-GAAP) was 47.8 percent, up 60 basis points over third-quarter 2010 and up 240 basis points over second-quarter 2011. This was the highest Segment EBITDA margin on service revenues Verizon Wireless has ever reported.

Wireless Operational Highlights

• Verizon Wireless added 1.3 million total connections in third-quarter 2011, including 882,000 retail postpaid customers, and 367,000 wholesale and other connections. These additions exclude acquisitions and adjustments.

• At the end of the third quarter, the company had 107.7 million total connections, an increase of 6.5 percent year over year, consisting of 90.7 million retail customers and 17.0 million wholesale and other connections.

• At the end of the third quarter, smartphones accounted for 39 percent of the Verizon Wireless retail postpaid customer phone base, up from 36 percent at the end of second-quarter 2011.

• Retail postpaid churn was 0.94 percent in third-quarter 2011, an improvement of 13 basis points year over year. Total retail churn was 1.26 percent, an improvement of 17 basis points year over year.

• Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the United States, during the quarter. As of yesterday (Oct. 20), Verizon Wireless 4G LTE service was available in 165 markets covering a population of more than 186 million, across the country. With additional markets planned before year-end, the company's 4G LTE network build-out is ahead of schedule and has already exceeded the company's 2011 target of covering a population of 185 million.

• The company introduced five new 4G LTE devices: the DROID BIONIC by Motorola, Pantech Breakout, Samsung Galaxy Tab 10.1 tablet, Compaq Mini CQ10-688nr netbook and HP Pavilion dm 1-3010nr notebook. On Oct. 14, the Apple iPhone 4S became available on the Verizon Wireless 3G network. On Oct. 18, the company announced that the DROID RAZR by Motorola, a 4G LTE device, will be available in November.

• Verizon Wireless opened its LTE Innovation Center in Waltham, Mass., in July and its Application Innovation Center in San Francisco in August.

• The company continued to invest in and enhance its 3G network, the nation's largest and most reliable 3G network.

• Verizon Wireless ranked highest in customer care among the major national wireless phone service providers in the J.D. Power and Associates "2011 Wireless Customer Care Performance Study." Verizon Wireless was also named a Small Business Influencer Champion for 2011 by Small Business Trends and SmallBizTechnology.com.

FiOS, Strategic Services Transform Wireline Revenue Mix

Revenues and customers continued to increase for FiOS fiber-optic services, and sales of strategic services to business customers remained strong -- countering the adverse impacts to Verizon's Wireline segment in third-quarter 2011. FiOS and strategic services continued to become a larger percentage of the wireline revenue mix.

Wireline Financial Highlights

• Third-quarter 2011 operating revenues were $10.1 billion, a decline of 1.3 percent compared with third-quarter 2010. Consumer revenues grew 1.1 percent compared with third-quarter 2010.
• Consumer ARPU for wireline services was $94.20 in third-quarter 2011, up 8.8 percent compared with third-quarter 2010. ARPU for FiOS customers continues to be more than $146. Revenues for Verizon's FiOS services to consumer retail customers generated nearly 60 percent of consumer wireline revenues in third-quarter 2011, compared with approximately 50 percent in third-quarter 2010.
• Global enterprise revenues totaled $3.9 billion in the quarter, up 2.1 percent compared with third-quarter 2010. Sales of strategic services -- including Terremark cloud services, security and IT solutions, and strategic networking -- increased 15.6 percent compared with third-quarter 2010 and now represent nearly 50 percent of global enterprise revenues. Terremark achieved record new sales bookings in third-quarter 2011. International revenue, which makes up approximately 15 percent of global enterprise, grew 9.8 percent year over year.
• Segment EBITDA (non-GAAP) was $2.2 billion in the quarter, including the $250 million impact from the storms and strike. This compares with $2.3 billion in third-quarter 2010. As a result, segment EBITDA margin (non-GAAP) was 21.4 percent in third-quarter 2011, compared with 22.7 percent in third-quarter 2010.

Wireline Operational Highlights

• Verizon added 138,000 net new FiOS Internet connections and 131,000 net new FiOS TV connections in third-quarter 2011. Verizon had a total of 4.6 million FiOS Internet and 4.0 million FiOS TV connections at the end of the quarter. With the clearing of FiOS installation backlogs caused by the storms and strike, Verizon expects to add at least 200,000 FiOS Internet and 200,000 FiOS TV customers in fourth-quarter 2011.
• FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 35 percent at the end of third-quarter 2011, compared with 31 percent at the end of third-quarter 2010. In the same periods, FiOS TV penetration was 31 percent, compared with 27 percent, respectively.
• Broadband connections totaled 8.6 million at the end of third-quarter 2011, a 2.8 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 20,000 broadband connections from second-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.6 percent to 24.5 million -- the smallest year-over-year decline since fourth-quarter 2006.
• During the quarter Verizon continued to aggressively execute its global cloud strategy, expanding its portfolio of secure IT solutions and acquiring CloudSwitch, which will enable Verizon to boost industry adoption by simplifying the move to the enterprise cloud. Multinational companies including ARINC adopted Verizon enterprise cloud services during the quarter. In addition, enterprise customers including RWE of Germany, the University of North Carolina at Chapel Hill, Plunkett & Cooney Inc. and Smile Brands Inc. completed new agreements for a wide range of strategic advanced communications and information technology solutions.
• Verizon also continued to broaden the scope and capabilities of its global network infrastructure. The company completed the integration of Terremark data centers in Florida and Virginia with Verizon's Global IP network; activated its first 100 gigabit-per-second network route in the United States; expanded its 100G capabilities in Europe; and completed deployment of advanced network equipment on its global network in Singapore and Sydney.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010; and other non-operational items. See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, with more than 107 million total connections nationwide. Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500. A Dow 30 company with $106.6 billion in 2010 revenues, Verizon employs a diverse workforce of more than 195,000. For more information, visit www.verizon.com.

VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts, high-quality video and images, and other information are available at Verizon's News Center on the World Wide Web at www.verizon.com/news. To receive news releases by email, visit the News Center and register for customized automatic delivery of Verizon news releases.

NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; the effect of material changes in available technology; any disruption of our key suppliers' provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural disasters, terrorist attacks, breaches of network or information technology security or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

Gaming : Microsoft reportedly adding video from Comcast, Verizon, HBO Go and others to Xbox Live

Microsoft announced new integration with live TV as a part of the Xbox 360's fall update during E3 earlier this year, but didn't name any US pay-TV partners at the time. Now, anonymous rumors recently posted on Digiday suggested the folks at Redmond were looking to work with Verizon and Comcast, followed by Bloomberg hearing similar talk from its own "people with knowledge of the situation." Today's rumors finger Verizon (which showed off live TV on a variety of devices at CES), Comcast, HBO, Crackle, Bravo, Syfy and UK service Lovefilm as likely partners. Missing from the list is AT&T's U-verse, which already offers an Xbox 360 tie-in and distributes its IPTV on the Mediaroom platform, just like some of the international partners previously announced. If these services launch it will be interesting to see how the integration works and if it's VOD like the existing Xfinity TV and Flex View mobile apps, or if providers cross the IPTV bridge with in-home devices like the Televation / AnyPlay box.

Tech : Verizon's FiOS on Demand app brings Flex View streaming to iPad, iPhone

It's been in the works for more than a year, but Verizon's FiOS on Demand app has finally arrived to the iPad and iPhone. Available as a free download on the iTunes Store, this tool provides FiOS subscribers with instant access to all movies or TV shows available under the provider's Flex View service, which now boasts some 4,400 titles for purchase or rent, along with 32GB of cloud storage for each customer.

Verizon strike to come to an end August 23rd

Verizon workers are scheduled to return to their jobs Tuesday, after more than two weeks on strike. Some 45,000 union members left their posts August 7th, after contract negotiation between the Communication Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) and the company came to a halt two days prior. A statement from the union said it had reached an agreement with Verizon, but that "The major issues remain to be discussed." The union's claim, among other things that Verizon demanded "cuts in compensation of $20,000 per worker per year.

 

Press Release

CWA, IBEW Reach Agreement on Bargaining with Verizon;
Members to Return to Work Tuesday, August 23

WASHINGTON--(BUSINESS WIRE)--Following is a statement by the Communications Workers of America and the International Brotherhood of Electrical Workers:

Members of CWA and IBEW at Verizon Communications will return to work on Tuesday, Aug. 23, at which time the contract will be back in force for an indefinite period.

We have reached agreement with Verizon on how bargaining will proceed and how it will be restructured. The major issues remain to be discussed, but overall, issues now are focused and narrowed.

We appreciate the unity of our members and the support of so many in the greater community. Now we will focus on bargaining fairly and moving forward.

CWA and IBEW represent 45,000 workers at Verizon covered by this contract from Virginia to New England.

Tech : Verizon Wireless to tie American Express' Serve into mobile numbers, keep your credit card holstered

Good news online shopaholics, your tchotchke-buying ways are getting a couple of enablers in the form of American Express and Verizon Wireless. The two titans of industry have teamed up to integrate AMEX's PayPal-like Serve platform into the operator's phones and tablets in the next few months. The service will work by linking your existing mobile number to a Serve account, speeding up the checkout process and ensuring you never second-guess that impulse buy. Sure, this isn't the NFC-chipped, Isis future Big Red promised, but it's a good stopgap for virtual spendthrifts. 

 

Press Release

Verizon to Integrate American Express' Serve on Wireless Phones and Tablets

Verizon Wireless customers to have access to simple and easy mobile payments powered by Serve, American Express' new digital payment platform

NEW YORK and BASKING RIDGE, NJ, August 1, 2011 --

American Express and Verizon Wireless today announced they will integrate Serve, a next-generation digital payment and commerce platform, on many Verizon mobile phones and tablets. Over the coming months, Verizon Wireless customers will be able to establish Serve accounts that will enable them to make payments and redeem offers for goods and services directly from their mobile phones and tablets using Serve.

Serve simplifies the online checkout experience by authenticating a mobile number, then allowing a customer to make a purchase on-screen. Verizon Wireless customers who use Serve can expect to buy goods and services on their mobile phone in just a few clicks. Merchants who accept Serve mobile payments will enjoy a streamlined option for processing and settlement. The Serve card is currently accepted by the millions of merchants in the United States who accept American Express.

American Express and Verizon Wireless will also collaborate to source, distribute and simplify redemption of online and mobile offers with participating merchants through the use of the Serve account. For example, as customers redeem certain offers or coupons using their mobile phones, the credit may automatically appear in their Serve account.

