“While well-positioned for the future, Verizon’s full-year 2016 earnings may plateau at 2015 levels as the company manages near-term impacts,” Verizon Communications said today.
The market wasn’t pleased with that, and the shares of the TMT behemoth fell over 3% in the wake of the announcement. Consensus estimates had pencilled a 3.8% rise in earnings per share from $3.93 this year to $4.08 in 2016.
“These impacts include the commercial model change in wireless, year-over-year wireline financial comparisons following the expected first-half 2016 sale of operations to Frontier Communications, and the ramp up of new business models for wireless video and IoT.”
In fairness, earnings were not going to sky-rocket over the medium term, so today’s announcement doesn’t catch us by surprise.
That said, around mid-May we noted that AOL‘s Tim Armstrong came across as being too optimistic about Verizon’s prospects following the acquisition of AOL by Verizon.
One of the problems for Verizon, we pointed out, was that moving into Google’s turf could have brought higher execution risk, particularly in the digital advertising field, given that its focus is on mobile.
You can read our coverage that followed later in June this year — Verizon Wraps AOL Deal, But Was It Worth It?
Finally, as far its digital strategy is concerned, we wouldn’t recommend any action aimed at gaining more authority on Google — Verizon is incredibly strong in terms of domain authority — but it appears that its hierarchy structure could do with some help.
If you want to discuss some of issues that we have identified with verizon.com and other duplication issues concerning some of the domains owned by Verizon please contact our team at info@hedgingbeta.com
(Alessandro Pasetti and Hedging Beta are not invested in any of the shares mentioned in this article.)