Verizon profit drops 34 percent

NEW YORK -- Verizon Communications Inc., the nation's second largest telecommunications company, on Monday reported third-quarter earnings fell by a third from a year ago due to tax charges.

Verizon earned $1.27 billion, or 44 cents per share, in the July-September period, down 34 percent from $1.92 billion, or 66 cents per share, a year earlier.

This year's figure includes a charge of 16 cents per share for taxes related to a minority investment in Italian cell-phone carrier Vodafone Omnitel, and 3 cents per share in other charges.

Excluding those charges, earnings would have been 63 cents per share, beating the average estimate of analysts polled by Thomson Financial by a penny a share.

Last year's earnings figure includes a number of businesses that have since been sold or spun-off, including the high-margin Yellow Pages business. Excluding those businesses, earnings in last year's second quarter was 53 cents per share.

Revenue came to $23.8 billion in the latest quarter, up 5.8 percent from $22.5 billion a year ago.

Verizon's major growth driver, the cell-phone operations, added 1.6 million customers, for a total of 63.7 million, just behind AT&T Inc.'s 65.7 million. While Verizon has generally been slowly closing the gap with the larger AT&T, Verizon's rival pulled ahead this quarter with an assist from Apple Inc.'s iPhone, for which it is the exclusive carrier.

Verizon Wireless is a joint venture of Verizon and Vodafone Group PLC of Britain. All of its revenue -- $11.3 billion in the third quarter -- is counted on Verizon's books, but only 55 percent of its profits, with the rest going to Vodafone.

Verizon's other growth engine, though still much smaller than the wireless division, is the fiber-optic network that it is building out to replace its copper phone lines.

It added 229,000 fiber-optic subscribers during the quarter, up from 203,000 in the second quarter. It connected 202,000 subscribers to the TV service, FiOS TV.

At the same time, the wireline division continued to lose regular phone subscribers at a much faster rate -- 3.7 million in a year.

In premarket trading Monday, Verizon shares rose 40 cents to $46.