Earnings Preview: Verizon to report 3Q results

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NEW YORK (AP) ? Verizon Communications Inc., the nation’s largest wireless carrier and second-largest telecommunications company, is scheduled to report its third-quarter results before the stock market opens Friday.

WHAT TO WATCH FOR: Verizon Wireless has seen a big boost in new subscribers this year thanks to the iPhone, which it started selling in February, and a new, faster wireless data network. The third-quarter results will show whether it’s sustaining that momentum.

Analysts will be looking for the number of new subscribers on contract-based plans, which are the most lucrative. They expect to see Verizon Wireless adding around 950,000 subscribers under contract, easily leading the industry. Verizon’s largest competitor, AT&T, reports third-quarter results Thursday morning, and is expected to report adding about 400,000 contract plans.

Though Verizon Wireless is a big growth engine, only 55 percent of its earnings flow through to New York-based Verizon Communications. The rest of the wireless division is owned by Vodafone Group PLC of Britain.

In the quarter, Verizon Wireless announced that it will pay a dividend of $10 billion to its owners, Verizon and Vodafone, in January. For years, Verizon Wireless has used its cash flow to pay down debt, but that’s nearly paid off. The dividend will help Verizon sustain its own dividend to shareholders. Verizon’s other main business ?that of the conventional, wired phone company? is running close to break-even.

Verizon told investors a month ago that damage caused by Hurricane Irene, plus installation and repair delays due to a recent strike, cost the company $250 million in the quarter.

WHY IT MATTERS: Verizon Wireless had 106.3 million wireless devices on its network and 25 million landlines at the end of the last quarter. The stock is a component of the 30-stock blue-chip Dow Jones Industrial Average index.

WHAT’S EXPECTED: Analysts polled by FactSet on average expect Verizon to report earning 56 cents per share on revenue of $27.9 billion.

LAST YEAR’S QUARTER: Verizon initially reported a profit of 31 cents per share for the third quarter of 2010, but adjusted that to 23 cents per share due to a change in its pension accounting practices. Revenue was $26.5 billion.