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All organizations require reviewing their selling performance once in a while for them to determine the direction they are taking regarding profits made and revenue collected from their services offered or goods sold. It is a good and healthy way for them to set their goals and track their achievements as they set out to achieve their organizational goals and objectives, plus improve shareholders ‘profits and company value. Most organizations perform their selling review performance after conducting a financial analysis and realizing a financial report based on the data collected from the study. The report comprises of all the revenue collected from the organizations’ merchandise and goods or services sold and a comparison to their previous financial reports released.
With this in mind, an analysis and report of Verizon Communications were conducted, and a summary was arrived at based on the findings. Verizon Communications Inc. got incorporated on October 7, 1983, it is a holding company that provides com, networking devices and entertainment products and services to consumers, businesses, and government agencies. Its segments include Wireless and Wire line networks.
Verizon Earning Report
Verizon provides voice, data, and video services to its client into it wireless and the wire line network. The wireless segment directs communications of product and services which include wireless voices, data services and equipment sales to customers in United States. Wire line network provides services to people leaving in the United States and globally. The Company according to (Reuters, 2017), offers these products and services to consumers in the United States as well as to carriers, businesses, and government customers abroad (Reuters, 2017).
Verizon Communications Inc. releases its financial reports on a quarterly basis; that is after each quarter of a year. We looked at their last quarter financial report conducted on 20 October 2016 and came up with specific reports as follows. According to the report released, the summed up operating revenue decreased by 6.7% in the third quarter that was brought about by the sale of three wire line markets to Frontier Communications plus the wireless commercial pricing model changes. Consolidated revenue also decreased by 2.9%.
The total Consolidated adjusted EBITDA amounted to 11.3 billion US dollars an increase of 1% compared to the previous quarter. Operations in the third quarter brought in 4.8 billion US dollars in cash flows
Competitive activity in the wireless market had an increase during their third quarter which was their expectation during the beginning of the year; Service revenue raised a revenue of 16.7 billion US dollars which is a decline of 5.2% for the quarter in comparison to 5.4% in the second quarter of the same year. The service revenue plus instalment billings had an increase of 2.3% to 19.3 billion in the quarter compared to the second quarter.
Revenue raised from equipment was 4.1 billion that is a decline of 3.9% compared to the second quarter. This was mainly caused by lower equipment volumes. There was a 70% phone activation on device payment plans on the third quarter which is an increase compared to the second quarter that was about 67%. During the third quarter, 6.1 million phones were newly activated on a device payment plan summing up to 35.8 million phone connections enabled, a representation of 41 percent of the company’s post-paid phone base. There was a decline of 3.9 percent in the total wireless operations in the third quarter leading to 22.1 billion US dollars, but the cost structure keeps on improving which is brought about by improvements in supply chain, distribution, and care, leading to higher digital customer contact and lower transaction costs.
Regarding profits, Verizon raised $9.9 billion of segment EBITDA in the quarter, similar to last year, and had a segment EBITDA margin of 44.9%, an increase of 170 basis points from the previous 43.2%. The total network adds non inclusive of wholesale connections summed up to 442,000.357000 new 4G smartphones were added in the quarter that was partially offset by a net decrease of 3G smartphones, leading to 242000 net new high-quality smartphones.
Net phone additions had a negative 36000 brought about by an offset of basic phones plus softer phone gross additions. There was also increase to 83000 net prepaid additions for the quarter which is an improvement caused by the new price plans for Verizon’s prepaid market. The quarter closed with a retail connection that summed up to 113.7 million plus an increase in the industry-leading post-paid connection base rose by 3% to 108.2 million plus a total of 5.5 million prepaid connections.
Looking at 4G device activations and upgrades, total post-paid device activations summed up to 10.7 million in the third quarter an increase of 12.2% sequentially and decline of close to 7.7 percent on a year to year basis. This was a drop of 70 basis points year over year and an increase of 5.4% in the prior quarter.
This decline was caused by the recall of the Samsung Note 7 smartphones by the company due to the malfunctioning of the phones, plus an iPhone 7 backlog due to upgrades.
Network usage increased by 45% in the third quarter. Digital video is the core service of traffic on Verizon’s network. To offer services in the digital media value chain, Verizon has gathered assets to grow in the digital media business. They have accumulated an extensive portfolio of digital rights plus they have invested in specific assets to create digital content, distribute and publish digital content.
To drive incremental value from digital media traffic, Verizon has decided to scale and leverage AOL’s ad tech capabilities to monetize digital impressions on and off their network.
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Wire line segment.
On the wire line segment, Consumer revenue increased 0.2% compared to the second quarter and small business declined 0.5%.The total Fios revenue grew by 4.4% with the Fios consumer revenue increasing by 4.2%.
The growth of Fios was brought about by a higher customer base that demanded faster Internet speeds and strong retention programs.
16% of Fios internet consumers opt for internet speeds of 100 megabits or greater.
Fios internet subscriber increase was steady in the third quarter. In broadband, there was a 90,000 net Fios customer increase for the quarter, which was at pre-work-stoppage levels. Net broadband subscribers rose by 24,000 in the quarter. Fios internet penetration was 40.4 percent in the quarter in comparison to 40.1percent in the previous quarter that represents an increase of 30 basis points.
Network usage increased by 45%. In the third quarter. For Verizon to participate in the digital media, they have acquired assets to grow in that business through the acquisition of an extensive portfolio of digital rights and invested in specific assets to create digital media plus publish and distribute the same. Advertising revenue was the prime reason for the increase in Net income; there is also a high demand from advertisers for AOL’s expanding programmatic capabilities and high-quality data analytic tools (Thomson Reuters Streetevents Edited Transcript, 2016).
One of the businesses that are growing is the Internet of things that brought a revenue of 205 million US dollars. This is a small portion of the company’s revenue but has seen a significant rise compared to last year 165 million US dollars which are a 25% increase in revenue (Ha, 2016).
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- Ha, A. (2016, July 26). Verizon Q2 misses on declining sales of $30.5B, beats with EPS of $0.94. Retrieved from techcrunch.com: https://techcrunch.com/2016/07/26/verizon-q2-earnings/
- Reuters. (2017, January). Verizon Communications Inc. Retrieved from www.reuters.com: http://www.reuters.com/finance/stocks/companyProfile?symbol=VZ
- Thomson Reuters Streetevents Edited Transcript. (2016, October Thursday). Retrieved from www.verizon.com: http://www.verizon.com/about/investors/quarterly-reports/3q-2016-quarter-earnings-conference-call-webcast