Verizon (NYSE: VZ) reported earnings that missed analyst estimates, resulting in significant declines for its stock and those of related companies. Verizon's shares fell by up to 7% during the day.
While AT&T (NYSE: T) and Comcast (NASDAQ: CMCSA) dropped 4.2% and 3.2%, respectively. Stocks were down 6.3%, 1.5%, and 3%.
Earnings Details:
Verizon’s revenue was $32.8 billion for the second quarter, missing the $32.9 billion estimate.
Revenue increase was minimal at 0.6%, largely due to a $300 million drop in hardware sales, totaling $5 billion. Hardware sales are less profitable.
Wireless service revenue, which has a 75% margin, rose by 3.5% to $19.8 billion.
Adjusted earnings per share matched estimates at $1.15.
Market Reaction:
The decline in stock prices was influenced by concerns over slower-than-expected upgrade rates, which Verizon’s management attributed to the revenue miss.
The lower upgrade rates are seen as a potential issue for AT&T and Comcast, with delays possibly impacting their performance as well.
Industry Impact:
Verizon added 378,000 fixed wireless broadband subscribers, indicating potential disruption to Comcast’s broadband business. As wireless companies expand their broadband offerings, they could attract customers from traditional cable services.
Long-Term Outlook:
Despite the short-term revenue miss and slower upgrade cycle, the Motley Fool suggests that the fundamentals for wireless companies remain strong. The growth in wireless revenue, which is crucial for profitability, and future developments like AI-enabled devices might provide long-term benefits.
Investment Considerations:
While AT&T (NYSE: T) and Comcast (NASDAQ: CMCSA) dropped 4.2% and 3.2%, respectively. Stocks were down 6.3%, 1.5%, and 3%.
Earnings Details:
Verizon’s revenue was $32.8 billion for the second quarter, missing the $32.9 billion estimate.
Revenue increase was minimal at 0.6%, largely due to a $300 million drop in hardware sales, totaling $5 billion. Hardware sales are less profitable.
Wireless service revenue, which has a 75% margin, rose by 3.5% to $19.8 billion.
Adjusted earnings per share matched estimates at $1.15.
Market Reaction:
The decline in stock prices was influenced by concerns over slower-than-expected upgrade rates, which Verizon’s management attributed to the revenue miss.
The lower upgrade rates are seen as a potential issue for AT&T and Comcast, with delays possibly impacting their performance as well.
Industry Impact:
Verizon added 378,000 fixed wireless broadband subscribers, indicating potential disruption to Comcast’s broadband business. As wireless companies expand their broadband offerings, they could attract customers from traditional cable services.
Long-Term Outlook:
Despite the short-term revenue miss and slower upgrade cycle, the Motley Fool suggests that the fundamentals for wireless companies remain strong. The growth in wireless revenue, which is crucial for profitability, and future developments like AI-enabled devices might provide long-term benefits.
Investment Considerations: