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Verizon Q4 loss widens; revenue higher

TEL AVIV (MarketWatch)
Verizon Communications Inc., the New York telecom-services major, reported a wider fourth-quarter net loss, reflecting special items tied to pensions, debt retirement and other matters
The loss attributable to the company was $4.23 billion, or $1.48 a share, compared with $2.02 billion, or 71 cents, in the year-earlier quarter
Adjusted earnings were 38 cents a share against 52 cents
The number reflects a 7-cent impact from Hurricane Sandy
Revenue rose 5.7% to $30.05 billion from $28.44 billion
A survey of analysts by FactSet produced consensus estimates of profit of 50 cents a share on revenue of $29.82 million

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El Genio dijo...

By Thomas Gryta and Melodie Warner
NEW YORK (MarketWatch) — Verizon Communications Inc. reported a fourth-quarter loss Tuesday, as year-end charges and smartphone subsidies weighed down results that included the best-ever customer additions to its wireless service.

Showgowers visit the Verizon booth on the first day of the Consumer Electronics Show in Las Vegas on Jan. 8, 2013.
Verizon /quotes/zigman/262341/quotes/nls/vz VZ +0.56% reported a $4.23 billion loss that stemmed largely from massive charges from its pension plan, debt-related costs and storm damage. Revenue rose 5.7%.

The Basking Ridge, N.J., telecommunications giant also added a highest-ever 2.1 million in new wireless contract customers in the quarter, even as overall industry growth has been slow, driven by holiday spending and strong sales of Apple Inc.’s /quotes/zigman/68270/quotes/nls/aapl AAPL -0.29% iPhone 5, which is the first to run on next-generation LTE networks.

As expected, margins on wireless services dropped in the quarter as subsidies paid on all of those smartphones were a direct hit to profits. Verizon Wireless is a joint venture that is 45% owned by Vodafone Group PLC /quotes/zigman/101873/quotes/nls/vod VOD -0.14% /quotes/zigman/421253 UK:VOD +0.28%

“We knew margins were going to be light, but they were a little lighter than expected,” said Jonathan Chaplin, analyst at New Street Research, who noted that customer trends across Verizon were strong in the quarter.

VZ 42.78, +0.24, +0.56%

SPX 1,484.74, -1.24, -0.08%


“What we learned today was that it cost them a little bit more on the expense line than we thought,” he said. He noted that 2012 was strong for the overall business, but investors want to know what the company plans to do for 2013.

Verizon shares initially slid Tuesday but turned around as the company projected stronger wireless margins for 2013 and noted that it could soon repurchase shares. The stock was last trading up 0.5% at $42.77.

On a conference call Tuesday, Chief Financial Officer Fran Shammo said he has “confidence we can drive top line growth in 2013.”

Verizon didn’t provide specific guidance for 2013. Shammo said he’s “more confident in the fundamentals of this business today than I actually was a year ago,” noting per-share earnings growth of 15% in the first three quarters of 2012.

He also said wireless margins in 2013 would be 49% to 50%, a jump from the 46.6% it reported for 2012.

Contributing to that projected increase in profitability will be $2 billion in planned cost cuts this year. Shammo said the wireless operation has already cut $5 billion in expenses in the past three years. He expects capital spending across Verizon will be flat with 2012.

Shammo also said the company could immediately repurchase shares, an acceleration of the company’s previous statements that it could make such a move later this year.

“If the opportunity presents itself in our share price, than I would contemplate buying back shares,” he said, noting that the company has clearance to buy up to 100 million shares.

Verizon reported a loss of $4.23 billion, or $1.48 a share, compared with a loss of $2.02 billion, or 71 cents, a year earlier. The most-recent quarter included a charge of $1.86 a share, while the year-earlier quarter included a per-share charge of $1.23 primarily related to the valuation of pension plans.