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Verizon stock falls after earnings as company cuts forecast

Verizon Communications Inc. became the second major U.S. wireless carrier to disappoint with its earnings this week, as the company cut its full-year financial forecast Friday.

Shares were down nearly 5% in premarket trading.

The company posted second-quarter net income of $5.32 billion, or $1.24 a share, compared with $5.94 billion, or $1.40 a share, in the year-earlier quarter. On an adjusted basis, Verizon
VZ,
-2.87%

notched earnings per share of $1.31, down from $1.37 a year before, and a penny below the FactSet consensus, which was for $1.32. Verizon said earnings for the latest quarter included a $435 million pre-tax loss from special items.

Verizon’s revenue came in at $33.8 billion, roughly flat with a year earlier, whereas analysts tracked by FactSet were modeling $33.7 billion.

The company logged 12,000 total postpaid phone net additions in the latest quarter but noted that it had 215,000 such wireless losses in its consumer business. Verizon saw consumer wireless retail postpaid phone churn come in at 0.93%.

Verizon cut its outlook for the full year and now expects 8.5% to 9.5% wireless service revenue growth as well as $5.10 to $5.25 in earnings per share.

During its first-quarter report, Verizon said that it anticipated coming in toward the “lower end” of the guidance ranges it gave previously for revenue and adjusted earnings per share. Those guidance ranges called for 9% to 10% revenue growth as well as $5.40 to $5.55 in adjusted EPS.

Verizon’s results came after peer AT&T Inc.
T,
-7.62%

delivered a mixed report a day earlier. AT&T saw strong growth in its postpaid phone net additions and signaled that pricing changes were having a positive effect, but management also pointed to some changing consumer behaviors in the wake of deteriorating economic conditions, and the company lowered its free-cash flow outlook.

Read: AT&T earnings were ‘actually good’ despite stock selloff, says analyst

AT&T disclosed that some customers were becoming slower with their phone payments in light of the economy, one factor that contributed to the reduced free-cash forecast. At the same time, AT&T indicated that wasn’t seeing bad-debt expenses materially higher than they were before the pandemic, indicating to management that the company expected customers to still pay their bills even if it was a bit more slowly than AT&T had grown used to during healthier economic times last year.

Shares of Verizon have lost 8% over the past three months as the S&P 500
SPX,
+0.99%

has dropped 6%.

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