Verizon, Nextel Confirm Forecasts
Two big telecommunications firms said Monday that they will meet or beat financial forecasts for this year despite a continuing deterioration in the industry.
Verizon Communications Inc., the biggest local telephone company, reaffirmed its 2002 outlook, saying it will earn $3.05 to $3.09 a share this year on revenue that will be flat or decline by 1%.
Nextel Communications Inc., the nation’s sixth-largest mobile-telephone company, said it will meet or exceed projections for new customers and operation profit. Nextel expects to add 2 million subscribers, and earnings before interest, taxes, depreciation and amortization will top $3 billion.
Speaking at a Morgan Stanley conference in Miami, Verizon Chief Executive Ivan Seidenberg said he wants regulators to close some of the telephone companies now in bankruptcy protection rather than see them emerge in better shape in an industry with too much capacity.
“You know Arthur Andersen ran into some trouble and the government shut them down,” he said. “I don’t know why they don’t do the same thing with some of these companies that are in bankruptcy right now.”
Long-distance phone and data services company WorldCom Inc., which filed for bankruptcy protection in July, has admitted to $7.68 billion in accounting errors.
Seidenberg said Verizon has had business opportunities it would not have had if not for the uncertainty created by WorldCom’s bankruptcy filing, but added Verizon has not changed its strategy as a result, including its move into large corporate business. Verizon has little interest in buying assets, Seidenberg said.
He declined to provide any guidance on the company’s wireless subscriber growth rate, other than to say it sees a lot of activity and good momentum in its sales.
Shares of New York-based Verizon gained 2 cents to $29.85 in New York Stock Exchange trading.
Nextel CEO Tim Donahue, also speaking at the Miami conference, said his company is focusing on selling more phones and services to existing customers, instead of cutting prices such as rivals Verizon Wireless Inc. and AT&T; Wireless Services Inc. have done. Nextel’s phones, made by Motorola Inc., feature a walkie-talkie device popular with construction crews and financial traders.
Donahue said Nextel is paring costs with a new billing system, with smaller handset subsidies and by signing up customers through retail stores and the Internet.
Nextel said in July that it added 471,000 customers in the second quarter, even as some analysts were forecasting that the wireless industry would add subscribers this year at the slowest pace since 1985. Nextel had 9.64 million customers as of June 30.
Nextel’s average monthly customer bill rose to $71 in the second quarter from $68 in the first.
Profit in the quarter totaled $387 million, or 37 cents a share, compared with a net loss of $369 million, or 56 cents, a year earlier. Sales rose 25% to $2.15 billion.
Nextel hasn’t provided a net income or loss forecast for 2002. The company lost $3.67 per share last year on sales of $7.01 billion. Nextel will have a loss in 2002 of 40 cents a share and sales of $8.65 billion, according to analysts surveyed by Thomson First Call.
Shares of Reston, Va.-based Nextel fell 9 cents to $7.89 on Nasdaq.