The two companies are also working with Payfone to support Serve checkout on Verizon Wireless devices. Payfone's pre-authorization and intelligent routing features will help Verizon Wireless customers who use the Serve application make mobile payments simply and securely.

"Our collaboration with Verizon highlights the speed at which Serve is evolving to reach a wide audience," said Dan Schulman, group president, Enterprise Growth, American Express. "Verizon Wireless customers will soon be able to complement their busy lifestyle with a trusted payment platform that delivers a fast, flexible and secure way to manage their day-to-day mobile purchases, and together we're taking the necessary steps to make mobile commerce a reality."

Greg Haller, president, Enterprise & Government for Verizon Wireless, said, "Serve provides a quick and intuitive way for our customers to use their mobile service in a refreshingly convenient way. Our commitment to building the entire mobile payments ecosystem, through our Isis joint venture and now with Serve, gives customers incredible new ways to use their mobile devices."

Merchants who are interested in accepting mobile payments through Serve and Verizon can learn more at serve.com/billmyphone.

Cell Phones : Verizon is on a roll, posts another $27.5 billion in Q2 revenues

Hot on the heels of AT&T's happy earnings tidbits yesterday, VZW's latest figures also show that it's raking the money in nice and regular. Total operating revenues in Q2 were $27.5 billion -- that's up half a billion on Q1 2011 and 6.3 percent on Q2 2010 (on a non-GAAP basis). The Big Red claims 2.2 million net additions to its wireless customer base, contributing to a 6.6 percent year-on-year increase in wireless service revenues and a 22.2 percent increase in wireless data revenues. The wireline side of the business also performed well, with 189,000 FiOS Internet additions and 184,000 FiOS TV additions adding up to a 9.4 percent year-on-year increase. Chairman and CEO Ivan Seidenberg summed it up as "one of Verizon's best quarters since the 2008 economic downturn.

 

Press Release

Verizon Reports Accelerated Revenue Growth, Expanded Margins and Strong 2Q Earnings Performance

2Q HIGHLIGHTS

Consolidated

• 57 cents in diluted earnings per share (EPS), compared with a loss of 42 cents per share and adjusted EPS (non-GAAP) of 51 cents in 2Q 2010.

Wireless

• 6.6 percent year-over-year increase in service revenues in 2Q 2011; data revenues up 22.2 percent; 27.1 percent operating income margin and 45.4 percent Segment EBITDA margin on service revenues (non-GAAP).

• 2.2 million net additions, excluding acquisitions and adjustments, includes 1.3 million retail postpaid net customer additions; 106.3 million total connections, includes 89.7 million retail customers.

• Retail postpaid churn of 0.89 percent, the lowest in three years.

Wireline

• 189,000 FiOS Internet and 184,000 FiOS TV net additions.

• 9.4 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues represent approximately 57 percent of total consumer revenues.

• 17.8 percent increase in strategic services revenues, representing approximately 48 percent of total global enterprise revenues.

Verizon Communications Inc. (NYSE, NASDAQ: VZ) today reported accelerated revenue growth and improved margins across its business groups, leading to a strong earnings performance in second-quarter 2011.

Verizon reported 57 cents in EPS in the quarter, compared with a second-quarter 2010 loss of 42 cents per share.

There are no adjustments to second-quarter 2011 earnings results. Adjusted second-quarter 2010 earnings were 51 cents per share, excluding the impact of divestitures and non-operational charges (non-GAAP). The most significant 2010 charges related to a workforce-reduction incentive offer that led to approximately 11,900 voluntary separations last year.

Strong, Positive Momentum

"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," said Chairman and CEO Ivan Seidenberg. "We expanded sequential margins in both our wireline and wireless businesses, and in the second half of the year we expect Verizon to build on this strong, positive momentum to continue to drive profitable, sustainable growth."

Seidenberg added: "We expect Verizon Wireless to gain share in the retail postpaid market and widen its network-quality lead throughout 2011. We also continue to see strong customer demand for FiOS Internet and TV, and for cloud and other strategic services. At the same time, we remain focused on our cost structure, as we deliver improvements in wireline margins quarter after quarter."

Consolidated Revenue Growth Accelerates

On a consolidated basis, Verizon's total operating revenues were $27.5 billion in second-quarter 2011, an increase of 2.8 percent compared with second-quarter 2010. Last year's results included revenues from operations that have since been divested.

On a comparable basis (non-GAAP), second-quarter 2011 total operating revenues increased 6.3 percent compared with second-quarter 2010. This was Verizon's strongest quarter for consolidated revenue growth in 10 quarters.

Also on a comparable basis, consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for second-quarter 2011 totaled $9.0 billion, up 5.2 percent year over year.
Cash flow from operating activities totaled $12.8 billion in the first half of 2011, down from $16.8 billion in the first half of 2010. Last year's total included cash flow from businesses that have since been divested and the timing of favorable tax-related impacts, and 2011 totals include inventory purchases for wireless devices and the impact of previously announced pension-fund payments in first-quarter 2011. Verizon said its cash flow outlook for the remainder of 2011 remains very strong.

The company aggressively invested in growth opportunities in the first half of 2011. One example is the deployment of Verizon's nationwide 4G LTE (fourth-generation, Long-Term Evolution) wireless broadband network. In first-half 2011, Verizon's capital expenditures totaled $8.9 billion, compared with $7.6 billion in first-half 2010.

