Verizon revenue, income up, helped by wireless and data businesses

Driven largely by gains in its wireless and data businesses, Verizon Communications’ revenue was up 5.5 percent year over year in the fourth quarter of 2007, and net income was up slightly.

Verizon on Monday reported revenue of $23.8 billion for the fourth quarter, which ended Dec. 31, up from $22.6 billion in the fourth quarter of 2006. Verizon’s net income rose from $1.03 billion to $1.07 billion this past quarter.

Earnings per share was $0.37, or $0.62 before one-time items, matching consensus earnings expectations by analysts polled by Thomson Financial. However, analysts had expected revenue of nearly $24 billion for the quarter.

Not counting one-time charges, operating income dropped 0.6 percent, to $3.4 billion. One-time items included severance packages for layoffs that will continue through 2008, and a spin-off of wireline access lines in parts of New England.

Verizon reported “strong growth in sales of all our strategic products,” Verizon chairman and CEO Ivan Seidenberg, said in a statement. “We see significant opportunities to grow revenues and expand our leadership in wireless and broadband markets, while reducing operating expenses.”

Verizon’s revenue for the year was $93.5 billion, up by $5.3 billion from 2006.

Verizon focused on growth in a couple of key areas, including its wireless business.

Verizon Wireless’ customer numbers increased 11.3 percent from the fourth quarter of 2006, to a total 65.7 million, the company said. Wireless revenue for the quarter was $11.4 billion, up 13.3 percent from a year ago. Verizon Wireless added 2 million customers during the quarter.

Wireless data revenue was particularly strong, said Doreen Tobin, Venison’s chief financial officer. Wireless data revenue grew by 65 percent in 2007, she said during a conference call.

“We see enormous potential for growth in wireless data for years to come,” she said.

Total wireless revenue grew 15.3 percent in 2007, to $43.9 billion for the whole year. “We have a proven business model,” Tobin said. “These results are further evidence of great execution, sustainable growth, and strong cash generation.”

In Verizon’s data business, the company added 245,000 FiOS fiber-based Internet customers, and 226,000 FiOS television customers. The company added a total of 264,000 broadband customers in the quarter, including FiOS and DSL. Data revenue increased 12.8 percent to $4.8 billion.

Some of those gains were partially offset by a 1.4 percent decrease in overall wireline revenue. Wireline revenue was $12.5 billion for the quarter, which includes the data revenue.

Verizon had a “very good year,” but it faces some challenges in 2008, said Jeff Kagan, an independent telecom analyst.

“This year will be a little tougher with trouble in the housing market and debates about a coming recession, but so far, so good for Verizon,” Kagan wrote in an e-mail. “The telecom industry continues its strong growth, and cable television competitors have signaled price increases again, but at some point soon brisk competition will break out between the cable television companies and the telephone companies.

“The competitive action has started in many markets, but will spread dramatically this year,” Kagan added. “This will be an exciting year to keep our eyes on.”

Verizon has not yet seen slumping sales due to fears of a recession in 2008, Tobin said.