Despite adding customers at a rapid pace in the fourth quarter, Verizon still posted a net loss due to non-cash pensions for employees and subsidies it had to pay manufacturers for every new phone sold.
Verizon announced its fourth quarter earnings for 2011 this morning which saw it suffer a net loss of $2.02 billion, or 71 cents per share, compared with a net income of $2.64 billion, or 93 cents in Q4 2010. A large chunk of this was due to previously announced non-cash pension charges, but also factored in were the subsidies paid to cell phone manufacturers. While it equates to a short term loss for the company, the long-term revenue due to the two-year agreements each customer signs will actually lead to very large profit margins in future quarters. Although the current quarter sounds a bit doom and gloom, the carrier still saw 7.7 percent year-over-year in quarterly revenue, a new record for the company.
All told, VZW saw a net gain of 1.5 million subscribers this quarter for its wireless services, the largest increase in three years. The company’s FiOS service also saw growth by adding 201,000 Internet and 194,000 video net customer additions.
“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” said Lowell McAdam, Verizon chairman, president and chief executive officer. “Verizon Wireless produced particularly strong growth in the fourth quarter. While that diluted wireless margins in the short term, it is good news for revenue and margin growth over the long term, particularly given our leadership in the rapidly developing 4G LTE ecosystem.”
Earnings for the quarters worked out to 52 cents a share, coming in right inline with the projections from Wall Street analysts.