Summary
Verizon Communications Inc. (VZ) reported its second-quarter 2002 financial results on July 31, 2002. While overall revenues saw a slight decline of 1.8% to $16.8 billion, the company highlighted strong operational performance, particularly in its growth areas. Verizon Wireless added 1.1 million net retail customers, contributing to an 8.1% increase in wireless revenue to $4.7 billion. The company also saw significant customer additions in its long-distance and DSL services, underscoring progress in expanding its service offerings. A significant factor impacting the reported net loss of $2.1 billion was $4.2 billion in non-recurring after-tax charges, primarily due to investment write-downs, including a substantial portion related to Genuity Inc. Excluding these charges, earnings per share (EPS) remained stable at $0.77. The company also updated its full-year 2002 guidance, revising revenue growth expectations slightly downward and capital expenditure targets lower, while maintaining a favorable outlook for EPS before non-recurring items. Verizon also reported a notable reduction in net debt and improved free cash flow.
Key Highlights
- 1Reported a net loss of $2.1 billion, significantly impacted by $4.2 billion in non-recurring after-tax charges, primarily related to investment write-downs (including Genuity).
- 2Excluding non-recurring items, EPS for the quarter was $0.77, consistent with the prior year's adjusted EPS.
- 3Verizon Wireless added 1.1 million net retail customers, driving an 8.1% increase in segment revenue to $4.7 billion and maintaining a strong operating cash flow margin of nearly 39%.
- 4Significant customer growth in other segments: 800,000 net long-distance customer additions (up 51% year-over-year) and 150,000 new DSL lines (up nearly 80% year-over-year).
- 5Domestic Telecom segment saw a 5.3% reduction in cash expenses, marking the sixth consecutive quarterly decrease.
- 6Net debt was reduced by $3.3 billion during the quarter to $58.6 billion, and free cash flow improved by $6.0 billion in the first half of 2002 compared to the prior year.
- 7Updated 2002 guidance: revenue growth revised to 0% to -1% (from 0% to 1%), EPS (before non-recurring charges) revised to $3.05-$3.09 (from $3.12-$3.17), and capital expenditures lowered to $13-$13.5 billion (from $14-$15 billion).