By Ryan Knutson
Verizon Communications Inc. (VZ) is scheduled to announce
third-quarter results before the market opens Tuesday.
EARNINGS FORECAST: Analysts are expecting earnings of 91 cents a
share, according to Thomson Reuters.
REVENUE FORECAST: Analysts are expecting revenue of $31.5
billion, according to Thomson Reuters.
WHAT TO WATCH:
--WIRELESS COMPETITION: Verizon is under more pressure from
rivals now than at any time in years, especially as Sprint Corp.
recently began aggressively cutting prices and AT&T Inc. has
been reacting to T-Mobile US Inc.'s continued momentum. Verizon has
lowered its prices and mimicked some of Sprint's offers to increase
the size of data buckets. So far, it seems to have helped it avoid
customer losses. An important metric to monitor is churn, or the
percentage of customers leaving each month. Verizon has done well
keeping that percentage below 1%. A figure much higher than that is
a sign things are getting tougher.
--SUBSCRIBER GROWTH: Even though there are more active
cellphones in the U.S. than people, the big number everyone looks
for in earnings reports is still net postpaid additions. That is
the number of customers the carrier adds (or loses) that sign up
for monthly service. Verizon consistently has led the industry in
additions, but T-Mobile US has posted some impressive quarters as
of late. Analysts are predicting the carrier will bring in more
than 1 million new connections this quarter.
--TABLET SALES: Verizon has had to rely heavily on signing up
tablets as a way of keeping its subscriber numbers positive. It has
even given away tablets for free when customers add them to their
data plan. Another quarter of heavy reliance on tablets would
demonstrate how difficult it is to sign up new handset customers in
the saturated phone market, but it also may alleviate concerns that
huge tablet additions are just an aberration and that they can
actually sustain subscriber growth in the long run.
--INSTALLMENT BILLING: Unlike rivals, Verizon has been less
aggressive in pushing customers off contracts and onto plans where
they pay full price for their device over time. As of last quarter,
only about 18% of customers had done so, far less than AT&T or
T-Mobile. That means most customers at Verizon still are getting a
discount on their phone in exchange for signing a two-year service
contract. That is more expensive for Verizon, especially as so many
customers are signing contracts to get the new iPhone.
--INFRASTRUCTURE: Verizon hasn't said how much it plans to spend
in two upcoming government auctions of wireless airwaves, but it is
likely to exceed $10 billion. Meanwhile, executives have signaled
an interest in selling some of its cell towers. Any color on either
will be notable.
Write Ryan Knutson at ryan.knutson@wsj.com
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