Verizon gains more customers, but less profit

Buoyed By iPhones Sales Verizon Reports Stong Earnings
LOS ANGELES, CA - APRIL 21: A Verizon store is seen April 21, 2011 in the Westwood neighborhood of Los Angeles, California. Verizon announced today that it activated 2.2 million iPhones during the first quarter, helping the company more than triple its profit from a year ago. The company reported earnings of $1.4 billion on revenue of $27 billion for the quarter. Profit grew more than three-fold from the $443 million the telecom company earned during the same period last year. (Photo by Eric Thayer/Getty Images)
Photograph by Eric Thayer—Getty Images

Verizon Communications reported its third quarter earnings Tuesday morning and revealed profits that missed analysts’ estimates. Here’s what else you need to know about.

What you need to know: Verizon’s (VZ) 89-cent profit fell short of analysts’ expectations of 90 cents per share, while revenues of $31.6 billion were on target. The results were mildly disappointing even though profits were up over 14% when compared to the year-earlier quarter.

The big number: The largest U.S. wireless carrier brought on 1.52 million contract customers over the third quarter, well above the average analyst’s projection of 1.34 million, according to Bloomberg data. Subscriber growth was more than 40% stronger than a year prior, CEO Lowell McAdam had said in September.

What you might have missed: Verizon’s muted profit amid rising cellular sign-ons is the result of the growing battle between carriers to cut prices and lure in more customers. Verizon, along with competitors T-Mobile US (TMUS), AT&T (T) and Sprint (S), have offered a range of smartphone discounts and price promotions, which pushed down profit margins for the New York-based company’s mobile-phone unit. Verizon’s wireless service margins fell 1.6 percentage points to 49.5%. Despite the drop last quarter, profit margins for 2014 are on track to be higher than the prior year, the company said.

—Reuters contributed to this report.