Summary
Verizon Communications Inc. (VZ) reported on January 29, 2007, its fourth quarter and full-year 2006 results and provided its outlook for 2007. For the upcoming year, the company anticipates relatively flat pension and postretirement costs compared to 2006. A key financial target is operating income growth of at least 10 percent on an adjusted basis. Investors should note the expected earnings dilution from Verizon's significant investment in its FiOS (fiber-to-the-premises) deployment, projected to be in the mid-30 cent range for 2007. Despite this, Verizon aims to maintain strong wireless EBITDA margins between 43% and 45% in a high-growth environment, indicating continued profitability in its core wireless segment. The company also expects stable full-year 2007 wireline operating income margins compared to 2006, with improvements anticipated throughout the year.
Key Highlights
- 1Verizon provided its 2007 financial outlook on a January 29, 2007 conference call.
- 2The company expects operating income growth of at least 10 percent on an adjusted basis for 2007.
- 3Pension and postretirement costs are projected to be relatively flat in 2007 compared to 2006.
- 4Earnings dilution from FiOS deployment is estimated to be in the mid-30 cent range for 2007.
- 5Verizon targets wireless EBITDA margins of 43% to 45% in a high-growth environment.
- 6Full-year 2007 wireline operating income margins are expected to be generally stable with 2006 levels.