Verizon's Android Smartphone Sales Boost First Quarter Revenue

Verizon Wireless chugged along through its fiscal first quarter, posting profits of $400 million and praising its growing "Android franchise." Verizon sold even more Motorola Droids during Q1 than the holiday-friendly fourth quarter, and is rubbing its hands at the coming arrival of the HTC Droid Incredible.

Verizon Wireless announced revenues of $26.9 billion for its first quarter of 2010, on April 22. The carrier's net income, however, was about $400 million - compared to $1.6 billion a year earlier - due to do the closure of a tax exemption related to retiree health care, which forced Verizon to front a payment of $962 million.
AT&T, likewise, which announced first-quarter earnings April 21, was charged $995 million, which dropped its profits to $2.48 billion.
Cash flow from operations totaled $7.1 billion during the quarter, which ended March 31, and Verizon added 1.5 million new customers, bringing its total to 92.8 million - still the highest number of subscribers among U.S. carriers.
"Our first-quarter results were in line with our expectations, with solid growth in all strategic areas," Verizon CEO Ivan Seidenberg wrote in a statement. "Customer demand for broadband, such as a growing demand for wireless data, has improved revenue trends, and we are beginning to see signs of economic recovery, particularly in business markets."
Verizon's wireline broadband business, combined with video revenues, was up 22 percent from a year ago, totaling revenues of $1.7 billion, and its successful FiOS Internet business grew 40 percent year over year.
Wireless data revenue was up 26.4 percent, and during a conference call with investors to discuss the quarter, John Killian, Verizon's chief financial officer, expressed that total wireless service revenues showed the highest sequential growth rate that Verizon has seen in the last six quarters, driven by a focus on expanding the data market.
"Our strategy continues to center on taking advantage on the expanding smartphone category," said Killian. "Our approach has been to feature a number of different operating systems and platforms, which gives us the opportunity to not only attract new customers but aggressively upgrade existing customers to high-end, data-capable devices."
At the end of the third quarter, more than 30 percent of the carrier's retail postpaid base had 3G multimedia devices, or smartphones, up from 26 percent a year earlier. Customer demand for data mobility, said Killian, is only likely to increase as Verizon strengthens it device lineup and content - as it saw with the November introduction of the Motorola Droid and anticipates with the HTC Droid Incredible.

Click here to view images of the Motorola Droid.

"We came off a very strong fourth quarter... where we gained 1.1 million [customers], really on the back of the strong introduction of the Motorola Droid and Android operating devices," said Killian. "The Android operating system continues to do very well. When you look at gross numbers, we moved more of them in Q1 than we did in Q4, so we're very satisfied with what we would label as the -Droid Franchise.' "

Killian added, "You're going to hear a lot more about that in the coming months, particularly with an important launch for us coming up shortly, with the HTC Incredible, which the early reviews of have been extremely positive."

Indeed, reviewers have described the Droid Incredible, which is currently available for pre-orders, as one of the best-looking Android devices to date, as well as one of the sharpest in the Verizon lineup.
Going forward, Verizon plans to focus, in the wireless market, on balancing growth with profitability, growing market share, expanding penetration and revenue and commercializing its 4G LTE (Long-Term Evolution) network, which will begin rolling out this year.
By the end of 2010, Verizon plans to cover 30 markets with LTE, and expand that to its full 3G footprint by the end of 2013. This, in turn, will drive the market for "other connected devices" - non-smartphones with wireless chips - such as e-readers, and machine-to-machine (M2M), smart grid and medical alert devices. These devices, said Killian, will offer still another source of revenue.