Verizon Loses $2.2B in Q4, While Adding 2 Million Wireless Customers

Verizon also posted a loss of 54 cents per share for the quarter due to what the company called non-operational items, including benefit plan and pension costs.  

Verizon, smartphones, wireless

Verizon gained 2 million new wireless customers in the fourth quarter of 2014 ended Dec. 31, 2014, but the company lost $2.2 billion in the quarter, largely due to the cost of non-operational expenses including benefits and pension payments.

In its quarterly earnings report on Jan. 22, Verizon said it brought in revenue of $33.2 billion for the period, which was a 6.8 percent increase over the year-ago quarter, when revenue came in at $31.07 billion. Verizon is the largest wireless carrier in the United States.

The $2.2 billion Q4 loss was a $9 billion shift from one year ago, when the company posted $7.9 billion in profits for that quarter, according to the company's figures.

Per share loss for the quarter was 54 cents, compared with a $1.77 gain per share in the same quarter one year ago.

Verizon "missed analysts' fourth-quarter profit estimates as a surge in sales of deeply discounted phones squeezed margins," according to a Jan. 22 report by Bloomberg. "Below-cost prices on popular phones like Apple Inc.'s latest iPhones helped lure customers into two-year contracts. Those discounts, along with promotions for free tablets and holiday discounts, helped Verizon fend off competition from the likes of Sprint Corp., which offered to cut Verizon customers' bills in half. Verizon warned last month that the moves would reduce fourth-quarter margins."

In a statement, Lowell McAdam, the company's chairman and CEO, said that despite the loss caused by the non-operational expenses, Verizon is successfully moving forward. "Verizon posted another year of consistently high operating and financial performance in 2014, with strong cash generation and the return of $7.8 billion to our shareowners," McAdam said. "I am confident that Verizon's assets and market momentum position us to continue to drive profitable growth in 2015."

The quarterly loss of 54 cents per share was caused primarily by "significant non-operational items … primarily related to the annual actuarial valuation of benefit plans and mark-to-market pension adjustments," the company stated in its report.

On the positive side, 2.1 million net retail connections were acquired in Q4, including 2 million net retail postpaid connections and the net additions of 672,000 postpaid phones, the company stated. Postpaid retail customer churn for the quarter was 1.14 percent, a slight increase from a churn rate of 0.96 percent for the same period one year ago.

For the full year of 2014, Verizon reported per share earnings of $2.42, which was down 39.7 percent from the company's full-year 2013 earnings per share of $4.01.

The company said it also posted revenue of $585 million for the year 2014 from its new Internet of things and telematics services, including an annual growth rate of more than 45 percent. In addition, the company recently launched Verizon Vehicle, a connected-vehicle service for consumers, with an addressable market of more than 200 million vehicles.

Wireless revenue alone totaled $23.4 billion for Q4, which was up 11 percent over the same quarter in 2013. Verizon Wireless' full-year total revenues were $87.6 billion for 2014, an increase of 8.2 percent compared with full-year 2013 revenues of $81 billion.

In October 2014, Verizon reported revenue of $31.59 billion for the third quarter ending Sept. 30, up 4.3 percent from the $30.3 billion posted in the same quarter in October 2013. In Q3, the company said it had captured another 1.5 million wireless customers. Q3 profit came in at $3.7 billion, compared with $2.23 billion that was posted for the same quarter in 2013.