Verizon welcomes 2012 with profits up as sales rise

The No. 3 mobile service carrier earned $3.91 billion in net income, or 59 cents per share in Q1

Verizon Communications posted its Q1 earnings on Thursday that were just slightly higher than what many analysts were expecting, even as wireless growth slowed from the fourth quarter.

Its mobile company, Verizon Wireless, added 734,000 retail customers in the quarter -- including 501,000 contract customers for the quarter. That is a 5.2% increase from the same time last year down from fourth quarter additions of 1.2 million. 

The phone operator earned $3.91 billion in net income, or 59 cents per share, for the first quarter, compared to $3.26 billion, or 51 cents per share, in last year’s first quarter. Verizon’s operating revenue was $28.2 billion, up 4.6% from a year earlier, which is modestly more than the expected $28.17 billion that experts and the company were targeting.

At the end of the quarter, nearly 47 percent of traditional contract customers were using smartphones, up from 43.5 percent a quarter earlier. As far as new sales, almost three in four new customers were opting for smartphones, up from a rate of three-in-five a year ago.

Verizon shares rose 2% to $38.56 in Thursday trading, after closing at $37.66 on New York Stock Exchange Wednesday.

Since Verizon is the first carrier service to release its numbers, many are expecting similar, but not great results from the other big names in mobile.

“Verizon delivered double-digit earnings growth and strong cash flow this quarter,”  said Lowell McAdam, Verizon chairman and CEO, in the earnings statement today. “We built momentum coming out of 2011, and our results show that we continue to execute in the key growth  areas of our business . . . We are confident  we will improve wireline margins for the full year. Our repositioning of Verizon enterprise solutions has better aligned our strengths in high-growth markets, and we expect our enterprise business to contribute even more to overall wireline revenue growth and profitability over time.”

But some of the news was really great for Verizon Wireless, such as its profit margin -- which rose to 46.3% from 42.2% in the fourth quarter.  

So all, in all, the No. 3 mobile service provider can breath easy through this earnings report.

The company also stated in a conference call this morning that “Internet devices” make up 8% of its base of traditional postpaid customers and that 62% of tablet customers are on contracts with the company.

It also pointed out that the typical contract customer is spending $23.80 per month on the data portion of their bill–this is up 16% from a year ago.