Verizon scales back outlook

Susan Rush
from CED Broadband Direct, July 31, 2002

Verizon Communications Inc. has cut its outlook for 2002, citing the ongoing economic downturn.

In its revised guidance, the company said it expects revenue to be flat or down 1 percent compared to last year, as opposed to flat or up 1 percent. Verizon has pared its capital expenditures from as much as $15 billion, to as little as $13 billion.

For the just-ended second quarter, Verizon reported a loss of $2.1 billion, or 78 cents a share. In Q2 2001, the company posted a loss of $1 billion, or 38 cents a share. Verizon attributes the wider loss to layoff costs and a write down in the value of its stake in data network operator Genuity. Last week, Verizon said it would not convert a 10 percent stake in Genuity Inc. into an 80 percent position, citing market conditions and Verizon's business needs. The decision caused a default under Genuity's credit facility with Verizon and its credit facility consortium banks.

Revenue dipped slightly from $16.9 billion in Q2 2001 to $16.8 billion. The company's domestic telecom sector posted revenue of $10.5 billion, a 4.4 percent year-over-year drop.

During the second quarter, Verizon added 150,000 new net DSL lines to end the quarter with 1.5 million DSL customers. The company also continued trials of its service bundles, which combine local, long-distance, wireless and DSL services in one package.