Verizon continues to expect full-year 2011 capital spending to be similar to its 2010 investment of $16.5 billion.

Verizon Wireless Deliver Another Strong Quarter

Verizon Wireless delivered strong growth in revenues, retail customers and other connections, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user). In the second quarter of 2011:
Wireless Financial Highlights

• Service revenues in the quarter totaled $14.7 billion, up 6.6 percent year over year. Data revenues were $5.8 billion, up $1.1 billion or 22.2 percent year over year, and represent 39.5 percent of all service revenues. Total revenues were $17.3 billion, up 10.2 percent year over year.

• Retail postpaid ARPU grew 1.9 percent or $1.00 over second-quarter 2010, to $54.12. Retail postpaid data ARPU increased to $21.26, up 15.2 percent year over year. Retail service ARPU also grew 1.9 percent, to $52.49.

• Wireless operating income margin was 27.1 percent. Segment EBITDA margin on service revenues (non-GAAP) was 45.4 percent.

Wireless Operational Highlights

• Verizon Wireless added 2.2 million total connections, including 1.3 million retail postpaid customers, and 890,000 wholesale and other connections. These additions exclude acquisitions and adjustments.

• At the end of the second quarter, the company had 106.3 million total connections, an increase of 6.6 percent year over year, including 89.7 million retail customers and 16.6 million wholesale and other connections.

• At the end of the second quarter, smartphones were 36 percent of Verizon Wireless' retail postpaid customer phone base, up from 32 percent at the end of first-quarter 2011.

• Retail postpaid churn was 0.89 percent, the lowest in the industry and the company's lowest since second-quarter 2008. Total retail churn was 1.22 percent, an improvement of 9 basis points year over year and 11 basis points sequentially.

• Verizon Wireless continued to roll out its 4G LTE mobile broadband network during the quarter. As of yesterday (July 21), Verizon Wireless 4G LTE service is available in 102 markets across the country, covering a population of more than 160 million. By year-end, Verizon Wireless' 4G LTE network, the fastest and most advanced LTE network in the U.S., is expected to be available in more than 175 markets across the country, covering a population of more than 185 million.

• The company introduced three new 4G LTE devices: the Droid Charge by Samsung, Revolution by LG and the MiFi 4510L 4G LTE Mobile Hotspot by Novatel Wireless. The company also announced that the 4G LTE-enabled Samsung Galaxy Tab 10.1 is available for pre-order; the device is expected to launch by the end of this month. During the second-quarter 2011, Verizon Wireless sold 1.2 million 4G LTE smartphones and Internet data devices.

• Verizon Wireless continued to invest in and enhance its 3G network, the nation's largest and most reliable 3G network.

• During the quarter, Verizon Wireless deployed crisis response teams to help customers stay connected in areas devastated by disasters including the North Dakota floods, Arizona wildfires and Joplin, Mo., tornado.
Improved Revenue Trends in Wireline
Verizon's Wireline segment continued to expand margins, supported by improved revenue trends. In the second quarter of 2011:

Wireline Financial Highlights

• Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 22.4 percent in second-quarter 2010. This was Wireline's fifth consecutive quarter of sequential EBITDA margin expansion.

• Second-quarter 2011 operating revenues were $10.2 billion, a decline of 0.3 percent compared with second-quarter 2010. This is an improvement from a decline of 2.2 percent comparing first-quarter 2011 to first-quarter 2010. Verizon acquired cloud and managed IT infrastructure leader Terremark Worldwide in April, and the inclusion of Terremark results added $98 million in revenue, representing 100 basis points of wireline revenue growth, in second-quarter 2011.

• Revenues for Verizon's FiOS fiber-optic services to consumer retail customers generated approximately 57 percent of consumer wireline revenues in second-quarter 2011, compared with approximately 48 percent in second-quarter 2010.

• Consumer revenues grew 1.3 percent compared with second-quarter 2010. Consumer ARPU for wireline services was $92.44 in second-quarter 2011, up 9.4 percent compared with second-quarter 2010. ARPU for FiOS customers continues to be more than $146.

• Global enterprise revenues totaled $4.0 billion in the quarter, up 3.6 percent compared with second-quarter 2010. Sales of strategic services -- including Terremark cloud services, security and IT solutions, and strategic networking -- increased 17.8 percent compared with second-quarter 2010 and now represent approximately 48 percent of global enterprise revenues.

Wireline Operational Highlights

• Verizon added 189,000 net new FiOS Internet connections and 184,000 net new FiOS TV connections in second-quarter 2011. Verizon had a total of 4.5 million FiOS Internet and 3.8 million FiOS TV connections at the end of the quarter.

• FiOS penetration (subscribers as a percentage of potential subscribers) is now 30 percent or more for both services. FiOS Internet penetration was 34 percent at the end of second- quarter 2011, compared with 30 percent at the end of second-quarter 2010. In the same periods, FiOS TV penetration was 30 percent, compared with 26 percent, respectively. The FiOS network passed 16.1 million premises at mid-year 2011.

• Broadband connections totaled 8.6 million at the end of second-quarter 2011, a 3.3 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 62,000 broadband connections from first-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.9 percent to 25.0 million -- the smallest year-over-year decline since second-quarter 2007.

