Verizon Sees Wireless Sales Boost, but Profit Falls 50%

Boosted by 1.4 million new wireless customers, Verizon Communications Inc. on Tuesday posted a 3.9% hike in first-quarter revenue, but higher costs and lower revenue from its regular land-line business led to a 50% drop in net income.

The nation’s largest telephone company earned $1.2 billion, or 43 cents a share, for the first three months, down from $2.4 billion, or 87 cents, in the same period last year. Revenue rose to $17.1 billion from $16.3 billion.

Excluding one-time charges, New York-based Verizon earned 58 cents a share, a penny more than analysts had expected. Its shares fell 24 cents to $37.50 on the New York Stock Exchange.

“Without wireless, Verizon’s results would be like everyone else’s in the industry -- revenue declining, the number of access lines falling,” said analyst F. Drake Johnstone at Davenport & Co. in Richmond, Va., which doesn’t own Verizon shares or do business with the company. “The wireless results were great. With continued growth, it will propel Verizon to grow.”

Verizon has been focused on capturing wireless customers as it slowly rolls out fiber optic cable to homes in the 13 states and Washington, D.C., where it is the dominant local phone company, and 16 additional states, including California, where it is the secondary local carrier. Its affluent Southern California territory and local wireless operation help make the state Verizon’s second-largest market.

Verizon Wireless is offering a fast wireless data service in San Diego and Washington and expects to roll that out into the 100 top markets in the next year or so.

“When they’re out there with speeds three or four times faster than anyone else, they’re going to gain significant market share,” Johnstone said.

Verizon Wireless, with 38.9 million customers, is the nation’s leading mobile phone operation -- at least until Cingular Wireless completes its purchase of AT&T; Wireless Services Inc. That union would create a company with 46.6 million customers, but some analysts believe that Verizon Wireless could regain the top spot, possibly even before the merger’s completion later this year.

Marni Walden, president of Verizon Wireless’ Southern California region, said the sales gains came both from a continuing focus on fundamentals and from consumers who took advantage of the ability to take their cellphone numbers with them when they switched carriers.

But competition, lower prices and moves by businesses and consumers to ditch second lines in favor of one with both voice and DSL capabilities continued to depress the land-line business, Verizon’s biggest single operation. The company lost about 600,000 lines.