December 09, 2014
In a period of the year when promotions and presents are in the mind of every customer, of every consumer, big service providers, such is, for example, Verizon, might face some pressure, even though it is a short term and short impact situation. Many US citizens and not only they want to get new gadget, such are smartphones and tablets especially, for themselves or to make gifts to their beloved.
This is a situation mentioned in a public statement, delivered by Verizon board on Monday. “There is very strong customer demand for 4G smartphones and tablets in the current quarter, but the promotional costs will dent near-term earnings. The company expects that the fourth-quarter impacts of its promotional offers, together with the strong customer volumes this quarter, will put short-term pressure on its wireless segment (profit margins) and earnings per share”, appeared in the press release.
So, this might be a sign of the difficulties that, in some points, the big companies have to pass when promotion period are at high levels. And when your competitors also have more resources or even more financial possibilities then things can become quite complicated. A situation might happen now because of T-Mobile and Sprint intense price competition that might create extra pressure on the shoulders of the two dominant carriers, AT&T and Verizon, the last one being the company about we are talking right now.
Besides the statement mentioned above, Verizon representatives also quote in the same press release something else: “Nearly 25 percent of upgrades are using the company’s unsubsidized Verizon Edge program, where customers pay for their device in installments. That’s up from 12 percent as of last quarter”. And all happened ahead of the company’s full earnings report, which isn’t due out until January 22.