10-KPeriod: FY2011

VERIZON COMMUNICATIONS INC Annual Report, Year Ended Dec 31, 2011

Filed February 24, 2012For Securities:VZ

Summary

Verizon Communications Inc. (VZ) in its 2011 10-K filing presents itself as a leading provider of communications, information, and entertainment services, operating through two primary segments: Verizon Wireless and Wireline. The company highlighted significant progress in its 4G LTE network deployment, aiming for near-complete coverage of its 3G footprint by mid-2013, underscoring its commitment to advanced mobile broadband capabilities. This strategic focus on next-generation technology positions Verizon to meet the escalating demand for data services and compete effectively in the evolving telecommunications landscape. Financially, Verizon's operations are substantial, with the Wireline segment contributing approximately 37% of aggregate revenues in 2011, while Verizon Wireless, the largest wireless provider in the U.S. by retail customers and revenue, accounted for the remaining 63%. The company is actively expanding its product and service offerings in both segments, including cloud services, integrated home solutions via FiOS, and specialized enterprise services. Despite a highly competitive environment and various risk factors, including economic conditions, regulatory changes, and technological shifts, Verizon demonstrates a proactive approach to innovation and network infrastructure investment.

Financial Statements
Beta
Revenue$110.88B
Cost of Revenue$45.88B
Gross Profit$65.00B
SG&A Expenses$35.62B
Operating Expenses$98.00B
Operating Income$12.88B
Interest Expense$2.83B
Net Income$2.40B
EPS (Basic)$0.85
EPS (Diluted)$0.85
Shares Outstanding (Basic)2.83B
Shares Outstanding (Diluted)2.84B

Key Highlights

  • 1Verizon Wireless is the largest wireless service provider in the U.S. by retail customers and revenue, with 92.2 million retail customers and $70.2 billion in revenue for 2011 (63% of total revenue).
  • 2The company is aggressively deploying its 4G LTE mobile broadband network, aiming for coverage in virtually its entire 3G footprint by mid-2013, highlighting a strong focus on next-generation wireless technology.
  • 3The Wireline segment generated $40.7 billion in revenue in 2011 (37% of total revenue), offering a diverse range of services including voice, broadband internet, and FiOS Video to consumers and businesses.
  • 4Strategic acquisitions, such as Terremark Worldwide Inc., are enhancing Verizon's capabilities in cloud services and managed hosting for business and government customers.
  • 5Verizon is investing heavily in network infrastructure, including FiOS (Fiber-to-the-Premise) for high-speed internet and video services, and upgrading its global IP network with technologies like 100G.
  • 6The company faces significant competition across both wireless and wireline segments from national and regional players, as well as emerging technology companies.
  • 7Verizon is actively managing its spectrum portfolio, including agreements to acquire and swap licenses, to meet future demand for wireless broadband services.

Frequently Asked Questions

Verizon Communications operates through two main segments: Verizon Wireless and Wireline. In 2011, Verizon Wireless was the larger contributor, accounting for approximately 63% of aggregate revenues ($70.2 billion), while the Wireline segment contributed approximately 37% ($40.7 billion).

Verizon is heavily invested in its 4G LTE mobile broadband network, which offers higher data speeds. The company launched its 4G LTE network in late 2010 and planned to deploy it across virtually its entire 3G network footprint by mid-2013, aiming to meet increasing data demand and maintain a competitive edge.

Key growth areas include the expansion of 4G LTE services, development of wireless data applications and devices, enhancement of cloud services through acquisitions like Terremark, and the rollout of its FiOS fiber-optic network for broadband video and internet services. Verizon is also exploring mobile commerce through the ISIS joint venture and integrated wireline-wireless product development.

Verizon operates in a highly competitive market. Key challenges include competition from other national wireless carriers (AT&T, Sprint, T-Mobile), regional providers, cable companies offering bundled services, and emerging technologies like VoIP. Factors like network quality, pricing, customer service, and rapid product/service development are crucial competitive differentiators.