Investing.com - Verizon Communications (NYSE:VZ) revised its profit guidance for the year down due to the Covid-19 pandemic, which has forced the closure of most of its stores in recent weeks.
The company said on Friday it now expects earnings per share to be flat, within a range of 4 percentage points, predicting that lockdowns will generate "significant headwinds" in the current quarter. It also set aside $228 million in provisions against possible non-payment of bills as customers fall on hard times. Over 26 million Americans have lost their jobs in the last five weeks.
Verizon, which also withdrew its guidance for 2020 revenues entirely, had earlier expected EPS growth of around 3% from last year.
First-quarter adjusted earnings came in slightly ahead of expectations at $1.26 but were hit by a pre-tax loss from special items of about $1.4 billion, caused largely by a $1.2 billion loss related to the FCC's recently completed spectrum Auction 103. It also took another net charge of $182 million as it marked its pension liabilities to market.
However, the company said it won't cut capital spending, which it still expects to be between $17.5 and $18.5 billion. It had $7 billion cash on hand at the end of the quarter.
"We will emerge from this crisis stronger, knowing we provided critical connectivity to our customers, and especially our first responders, while maintaining our commitment to investing in our 5G and Fiber strategies," chairman and CEO Hans Vestberg said in a statement.
Revenue fell to $31.61 billion from $34.78 billion three months earlier, as the pandemic depressed advertising rates at its media business. In the core telecoms business showed mixed results, with losses in consumer subscriptions almost being compensated by gains in business customers.
Verizon shares are down 6% from the beginning of the year , still down 7.44% from its 52 week high of $62.22 set on December 20, 2019. They are outperforming the S&P 500 which is down 13.77% year to date.
Verizon shares were unchanged in premarket trade following the report, underperforming a broader market that was around 0.5% higher.
Verizon follows other major Services sector earnings this month
Verizon's report follows an earnings missed by AT&T on Wednesday, who reported EPS of $0.84 on revenue of $42.78B, compared to forecasts EPS of $0.85 on revenue of $44.33B.
Netflix had missed expectations on Tuesday with first quarter EPS of $1.57 on revenue of $5.77B, compared to forecast for EPS of $1.63 on revenue of $5.74B.
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