• During the quarter Verizon continued to execute its global cloud strategy, rolling out an expanded portfolio of secure IT solutions and an operational model for its Terremark subsidiary. Verizon also continued to deploy integrated IT and communications solutions for multinational enterprise, medium-sized and government customers. These solutions included expansion of the company's managed mobility services for tablets, mobile access to cloud-based SAP applications and enhanced security management programs for health care providers. Verizon also completed new agreements with a range of multinational corporations, including Constellation Energy, Epsilon, Masco Corp. and PHH Corp.

• Verizon expanded its global network infrastructure during the quarter as it continued to broaden its scope and capabilities. The company installed 63 additional Private IP edge routers for a total of 915 edge routers in 245 sites throughout 63 countries, activated more than 1,500 kilometers (932 miles) of ultra-long-haul network across the southern part of the United Kingdom, and completed a joint fiber build in Singapore, which almost doubles the coverage of the Singapore fiber-optic network. Verizon continued to demonstrate leadership in scaling the global IP network and kicked off the expansion of 100G IP backbone capabilities in the U.S. to nine routes.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; and the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010. See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; the effect of material changes in available technology; any disruption of our key suppliers' provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural disasters, terrorist attacks, breaches of network or information technology security or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

Wireless : Verizon tiered data plans coming July 7, starting at $30? (update)

We were hoping it wouldn't happen, but it appears that Verizon CFO Fran Shammo's summer foreboding of his company's dreaded tiered data plans could be right on the money. Droid-Life is reporting the magic date will be July 7 and has provided supposed pricing details: data plans without tethering would start at $30 for 2GB, while 5GB and 10GB will cost $50 and $80 respectively. Tethering will cost an extra $20 and adds another 2GB to the pool. There's said to be no notable separation between 3G and 4G -- you'd be billed exactly the same whether you're packing a Droid X2 or a Droid Charge. These new plans wouldn't affect anyone currently under contract, though it's still unknown if customers can hang onto them when it's time to renew. While this remains filed in the "grain of salt" cabinet for now, it may be a good time to at least start checking out your next phone.

Data Pricing Evolution...The Present

Our legacy data pricing structure was designed to address a somewhat different customer need profile than what we are seeing and can expect in the future.

Consider this. Data usage has more than doubled over the last three years. Consumers and business users alike are doing more and more with their mobile devices. The notion of "send and end" has migrated to "managing multiple aspects of one's lifestyle through mobility." Whether it's social media (85%+ of Smartphone users), mobile internet (88%+ of Smartphone users), or email/applications (71%+ of Smartphone users), this usage has one thing in common-dramatically increased demand for data and media consumption.

As a result, we are evolving our approach around how we package our data solutions and pricing to our customers. Coming soon, Verizon Wireless will move from our existing pricing format to a structure designed to allow customers to choose the right data solution that best aligns with their needs.

The Value Benefit Equation...
With the new usage based pricing plans, the vast majority of our customers will be able to enjoy their typical level of data consumption for the same value that they outlay today. Additionally, for those who have greater requirements for data, we will have solutions that they can tailor to their unique needs.

Perhaps more importantly, given our strong desire to continue to provide enhanced capability and value to our customers, the new data pricing will apply to both our 3G AND 4G LTE networks. So in essence, for those customers in our ever and rapidly expanding 4G LTE network coverage footprint, users will gain the benefit of the fastest and most advanced 4G LTE network in the U.S. all for the same usage based value. More speed. More functionality. Same value.

Cell Phones : Verizon finally killing unlimited data plans this summer, says it'll get iPhone 5 at same time as AT&T

Verizon's been telegraphing its intent to drop unlimited data plans for nearly a year, and despite the fact that LTE smartphones launched with all-you-can-eat options, those plans haven't changed one bit. Reuters reports that Verizon will finally nix the megabyte buffet this summer, replacing it with a fully tiered data pricing scheme, though CFO Fran Shammo also floated the idea that tiered data could open up an avenue for family data plans. We've never really enjoyed sharing minutes, so we doubt counting our kilobytes will be much fun, but we suppose there's always room for Verizon to pleasantly surprise us with a really low price for mobile web browsing. Right? By the by, Fran also reiterated claims that the next iPhone will be a global device, and said that when it launches on AT&T, it'll hit Verizon stores at the very same time.

Cell Phones : Verizon says it will put location warning labels on all phones sold

See that rather ominous warning label above? That's a new sticker that will soon be placed directly on the screen of every new device Verizon Wireless sells. Contrary to what you might suspect, however, that's not being done in response to the most recent iPhone 4 tracking fiasco. The label was revealed in a letter to Representatives Ed Markey and Joe Barton, who themselves sent a letter to Verizon (and the three other major carriers) on March 29th inquiring about a New York Times story that raised concerns about how carriers collect and store personal location data. As for the other carriers' responses, they apparently aren't going as far as Verizon has with its warning label, but they do mostly echo Verizon's response in other respects. They all say, for instance, that personal data is secured by a variety of means and stored only as long as needed (which can apparently vary by carrier, though), that they don't rent or sell personal information, and that they request customer consent before accessing location data. Despite those assurances, however, Rep. Markey says he's still left with a "feeling of uneasiness and uncertainty," and he's pointing a finger at third-party developers in particular, who he says must be held "accountable."

