Verizon Communications Inc. on Thursday reported a fourth-quarter loss of $2.23 billion, compared with year-ago earnings of $5.07 billion a year ago.
The loss was attributed to costs associated with adding new subscribers along with year-end charges for pension adjustments, employee benefits and severance costs.
The New York-based company said it had a loss of 54 cents per share. Earnings, adjusted for nonrecurring costs, came to 71 cents per share — at or just below expectations in two surveys of Wall Street analysts.
The largest U.S. cellphone carrier posted revenue of $33.19 billion in the period, topping analyst expectations of $32.53 billion, according to Zacks.
Verizon stock closed down 45 cents at $47.80.
Verizon is the first of the big wireless companies to report quarterly results. AT&T releases earnings next week, and Overland Park-based Sprint’s numbers are due out Feb. 5.
Below-cost prices on popular phones like Apple’s latest iPhones helped lure customers into two-year contracts. Those discounts, along with promotions for free tablets and holiday discounts, helped Verizon fend off competition from the likes of Sprint, which offered to cut Verizon customers’ bills in half.
Verizon warned last month that the moves would reduce fourth-quarter margins, which came in at 42 percent. The wireless profit margin shrank from 49.5 percent in the third quarter and 47 percent a year ago.
“Expectations had been set pretty low,” Dave Heger, an analyst with Edward Jones & Co. who recommends buying Verizon shares, said before the earnings announcement. “A miss will raise questions about the longevity of the price war and the ongoing lowering of margins in wireless.”
The lower margins show how expensive it was for Verizon to drive subscriber growth in the quarter. The industry has been trading short-term profitability in order to lock in more customers who will be paying them for years.
Verizon added about 2 million new monthly subscribers, beating the average estimate of 1.7 million, based on a Bloomberg survey of seven analysts. The majority of the additions were driven by 1.4 million new tablet customers. The company added only 672,000 net phone customers.
Analysts’ average estimates called for twice as many tablets as phones, with 1.2 million tablet users and 500,000 phone customers.
Signing up more subscribers helped Verizon forecast 2015 revenue growth that exceeded analysts’ estimates. The company projected growth of at least 4 percent, which would amount to about $132 billion. Analysts were predicting sales this year of $129.8 billion, or about 2.1 percent growth.