Verizon Communications, one of six Dow components out with quarterly results before the bell Tuesday, reported better-than-expected earnings and revenue.
The telecom giant said it earned 91 cents a share excluding items in the second quarter, a penny better than estimates. Operating income increased 24 percent over the same period last year.
Revenue rose 5.6 percent to $31.48 billion in the second quarter, compared with forecasts of $31.11 billion.
“There’s a few things to be focused on, three key beats, in our mind, today that should dispel some of the competitive fears,” Michael McCormack, telecommunications analyst at Jefferies, told CNBC. “Number one, ARPA growth [average revenue per account] … was up more than expected. [Wireless] churn a little bit lower. And wireline margins beat.”
Verizon’s wireline segment provides customers voice, broadband video and data services.
In the second quarter, Verizon added 139,000 net new FiOS Internet users for the quarter, while it added 100,000 net FiOS TV customers. These figures reflect the number of people who signed up for service minus those who canceled.
The caveat among the good news, he warned in a “Squawk Box” interview, “is wireless margins came under just a bit of pressure, so that’s probably around promotional activity for tablets and a bit of an elevated marketing spend.” The U.S. wireless industry has become increasingly competitive, driven by T-Mobile‘s activities, which has been putting pressure on Verizon and others, he added.
Looking ahead to the back half of the year, Verizon is preparing for the expected launch of new, bigger screen iPhones. Apple is preparing for its largest-ever initial production runs, according to The Wall Street Journal, betting larger screen devices can lure would-be fans of Samsung’s smartphones.
“Anytime Apple comes out with a new device, you tend to get very high upgrades. This one, I think, will be the same [for Verizon],” said McCormack, who has a buy rating on Verizon stock with a $55 a share price target—an 8.5 percent increase from Monday’s close.