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Verizon sees profit boost
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November 30, 2000: 10:50 a.m. ET
No.1 U.S. local phone company now expects 8 percent gain in 2001
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NEW YORK (CNNfn) - Verizon Communications Inc. Thursday raised its earnings forecasts for 2001 and 2002, on the heels of its decision to not buy a stake in NorthPoint Communications.
New York-based Verizon Communications (VZ: Research, Estimates) is targeting earnings growth of about 8 percent, with earnings in the range of $3.13 to $3.17 a share in 2001, up from its prior expectations of $3.06 to $3.10 a share. Wall Street analysts, polled by First Call, expect $3.08 a share in 2001.
Verizon, the No. 1 local U.S. telephone company, also revised expectations for 2002 in the range of $3.49 to $3.54 a share, a boost from prior expectations of $3.41 to $3.46 a share. Wall Street analysts anticipate $3.51 a share.
Verizon also said its target range for the fourth quarter of 2000, ending Dec. 31, is 76 to 78 cents a share. Wall Street expects 78 cents.
New York-based Verizon was formed by the merger of Bell Atlantic and GTE.
A NorthPoint snub
Verizon announced Wednesday that it would not be purchasing a 55 percent stake in NorthPoint Communications, scuttling the planned merger of both firms' DSL businesses.
Verizon, which planned to pay $800 million for the stake, said it terminated the agreement because of NorthPoint's deteriorating financial, business and operating conditions. Verizon also said it will not arrange for NorthPoint to receive additional financing.
Verizon cited NorthPoint's announcement Nov. 20 in which the DSL company revised its third-quarter 2000 financial results, indicating a decline in revenue, an eroding customer base and material increases in net loss.
 San Francisco-based NorthPoint (NPNT: Research, Estimates), a high- speed Internet service provider, countered Wednesday that Verizon's actions were invalid and that it is exploring legal options.
Verizon said Thursday that it plans to continue expanding its wireline footprint through its purchase of One Point Communications Corp. and its strategic relationship with Metromedia Fiber Network Inc.
Verizon has paid about $150 million in convertible securities to NorthPoint so far and will likely take a one-time charge at the end of the fourth quarter to reflect this investment, said Verizon CFO Fred Salerno on a conference call to analysts Thursday.
"We will let you know at the end of the quarter what the number is," Salerno said.
Though it terminated its deal with NorthPoint, Verizon remains committed to becoming a leading DSL provider. Verizon had 350,000 DSL subscribers in September and is targeting 500,000 by the end December, company executives said.
Verizon plans to spend $500 million over the next three years on expansion. The leading phone company plans to target initially Seattle; Portland, Ore.; Dallas; and Los Angeles. Other targets will include Chicago, Houston, San Francisco, San Diego, Cincinnati and Louisville, Ky.
Verizon shares gained 56 cents to at $56.38 while NorthPoint fell 41 cents to $1.59 in morning trading Wednesday. 
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