Verizon Cuts Outlook, Blames Everyone
Verizon Communications Inc. (NYSE: VZ) reported a catalogue of problems Tuesday that it expects will cause a shortfall in its profits this year and next, and, analysts say, is likely to be echoed by other carriers throughout the industry (see Verizon Lowers Guidance).
For the full year, Verizon now said it expects profit of $2.56 to $2.60 a share, adjusted for onetime items. In January, the carrier predicted it would earn $2.70 to $2.80 a share.
Chief among its concerns appears to be the impact of the Federal Communications Commission (FCC)'s recent Triennial Review ruling concerning which Verizon has a complaint filed with the Commission (see RBOCs Appeal Directly to FCC).
The carrier has asked the FCC to stay the specific portions of the Review that impose unbundling requirements for elements of traditional narrowband telephone networks. The appeal centers around EELs (enhanced extended links), which allow competitive carriers to share Verizon’s facilities at reduced rates. Verizon and the other RBOCs say that enabling this function costs them more money than they are allowed to charge for it, which they say is unfair (see ILECs, CLECs Face Off Over UNE-P).
"On EELs, lawyers have been sent out into the wilderness until they fix this damn issue,” said a disheartened Ivan Seidenberg, CEO of Verizon, on a conference call with press and analysts. “You can rest assured we will continue to fight this and nail it down from a litigation standpoint."
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— Jo Maitland, Senior Editor, Boardwatch