What happened
Actions the wireless giant Verizon (VZ 0.53%) rose 2.9% in early trading on Tuesday after the earnings report. The stock gave back some of those gains and was up 1% at 12:30 a.m. ET.
And what
Revenue fell 3.5% from a year ago to $32.6 billion, but revenue from high-margin services rose from $27.1 billion to $27.3 billion. Verizon is actually losing money on equipment revenue, which fell from $1.2 billion to $5.3 billion, so the drop in revenue wasn’t as bad as it sounds.
Total wireless revenue rose 3.8% to $19.1 billion as 384,000 customers added fixed wireless broadband. Free cash flow also improved from $2.3 billion in the first quarter to $5.7 billion in the second quarter.
That’s partly because capital spending is falling. Capital expenditures were $6 billion in the first quarter and $4.1 billion in the second quarter. It is expected to be around $4.4 billion per quarter in the second half of the year.
And now what
Verizon’s cash flow machine is finally starting to turn on. Wireless business plans are growing and broadband is doing well, which has offset losses in the consumer segment. What management needs to do now is cut the costs and debt that have weighed down the company. If this happens, stocks will slowly recover.
Travis Hoyum holds positions at Verizon Communications. The Motley Fool recommends Verizon Communications. A motley fool has a disclosure policy.