Verizon Profits Fall, Sales Increase

Merger costs lowered Verizon Communications Inc.s profit during the first quarter of 2006, the company reported on Tuesday, but wireless sales boosted its sales numbers.

Verizons acquisition of long-distance carrier MCI Inc. in January contributed to the RBOCs 7.1 percent earnings loss from the first quarter of 2005. First quarter 2006 earnings totaled $1.63 billion, or 56 cents per share, compared to $1.76 billion, or 63 cents per share, a year earlier.

Still, the company reported growth in its wireless and wireline broadband divisions. Verizon Wireless added 1.7 million new customers in the first quarter 2006, for a total of 53 million customers nationwide. The numbers are 16.7 percent higher than the first quarter of 2005. Customer churn totaled 1.18 percent, which Verizon said was a record low.

Meanwhile, Verizon added 541,000 wireline broadband connections during the first quarter of 2006. The company now claims 5.7 million such connections; that number includes DLS and FiOS, Verizons fiber-optic service. Following the MCI merger, Verizon’s wireline business segment includes both Verizon Telecom and Verizon Business formerly MCI. Total wireline operating revenue was $12.5 billion in the first quarter 2006, an increase of 33.3 percent compared with the first quarter 2005. Total wireline operating expenses were $11.4 billion in the first quarter 2006, a 40.6 percent increase compared with the first quarter 2005 on the same basis.

Verizon spent $4.1 billion in capital expenditures in the first quarter of 2006; those costs primarily were due to the MCI acquisition, and were up from $3.9 billion a year earlier. At the same time, Verizon said it is ahead of its goal to save $550 million in 2006, thanks to the MCI buy. The company said it will save money in part by cutting about 3,500 jobs this year.

Verizon Communications Inc.


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