iPhone boosts Verizon customers, hurts profit

By @ibtimes on

Apple Inc's iPhone pushed Verizon Communications Inc's wireless subscribers higher in the first quarter but it also took a toll on profits, sending shares down 1.8 percent.

Verizon Wireless, its venture with Vodafone Group Plc, posted net additions of 906,000 subscribers, just slightly ahead of expectations for more than 888,000 subscribers from seven analysts contacted by Reuters.

While Verizon Wireless added only slightly more subscribers than it did in the fourth quarter, the top mobile service was well ahead of archrival AT&T Inc, which added 62,000 net subscribers in the quarter.

But higher sales of advanced devices like iPhone came at a high cost as Verizon's profit margin dipped, said Mizuho analyst Michael Nelson.

Its margin was 43.7 percent, well below the 46 percent it posted a year earlier, based on earnings before interest tax depreciation and amortization.

While iPhone helped Verizon boost subscriber numbers its sales were not dramatically better than analyst expectations, as some investors had hoped.

Over all it was a solid quarter. Not necessarily a blow out quarter, Nelson said.

AT&T Inc lost exclusive rights to the iPhone when Verizon started selling its iPhone in February. Verizon sold more than 2 million iPhones through the end of the quarter.

Verizon earnings rose to $1.44 billion, or 51 cents per share from $443 million, or 16 cents per share in the same quarter a year before when it shouldered hefty one time charges.

Revenue rose to $26.99 billion from $26.86 billion in the year-ago quarter and compared with the average analyst expectation for $26.86 bln, according to Thomson Reuters I/B/E/S.

Verizon shares were down 1.7 percent at $37.15 in premarket trading.

(Reporting by Sinead Carew; editing by Derek Caney)

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