Verizon yesterday announced a landmark deal to purchase Yahoo’s core business for $4.83 billion, but judging from its just-released second quarter earnings report, the telecom giant continues to feel the pressure of declines in its legacy business.
The Q2 report shows total operating revenue of $30.5 billion and earnings per share of 94 cents. That’s a miss on revenue, but a slight win on earnings/profitability — Wall Street analysts had predicted that the company (which owns TechCrunch) would report revenue of $30.9 billion and EPS of 92 cents.
Revenue is down 5.3 percent from the same period last year, although the decline is only 3.5 percent if you exclude divested landline businesses and AOL (which was not part of Verizon a year ago).
The company says a seven-week work stoppage (namely, a strike) negatively impacted earnings by seven cents per share.
On the wireless side, Verizon says it saw 615,000 net additions, bringing the total number of connections to 113.2 million — up 3.3 percent year-over-year. Total revenue for the wireless business was $21.7 billion, a 4 percent decline.
The report also points to new businesses that are growing, such as Internet of Things revenue of $205 million — only a tiny fraction of the company’s total revenue, but up 25 percent increase from a year ago.
“Verizon’s second quarter shows that the company continues to deliver strong results while evolving operations and advancing a strategy to sustain network leadership, build new ecosystems and deliver the promise of the digital world to customers,” said Verizon CEO Lowell McAdam in the earnings release.
McAdam also commented on the Yahoo acquisition, which suggests that Verizon is doubling down on the digital media business, but isn’t expected to close until the first quarter of 2017.
“By acquiring Yahoo, we are scaling up to be a major competitor in mobile media,” he said. “Yahoo is a complementary business to AOL, giving us market-leading content brands and a valuable portfolio of online properties and mobile applications that attract over 1 billion monthly active consumer views.