Cell Phones : Verizon CFO suggests next iPhone will be a 'global device'

We're guessing it wasn't on the company's agenda for its earnings call earlier today, but Verizon CFO Fran Shammo let slip one other interesting iPhone tidbit in addition to its news of 2.2 million iPhone 4 activations. Here's what he said:

The fluctuation, I believe, will come when a new device from Apple is launched, whenever that may be, and that we will be, on the first time, on equal footing with our competitors on a new phone hitting the market, which will also be a global device.

That pretty clearly suggests that the next iPhone -- supposedly coming in September -- will be a world phone, which just so happens to coincide with rumors to same effect we've heard as recently as this week. Of course, there's been talk of a dual-mode GSM / CDMA iPhone even before that, considering that the Qualcomm baseband chip used in the Verizon iPhone is technically capable of supporting both CDMA and GSM networks -- Apple simply chose not to or wasn't able to take advantage of that particular functionality at the time.

Cell Phones : Verizon reports 'strong' Q1 earnings: $27 billion revenue, 2.2 million iPhone activations

Yesterday was AT&T's turn, and today it's Verizon revealing its earnings for the first quarter of 2011. The company has reported $27 billion in consolidated revenue from its wireless and wireline businesses, which is up 5.3 percent year over year (on a non-GAAP basis), while profits rose to $1.4 billion. Fueling that growth was 1.8 million net additions to its wireless customer base, which now totals 88.4 million customers (and 104 million connections). It also saw 207,000 net additions to its FiOS internet business and 192,000 net additions to FiOS TV, which bring those total customer bases to 4.3 million and 3.7 million, respectively. As for that little iPhone 4 launch, Verizon says it's resulted in 2.2 million activations -- that's quite a bit less that AT&T's 3.6 million iPhone activations for the same quarter, as you've no doubt noticed, although it does also have the benefit of a much cheaper iPhone 3GS in addition to the iPhone 4. Verizon also said that demand was "strong" for its new LTE devices (including 260,000 HTC Thunderbolt activations), and that deployment of its LTE network remains on track, with it expected to be available in more than 175 markets by the end of the year -- in fact, that's actually up a bit from the 147 figure we last heard. Head on past the break for the company's full earnings report. 

 

First-Quarter Performance Affirms 2011 Revenue and Earnings Guidance

1Q HIGHLIGHTS
Consolidated

51 cents in diluted earnings per share (EPS), compared with EPS of 16 cents and adjusted EPS (non-GAAP) of 48 cents in 1Q 2010.
Wireless

6.3 percent year-over-year increase in service revenues in 1Q 2011; data revenues up 22.3 percent; 25.8 percent operating income margin and 43.7 percent Segment EBITDA margin on service revenues (non-GAAP).
1.8 million net additions, excluding acquisitions and adjustments, includes 906,000 retail postpaid net customer additions; continued low retail postpaid churn of 1.01 percent.
104.0 million total connections, includes 88.4 million retail customers.
Wireline

207,000 net FiOS Internet and 192,000 net FiOS TV additions; 4.3 million total FiOS Internet connections and 3.7 million total FiOS TV connections.
10.5 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues now represent approximately 54 percent of total consumer revenues.
12.8 percent increase in strategic enterprise revenues, which now represent approximately 46 percent of total global enterprise revenues.
Verizon Communications Inc. (NYSE, NASDAQ: VZ) today reported strong first-quarter 2011 earnings, as industry leader Verizon Wireless continued to effectively balance customer growth and profitability, while growth in FiOS and strategic enterprise services contributed to another quarter of improvement in wireline margins.

Verizon reported 51 cents in EPS in first-quarter 2011, compared with first-quarter 2010 earnings of 16 cents per share. There are no adjustments to first-quarter 2011 earnings results. Adjusted first-quarter 2010 earnings, excluding the impact of divestitures and non-operational charges (non-GAAP), were 48 cents per share.

On Track to Meet Revenue and Earnings Objectives

"In the first quarter, Verizon Wireless solidified its industry leadership with results that once again showed sustainable, profitable growth," said Verizon Chairman and CEO Ivan Seidenberg. "We are executing on our business plans and building momentum, and we are on track to meet both our revenue and earnings objectives for the year."

Seidenberg added, "Wireline EBITDA margins expanded for the fourth consecutive quarter, driven by continued strength in FiOS revenues and disciplined cost management. Our strategic acquisition of Terremark, which closed earlier this month, improves our ability to provide integrated, enterprise-class cloud solutions and accelerate growth."

Consolidated Revenue Growth Accelerates

On a consolidated basis, Verizon's total operating revenues were $27.0 billion in first-quarter 2011, an increase of 0.3 percent compared with first-quarter 2010. Last year's results included revenues from operations that have since been divested.

On a comparable basis (non-GAAP), first-quarter 2011 total operating revenues increased 5.3 percent compared with first-quarter 2010 -- up from growth of 2.3 percent on the same basis comparing fourth-quarter 2010 with fourth-quarter 2009. Approximately 77 percent of first-quarter 2011 revenues were generated by higher-growth wireless, FiOS and strategic enterprise services, compared with approximately 72 percent of comparable first-quarter 2010 revenues.

