Verizon earnings meet expectations

Verizon met analyst expectations for earnings, but just missed revenue for its fiscal first quarter.

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NEW YORK (CNNMoney.com) -- Verizon Communications Inc.'s first-quarter earnings met Wall Street expectations Monday on strong growth in sales of home fiber-optic services and strong wireless customer additions.

Verizon shares rose 1.4% to $37.55 at midday.

Excluding one-time items, Verizon (VZ, Fortune 500) earned 61 cents per share, up 13% from 54 cents per share a year earlier, meeting average expectations of analysts polled by Thomson Financial.

After accounting for 4 cents a share in special items, Verizon reported net income of $1.64 billion, or 57 cents a share, up 10% from $1.5 billion, or 51 cents, in the year-earlier period.

Revenue rose 5.5% to $23.8 billion, just barely missing analyst expectations of $23.9 billion.

The company reported operating income of $4.3 billion, up 14.1% from the fiscal first quarter a year ago. Excluding one time items, the company reported that operating income grew 14.2% to $4.5 billion.

"Verizon has weathered the current economic uncertainty with strong first-quarter results," said Verizon Chairman and CEO Ivan Seidenberg in a statement.

Verizon reported 1.5 million net customer additions to its 67.2 million total wireless customer base.

Verizon added 263,000 new customers for its fiber-optic FiOS TV service in the first quarter, bringing its total to 1.2 million TV customers.

While the domestic FiOS TV service is doing well, the company is still being supported in large part by its wireless services - as its traditional phone wire service continues to fade.

"The wireless business is firing on all cylinders, but the legacy wireline business is deteriorating even faster than we would have expected," said Craig Moffett, senior telecom analyst for Sanford C. Bernstein.

"The wireless business so far has proven to be very resilient in the face of a weakening macro economic picture," Moffett said.

However, Moffett is concerned about the long-term sustainability of the already suffering wireline business. Both consumer and business use of wirelines is falling off.

While Verizon will continue to have the $99-a-month Triple Play bundle promotion for broadband, TV and regular phone services, prices of other, more selective service bundles will increase, according to Doreen Tobin, Verizon's chief financial officer.

"We anticipate increasing prices on certain products and bundles in the second quarter this year," Tobin said in the conference call after the earnings release.

Verizon competes with rival telecom companies AT&T (T, Fortune 500) and Sprint (S, Fortune 500) for wireless customers. Last week, AT&T reported their earnings up 22% on strong wireless growth. Sprint warned of heavy subscriber losses earlier this month.

With the addition of the FiOS TV fiber-optic service, Verizon has also started competing with Comcast (CMCSA, Fortune 500) and Time Warner Cable (TWC). Time Warner Cable is a majority owned subsidiary of Time Warner, which is the parent company of CNNMoney.com.