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Verizon's first-quarter earnings drop

Verizon Communications Inc., the largest U.S. telephone company, on Tuesday reported lower first-quarter earnings as pension and employee costs increased.
/ Source: Reuters

Verizon Communications Inc., the largest U.S. telephone company, on Tuesday reported lower first-quarter earnings as pension and employee costs increased.

Verizon said it earned $1.2 billion, or 43 cents a share, compared with $2.4 billion, or 88 cents a share, in the same period a year earlier.

Excluding about $400 million in one-time items, most related to a 10 percent cut in its work force from the end of 2003, Verizon said it earned 58 cents a share. Analysts' average forecast was 57 cents a share, according to Reuters Research.

Verizon said revenue grew 3.9 percent to $17.1 billion, in line with estimates, as growth at its Verizon Wireless cellular service division more than made up for a decline in traditional phone business. Verizon Wireless' revenue grew 21.2 percent to $6.2 billion as it added 1.4 million customers in the quarter.

Verizon and other Baby Bells have seen their local service erode as competition has escalated and more customers have shifted to wireless telephones and electronic mail. Local competitors picked up 508,000 lines in the quarter, and Verizon lost 314,000 residential lines.

To help offset those losses, Verizon has pushed into long-distance and high-speed Internet access. During the quarter, it added 1 million long-distance lines and 345,000 high-speed Internet lines.