As previously stated, Verizon is targeting comparable top-line revenue growth rates in the range of 4 percent to 8 percent for full-year 2011. The company is also targeting EPS growth of 5 percent to 8 percent in 2011, over a comparable adjusted base of $2.08 per share in 2010.

Verizon continues to expect 2011 capital spending to be essentially flat, compared with the 2010 investment of $16.5 billion. In first-quarter 2011, Verizon's capital expenditures totaled $4.4 billion, compared with $3.4 billion in first-quarter 2010, as the company aggressively invested in growth opportunities, including the deployment of Verizon's nationwide 4G LTE (fourth-generation, Long-Term Evolution) wireless broadband network. With 4G LTE deployment well under way, Verizon's capitalized interest will be lower in 2011, resulting in higher interest expense of about $150 million for each quarter this year.

Cash flow from operations totaled $5.0 billion in first-quarter 2011, down from $7.1 billion in first-quarter 2010. Operating cash flow from higher net income in first-quarter 2011 was offset by the launch of the iPhone and satisfaction of Verizon's full-year 2011 pension funding obligation of $392 million. In addition, the first half of last year included cash flows from since-divested properties.

Verizon said its cash flow outlook for 2011 remains strong, and there is no change regarding the anticipated 2012 timing of a Verizon Wireless dividend to its parent companies.

The effective income tax rate attributable to Verizon for the first quarter was 30 percent. For full-year 2011, Verizon anticipates an effective tax rate to be in a range consistent with the past three quarters, post the Frontier and Alltel divestitures.

Verizon Wireless Delivers Strong Operational and Financial Results

Verizon Wireless delivered strong growth in revenues, retail customers and other connections; increased retail postpaid ARPU (average monthly service revenue per user) and smartphone penetration; and delivered a strong EBITDA margin. In the first quarter of 2011:

Wireless Financial Highlights

Service revenues in the quarter totaled $14.3 billion, up 6.3 percent year over year. Data revenues were $5.5 billion, up $1.0 billion or 22.3 percent year over year, and represent 38.1 percent of all service revenues. Total revenues were $16.9 billion, up 10.2 percent year over year.
Retail postpaid ARPU grew 2.2 percent over first-quarter 2010, to $53.52. Retail postpaid data ARPU increased to $20.51, up 17.3 percent year over year. Retail service ARPU also grew 2.2 percent, to $51.88.
Wireless operating income margin was 25.8 percent. Segment EBITDA margin on service revenues (non-GAAP) was 43.7 percent.
Wireless Operational Highlights

Verizon Wireless added 1.8 million total connections, including 906,000 retail postpaid customers, and 897,000 wholesale and other connections. These additions exclude acquisitions and adjustments.
At the end of the first quarter, the company had 104.0 million total connections, an increase of 6.1 percent year over year, including 88.4 million retail customers and 15.6 million wholesale and other connections.
At the end of the first quarter, 32 percent of Verizon Wireless' retail postpaid customer phone base were smartphones, up from 28 percent at the end of fourth-quarter 2010.
Retail postpaid churn remained low at 1.01 percent, and total retail churn was 1.33 percent. Both improved year over year.
Following the launch of its 4G LTE mobile broadband network in 38 markets in December 2010, the company so far has named more than 100 additional markets where 4G LTE is being rolled out. By year-end, Verizon Wireless' 4G LTE network, the fastest and most advanced 4G LTE network in the U.S., is expected to be available in more than 175 markets, covering a population of more than 185 million people throughout the country.
The company introduced three 4G LTE devices: the ThunderBolt by HTC, the first 4G LTE smartphone; the Verizon USB551L, a modem made by Novatel Wireless; and a Samsung 4G LTE Mobile Hotspot.
Demand was strong for new LTE devices -- as well as for Apple's iPhone 4, which produced the most successful first-day sales in Verizon Wireless history when it was introduced in February to existing customers.
Verizon Wireless continued to invest in its 3G network, the nation's largest and most reliable 3G network.
The company announced plans to open the Verizon Wireless Application Innovation Center in San Francisco later this year, where developers, engineers and others can work together on innovative applications that will run on the company's 3G and 4G networks.
Continued Wireline Margin Expansion and FiOS Growth

Verizon's Wireline segment delivered continued margin expansion and growth in FiOS customers and revenues, as well as accelerated growth in revenues for strategic enterprise services. In the first quarter of 2011:

Wireline Financial Highlights

Segment EBITDA margin (non-GAAP) was 23.6 percent, compared with 21.1 percent in first-quarter 2010. This was Wireline's fourth consecutive quarter of sequential margin expansion.
First-quarter 2011 operating revenues were $10.1 billion, a decline of 2.2 percent compared with first-quarter 2010. This is an improvement from a decline of 2.8 percent comparing fourth-quarter 2010 to fourth-quarter 2009. First-quarter 2011 total operating expenses were $9.9 billion, a decline of 3.9 percent compared with first-quarter 2010.
Revenues for Verizon's FiOS fiber-optic services to consumer retail customers generated approximately 54 percent of consumer wireline revenues in first-quarter 2011, compared with approximately 45 percent in first-quarter 2010.
Consumer revenues grew 1.9 percent compared with first-quarter 2010. Consumer ARPU for wireline services was $90.55 in first-quarter 2011, up 10.5 percent compared with first-quarter 2010. ARPU for FiOS customers continues to be more than $146.
Global enterprise revenues totaled $3.8 billion in the quarter, up 1.0 percent compared with first-quarter 2010. Sales of strategic enterprise services -- such as security and IT solutions, as well as strategic networking -- increased 12.8 percent compared with first-quarter 2010, and accelerated from a growth rate of 8.0 percent comparing fourth-quarter 2010 with fourth-quarter 2009. Strategic services now represent approximately 46 percent of global enterprise revenues.
Wireline Operational Highlights

