By Senad Karaahmetovic
Shares of Verizon (NYSE:VZ) are down 5% in premarket Friday after the company slashed its full-year profit guidance.
Verizon reported an EPS of $1.31 to miss on the consensus of $1.33 while revenue came in at $33.8 billion, slightly ahead of the $33.78 billion expected.
Wireless revenue also topped consensus as it came in at $26.89 billion to beat the $26.69 billion expected. The company added 514,000 postpaid subscribers, better than the expected 413,460.
However, shares were hit after the company said it now expects to report adjusted EPS of $5.10 to $5.25, worse than the prior guidance of $5.40 to $5.55. Analysts were calling for a full-year EPS of $5.38.
Verizon reiterated its previous outlook for wireless service revenue growth of 8.5% to 9.5%, capital expenditures. On the other hand, the company said it now sees service and other revenue growth at negative-to-flat, worse than the prior outlook of “approximately flat.”
“Although recent performance did not meet our expectations, we remain confident in our long term strategy,” Matthew D. Ellis, Verizon’s CFO, said in a statement.
Lower cash flow generated in the first half of the year is a result of “working capital impacts from higher device activations, and increased inventory levels as part of the company’s supply chain management in the current environment.”
A Goldman Sachs analyst saw “mixed” Q2 results.
“We expect the stock to come under pressure as investors digest the drivers of VZ’s lowered 2022 guidance, including the extent to which this represents execution challenges that are causing VZ to lose Consumer wireless subs in a strong market vs. macro pressures such as cost inflation,” the analyst told clients.