Apple's (NASDAQ:AAPL) iPhone 4 has been very good to Verizon Wireless (NYSE:VZW), as the carrier shipped 2.3 million of the popular devices and reported $1.61 billion, or 57 cents a share, in profit for the second quarter.
Verizon notched $3.6 billion in earnings for the quarter on 57 cents earnings per share, with revenue of $27.53 million. The company bested Wall Street analysis consensus of 55 cents per share and proved a marked improvement over the 42 cents per share loss on $1.19 billion in earnings Verizon posted in Q2 2010.
Verizon Chairman and CEO Ivan Seidenberg said the quarter was one of the best in terms of earnings growth and revenue growth since the 2008 recession.
"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 said.
Verizon reported 2.2 million wireless connections, including 1.3 million retail postpaid subscribers. Citadel Securities said investors "will likely be most pleased" by the postpaid new customers, which beat analysts' expectation for 906,000 postpaid adds.
The biggest stories for Verizon include the iPhone 4 sales momentum, as well as well as the expansion of its 4G LTE (Long Term Evolution) network and associated handsets into new markets.
The company's 4G LTE service, which aims to facilitate data 10 times faster than the company's 3G network, is available in 102 markets across the country, reaching more than 160 million users.
Verizon Wireless sold 1.2 million 4G LTE smartphones and Internet data devices, comprising mostly handsets based on Google's Android operating system.
Verizon sells the Android-based HTC Thunderbolt 4G, Samsung Droid Charge and LG Revolution smartphones, in addition to the MiFi 4510L 4G LTE Mobile Hotspot from Novatel Wireless.
Citadel estimated Verizon sold 6.3 million total smartphones in Q2. However, the equities firm noted that while Verizon's smartphone penetration increased to 36 percent on a net increase of 3.2 million units, this was less than the 3.4 million gain in Q1. As a result, Citadel warned Verizon could miss its guidance for 2011.
"In other words, Verizon's smartphone momentum slowed sequentially from Q1 to Q2. In contrast, AT&T's smartphone gains accelerated (from 2.4MM in Q1 to 2.6MM in Q2), despite its significantly higher smartphone base," Citadel noted. "Given this pace, we believe Verizon is very unlikely to reach 50 percent smartphone penetration by year end, as previously guided."
Verizon's Seidenberg, who has picked President and COO Lowell McAdam to succeed him as CEO Aug. 1, said he expects Verizon Wireless to gain share in the retail postpaid market throughout 2011.
He also sees growth coming for its FiOS Internet and TV (189,000 FiOS Internet and 184,000 FiOS TV net additions in Q2), as well as cloud and other strategic services.