Verizon added 207,000 net new FiOS Internet connections and 192,000 net new FiOS TV connections in first-quarter 2011. Verizon had 4.3 million FiOS Internet and 3.7 million FiOS TV connections at the end of the quarter.
FiOS Internet penetration (subscribers as a percentage of potential subscribers) was 33.1 percent by the end of the first quarter, with the product available for sale to 13.0 million premises. This compares with 29.0 percent and 12.0 million, respectively, at the end of first-quarter 2010. FiOS TV penetration was 29.1 percent by the end of first-quarter 2011, with the product available for sale to 12.6 million premises. This compares with 25.4 percent and 11.5 million, respectively, at the end of first-quarter 2010.
Broadband connections totaled 8.5 million at the end of first-quarter 2011, a 3.0 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, leading to a net increase of 98,000 broadband connections from fourth-quarter 2010. These are the most broadband net additions since second-quarter 2009. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 8.2 percent to 25.5 million -- the smallest year-over-year decline since first-quarter 2008.
During the quarter, Verizon moved decisively to accelerate its "everything-as-a-service" enterprise cloud strategy by announcing its acquisition of cloud and managed IT infrastructure leader Terremark Worldwide, which closed in April.
Verizon continued to deploy secure IT and communications solutions that enable better business outcomes for multinational enterprise, medium-sized and government customers. These included a new cloud-based unified communications service, an enhanced set of Enterprise Identity Management offerings, and delivery of SAP's Customer Relationship Management service through Verizon's flagship cloud offering, Computing as a Service. In addition, Verizon completed new agreements during the quarter with a range of multinational corporations, including Delphi Automotive.
Verizon expanded its global network infrastructure, continuing to broaden its global scope and capabilities. The company installed 38 additional Private IP edge routers for a total of 852 edge routers in 238 sites throughout 63 countries; activated the first 100GE (gigabit Ethernet) transmission trunk between routers on Verizon's backbone network; implemented Internet Protocol Version 6 (IPv6) on its public IP backbone in Europe and the Asia-Pacific regions; and activated 7,021 miles of the Europe India Gateway submarine cable system, which connects the United Kingdom, the Middle East, Africa and Asia.
The Wireline workforce totaled 92,000 at the end of first-quarter 2011, a year-over-year decline of 16,000 (adjusted for divested operations), primarily as a result of incentive offers that led to voluntary separations.
NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; and the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010. See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; the effect of material changes in available technology; any disruption of our key suppliers' provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural disasters, terrorist attacks, breaches of network or information technology security or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

 

Cell Phones : Verizon Wireless CEO 'not interested' in buying Sprint, won't waste time opposing T-Mobile / AT&T merger

Well, isn't this just something. It only took Sprint a matter of hours (on a Sunday evening, no less) to push out a detailed list of gripes concerning the proposed AT&T / T-Mobile USA tie-up, but Verizon Wireless won't even be wasting its time. According to an interview with Reuters ahead of CTIA, VZW CEO Daniel Mead confessed that his company wouldn't be lobbying the FCC or any other entity to stop the inevitable, noting that "anything can go through if you make enough concessions." That's a pretty bold quote in and of itself, but of course, this is coming from the man who made an awful lot of those so-called concessions in order to pick up Alltel a few years ago. Continuing on, he blasted out this gem: "We're not interested in Sprint. We don't need them." In other words, there's nary a chance in Hades that America's current largest wireless carrier will be making a bid to keep it that way by shelling out for The Now Network. Why? Quite simply, he'd rather focus on being the most profitable US carrier rather than the largest. Not exactly what you'd expect coming from Verizon Wireless' CEO, but hey -- if he's down for the competition, we're down with watching from the sidelines.

Can You Hear Me Now?? Verizon dropped 10,000 emergency calls during January snowstorm in Maryland, FCC finds it 'alarming'

Uh oh, Verizon's got itself into a bit of hot water with the old FCC. An outage during a snowstorm last month has reportedly resulted in a whopping 10,000 calls to 911 not being connected by the big red carrier. That would be bad enough in itself, but the less-than-pleased Communications Commission also notes that the emergency services that missed out on these calls were not alerted to the connectivity failure -- in fact, Maryland's Montgomery County officers were the ones to inform Verizon of the fault it was having, which was then promptly repaired within 15 minutes. The FCC is now curtly asking the network to check its entire footprint for similar vulnerabilities -- as the January events were apparently "not unique" -- and to propose remedial actions and monitoring systems to prevent it happening again.

Cell Phones : First Verizon iPhones now being received, FedEx now awaiting your impatient

If you got in quick and ordered your Verizon iPhone early you might just be getting a surprise in the mail this morning. We've heard from a number of people that their special somethings were out for delivery, but our man Chris was the first to provide conclusive proof, freshly in the door and photographed for your viewing pleasure. Still haven't ordered yours and are on the fence?