Fiber-Optic Focus, Asset Sales Trim Verizon's Profit
Tuesday, January 30, 2007
Verizon Communications, the second-largest U.S. telephone company, said fourth-quarter profit declined 38 percent because of costs to build a fiber-optic network and shed assets.
Profit fell to $1.03 billion from $1.66 billion during the same period a year ago.
Chief executive Ivan Seidenberg sacrificed profit from the wireless unit to expand Verizon's faster network for Internet and TV service. The $23 billion investment is designed to compete with cable companies such as Comcast, which have attracted more subscribers by offering phone service.
The company's mobile phone unit gained 2.3 million wireless subscribers, helping to offset the loss of revenue from the 366,000 customers who shut off their home phones in the quarter.
"We have no intentions of slowing down growth," Verizon Wireless chief operating officer Dennis Strigl said in a conference call. "Our goal is to continue to take share."
Verizon Wireless is to announce a plan today to sell wireless and land-line service together in a package, Strigl said. Under Verizon's new plans, land-line customers may select one to three additional services at a discount, said Eric Rabe, a spokesman for New York-based Verizon. The bundled services will appear on the same bill.
Fourth-quarter sales rose 26 percent, to $22.6 billion. Taxes on the sale of assets in the Dominican Republic and costs to spin off a directories unit cut profit by 22 cents a share.