Case Study

The article that I read was found in the October 29 issue of the Wall Street Journal. This article is called, “Verizon Net Drops, But Wireless Area Sees Revenue Rise.” Verizon Communications Inc. reported that third-quarter net income fell fifty-nine percent from the year-earlier period, when results were helped by asset sales and tax benefits (p.B7). However, there was an eighteen percent jump in revenue at the wireless affiliate.

Verizon’s total number of residential phone lines fell 3.5%, business lines declined 4.6%, and revenue in the U.S. wireline division was down 4.1%, which was the steepest decline of this year (p.B7). Like other regional telecommunications companies, Verizon continues to suffer from declines in usage of traditional phone services as people rely more on cell phones and the Internet (p.B7). Verizon Wireless had a net gain of 1.3 million retail subscribers and customer growth accelerated from the first and second quarters. Also, Verizon is taking customers from rival carriers like Sprint PCS and Cingular. Therefore, Verizon needs to focus most of its attention to the wireless affiliate because that’s what is giving Verizon a competitive advantage.

Last month, Verizon cut its earnings forecast for the year, as well as expenses associated with a new labor contract and heady growth in the wireless business (p.B7). Verizon will have to create something new for the phone